Sunday, December 15, 2019

November oil shortage at 1.17 million barrels per day; January natural gas hits another all time low

oil prices rose for the 5th time in 6 weeks to close at a three month high this week, as renewed hopes for a US-China trade deal powered a late week rally....after rising 7.3%, or more than $4 to $59.20 a barrel after OPEC and other oil producers agreed to deeper output cuts last week, oil traders took some profits on Monday ahead of Trump's China tariff deadline and the price of the benchmark US crude for January delivery slipped 18 cents to settle at $59.02 per barrel after Chinese data showed their overall exports of goods and services shrank for a fourth straight month, highlighting the economic impact of the ongoing trade war...oil prices slid again early on Tuesday on concerns over the shrinking global demand outlook, but turned higher in the afternoon to settle 22 cents higher at $59.24 per barrel, as OPEC’s deal with other producers to deepen output cuts continued to provide a floor for prices...however, oil prices fell early on Wednesday after industry data showed a surprise build in US crude oil inventory and then continued downward to close 48 cents lower at $58.76 per barrel after the EIA confirmed an inventory increase, along with large builds in product supplies...however, oil prices steadied on Thursday as the market mood switched back to relief, after OPEC forecast a supply deficit next year, even before their cuts kick in, with US crude rising 42 cents to settle at $59.18 a barrel, buoyed by reports of progress on the U.S.-China trade front and optimism after US & European central banks signaled a willingness to keep interest rates low and maintain economic stimulus for the foreseeable future....signs of further progress on US-China trade and a big conservative victory in UK elections then powered oil prices higher on Friday, as US crude rose 89 cents to finish the week with a 1.5% gain at $60.07 a barrel, two days short of a three month high...

natural gas prices, meanwhile, finished lower after the current contract ​price ​hit another all time low on Monday...after finishing at $2.334 per mmBTU last week, 2.3% higher than it's all time low of $2.281 per mmBTU of the previous Friday, the price of natural gas for January delivery gapped lower on Sunday evening and fell to as low as $2.158 before rebounding to finish at $2.232 per mmBTU, as last week's forecast for an outbreak of cold gave way to a forecast of milder weather for ​a broad area of ​the nation's midsection heading into Christmas week...prices rebounded a bit on Tuesday, rising 3.2 cents, but fell back 2.1 cents again on Wednesday...prices then recovered 8.5 cents on Thursday after the natural gas storage report revealed a larger than average withdrawal from inventories, but fell back 3.2 cents on Friday to end the week at $2.296 per mmBTU, down 1.6% from the prior week's close..

the natural gas storage report for the week ending December 6th from the EIA indicated that the quantity of natural gas held in storage in the US decreased by 73 billion cubic feet to 3,518 billion cubic feet by the end of the week, which left our gas supplies 593 billion cubic feet, or 20.3% higher than the 2,925 billion cubic feet that were in storage on December 6th of last year, but still 14 billion cubic feet, or 0.4% below the five-year average of 3,532 billion cubic feet of natural gas that have been in storage as of the 6th of December in recent years....the 73 billion cubic feet that were withdrawn from US natural gas storage this week was near the average forecast of a 74 billion cubic feet withdrawal by analysts surveyed by S&P Global Platts, but was above the average 68 billion cubic feet of natural gas that have been pulled from natural gas storage during the first week of December over the past 5 years...

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending December 6th indicated that because of a big increase in our oil imports and a modest pullback the amount of oil being used by our refineries, we managed to end up with surplus oil to add to our stored commercial supplies for the tenth time in the past thirteen weeks...our imports of crude oil rose by an average of 899,000 barrels per day to an average of 6,887,000 barrels per day, after fa​lli​ng by an average of 201,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 265,000 barrels per day to an average of 3,400,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,487,000 barrels of per day during the week ending December 6th, 634,000 more barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells reportedly fell by 100,000 barrels per day to 12,800,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,287,000 barrels per day during this reporting week..

meanwhile, US oil refineries were reportedly processing 16,597,000 barrels of crude per day during the week ending December 6th, 201,000 fewer 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 average of 90,000 barrels of oil per day were being added to 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 and from oilfield production was 399,000 barrels per day less than what was added to storage plus what our oil refineries reported they used during the account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA inserted a (+399,000) 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", thus suggesting an error or errors of that magnitude in the oil supply & demand figures we just 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 6,259,000 barrels per day last week, still 17.4% less than the 7,582,000 barrel per day average that we were importing over the same four-week period last year....the 90,000 barrel per day net addition our total crude inventories ​was due to a 118,000 barrel per day addition to our commercially available stocks of crude oil, which was slightly offset by a withdrawal of 28,000 barrels per day from our Strategic Petroleum Reserve......this week's crude oil production was reported to be 100,000 barrels per day lower at 12,800,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was ​1​00,000 barrels per day lower at 12,300,000 barrels per day, while a 8,000 barrel per day decrease to 480,000 barrels per day in Alaska's oil production was not large enough to impact the final rounded total...last year's US crude oil production for the week ending December 7th was rounded to 11,600,000 barrels per day, so this reporting week's rounded oil production figure was 10.3% above that of a year ago, and 51.9% 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 90.6% of their capacity in using 16,597,000 barrels of crude per day during the week ending December 6th, down from 91.9% of capacity the prior week, and well below the ​recent normal for the first week of a result, the 16,597,000 barrels per day of oil that were refined this week was 4.8% below the 17,436,000 barrels of crude per day that were being processed during the week ending December 7th, 2018, when US refineries were operating at 95.1% of capacity....

with the decrease in the amount of oil being refined, gasoline output from our refineries was ​also lower, decreasing by 188,000 barrels per day to 9,753,000 barrels per day during the week ending December 6th, after our refineries' gasoline output had decreased by 114,000 barrels per day the prior week....and with this week's decrease in gasoline output, our gasoline production was 6.7% lower than the 10,457,000 barrels of gasoline that were being produced daily over the same week of last the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 35,000 barrels per day to 5,228,000 barrels per day, after our distillates output had increased by 188,000 barrels per day over the prior week...likewise, after this week's decrease in distillates output, our distillates' production for the week was 5.7% below the 5,545,000 barrels of distillates per day that were being produced during the week ending December 7th, 2018....

however, even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week increased for the 5th time in eleven weeks and for the 11th time in 25 weeks, rising by 5,405,000 barrels to 234,768,000 barrels during the week to December 6th, after our gasoline supplies had increased by 3,385,000 barrels over the prior week....our gasoline supplies increased by more this week because our imports of gasoline rose by 180,000 barrels per day to 579,000 barrels per day while our exports of gasoline rose by 43,000 barrels per day to 916,000 barrels per day, and because the amount of gasoline supplied to US markets decreased by 150,000 barrels per day to 8,882,000 barrels per day....after this week's increase, our gasoline supplies were 2.8% higher than last December 7th's inventory level of 228,337,000 barrels, while ​they rose to roughly 5% above the five year average of our gasoline supplies for this time of the year...

likewise, even with the decrease in our distillates production, our supplies of distillate fuels rose for the 3rd time in 12 weeks and for 13th time in the past 37 weeks, increasing by 4,118,000 barrels to 123,587,000 barrels during the week ending December 6th, after our distillates supplies had increased by 3,063,000 barrels over the prior week...our distillates supplies rose more this week because our exports of distillates fell by 341,000 barrels per day to 1,071,000 barrels per day while our imports of distillates rose by 19,000 barrels per day to 162,000 barrels per day, while the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 175,000 barrels per day to 3,731,000 barrels per day....but even after this week's inventory increase, our distillate supplies were still 0.4% lower than the 124,137,000 barrels of distillates that we had stored on December 7th, 2018, even as they rose to 9% below the five year average of distillates stocks for this time of the year...

finally, this week's big jump in oil imports, combined with the slump in​ our​ oil refining, meant our commercial supplies of crude oil in storage rose for the thirteenth time in twenty-six weeks and for the twenty-eighth time in 46 weeks, increasing by 822,000 barrels, from 447,096,000 barrels on November 29th to 447,918,000 barrels on December 6th...after that ​relatively ​small increase, our crude oil inventories remained roughly 3% above the five-year average of crude oil supplies for this time of year, and 34% higher than the prior 5 year (2009 - 2013) average of crude oil stocks at the end of November, 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 over this year up until July, after generally falling until then through most of the prior year and a half, our oil supplies as of December 6th were still 1.3% above the 441,954,000 barrels of oil we had stored on December 7th of 2018, and 1.1% above the 442,986,000 barrels of oil that we had in storage on December 8th of 2017, but at the same time were 7.3% below the 483,193,000 barrels of oil we had in commercial storage on December 9th of 2016...     

OPEC's Monthly Oil Market Report

Wednesday of this past week saw the release of OPEC's December Oil Market Report, which covers OPEC & global oil data for November, and hence it gives us a snapshot of ​the ​global oil supply & demand ​situation just before the December 6th OPEC meeting, when total production cuts of up to 2.1 million barrels per day, or more than 2% of global supply, were announced...but as we'll see, this report shows there was already a shortfall of more than 1% in the amount of oil produced globally in November, even ​though it was less than the large shortfalls seen in October and ​during this summer...

the first table from this monthly report that we'll look at is from the page numbered 58 of that report (pdf page 70), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thus avert any potential disputes that could arise if each member reported their own figures...

November 2019 OPEC crude output via secondary sources

as we can see from the above table of oil production data, OPEC's oil output fell by 193,000 barrels per day to 29,551,000 barrels per day in November, from their revised October production total of 29,744,000 barrels per day...however that October output figure was originally reported as 29,650,000 barrels per day, which means that OPEC's October production was revised 94,000 barrels per day higher, and hence November's production was, in effect, a 287,000 barrel per day decrease from the previously reported OPEC production figures (for your reference, here is the table of the official October OPEC output figures as reported a month ago, before this month's revisions)...

​from this table, ​we can also see that a 151,000 barrel per day decrease in production by the Saudis, a 75,000 barrel per day decrease in production by Angola, a 59,000 barrel per day decrease in production by Iraq, and a 45,000 barrel per day decrease in production by Iran were the major reasons for OPEC's November output drop, more than offsetting increases of 73,000 barrels per day in output from Ecuador and 58,000 barrels per day in output from Kuwait, while the oil output from most other OPEC members was comparatively little changed....we should also note that the 73,000 barrels per day increase in Ecuador's production was only a partial recovery of their October output decrease, when violent protests over an end to fuel subsidies reduced their production...

with this report, the Saudi's production, and production from most other OPEC members other than Iraq and Nigeria, remains below the output allocation as originally determined for each OPEC member after their December 7th, 2018 meeting, when OPEC agreed to cut 800,000 barrels per day as part of a 1.2 million barrel per day cut agreed to with Russia and other oil producers, and which were extended at their July 1st meeting a little over five months ago...this can be seen in the table of OPEC production allocations we've included below:

February 6 2019 Platts on OPEC allocations

in addition to those cuts, at their meeting with other oil producers on December 6th of this year, OPEC announced additional production cuts of 500,000 barrels per day through to March 2020 on top of those figures, a breakdown of which we have in a table from OPEC below:

OPEC additional supply cuts as of December 2019

the above table was posted on OPEC's website after their December 6th meeting, and it shows the additional production cuts each of the OPEC members and their allies among other producers are expected to make over the 3 month​ period​ beginning you see, the heaviest cuts fall on the core OPEC members of Saudi Arabia. the United Arab Emirates, Kuwait and Iraq, while embargoed Iran and Venezuela remain exempt...obviously, the table would be more meaningful if their current production, or even their expected end production, were included, but i've been unable to find a table with those important details, so we'll just have to make do switching back and forth between the two tables we have to see how each member is addition to those cuts that came out of the OPEC meeting, the Saudis voluntarily pledged to cut an additional 400,000 barrels a day than mandated by the December 6th agreement, bringing the total cut for the group to 2.1 million barrels a day, or more than 2% of global output....

the next graphic from the report that we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from December 2017 to November 2019, and it comes from page 59 (pdf page 71) of the December OPEC Monthly Oil Market Report....on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale...  

November 2019 OPEC report global oil supply

even after the 193,000 barrel per day decrease in OPEC's production from what they produced a month ago, OPEC's preliminary estimate indicates that total global oil production increased by a rounded 0.41 million barrels per day to 99.78 million barrels per day in November, and that reported increase came after October's total global output figure was revised up by 30,000 barrels per day from the 97.34 million barrels per day of global oil output that was reported a month ago, as non-OPEC oil production rose by a rounded 610,000 barrels per day in November after that revision, with higher oil production from the US, Canada, Norway, the UK, Russia, and Azerbaijan the major ​​reasons for the non-OPEC output increase in November...despite that increase in November 's output, the 99.78 million barrels of oil per day produced globally in November were still 0.86 million barrels per day, or 0.85% lower than the 100.64 million barrels of oil per day that were being produced globally in November a year ago (see the December 2018 OPEC report (online pdf) for the originally reported October 2018 details)...with this month's decrease in OPEC's output, their November oil production of 29,551,000 barrels per day fell to 29.6% of what was produced globally during the month, down from the 29.9% share ​OPEC contributed in October....OPEC's November 2018 production was reported at 32,965,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year, excluding Qatar from last year's total and new member Congo from this year's, produced 3,119,000 fewer barrels per day of oil than what they produced a year ago, when they accounted for 32.8% of global output, with a 1,166,000 barrel per day decrease in output from Saudi Arabia, a 852,000 barrel per day drop in the output from Iran, and a 440,000 barrel per day decrease in the output from Venezuela from that time more than offsetting the ​much ​small​er​ year over year production increases of 144,000 barrels per day by the United Arab Emirates, 84,000 barrels per day by Libya, and 62,000 barrels per day by Nigeria... 

even with the 410,000 barrels per day increase in global oil output that was seen during November, there was a substantial shortfall in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us...     

November 2019 OPEC report global oil demand

the table above came from page 31 of the December 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...on the "Total world" line in the fifth column, we've circled in blue the figure that's relevant for November, which is their estimate of global oil demand during the fourth quarter of 2019...

OPEC has estimated that during the 4th quarter of this year, all oil consuming regions of the globe ​are using 100.95 million barrels of oil per day, which is the same as they reported for the 4th quarter a month ago....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were only producing 99.78 million barrels per day during November, which means that there was a shortage of around 1,170,000 barrels per day in global oil production when compared to the demand estimated for the month... 

meanwhile, the upward revision of 30,000 barrels per day to September's global output that's implied in this report means that the 1,610,000 barrels per day  shortfall that we had originally figured for October based on last month's figures would now have to be revised to a deficit of 1,580,000 barrels per day...however, since there are no revisions to previous months, that means the supply deficit and surplus figures that we had figured last month will not be changed from what we had logged then...those include a deficit of 3,030,000 barrels per day for September (following the September 14th drone attack on Saudi oil infrastructure), a 1,670,000 barrels per day shortfall in August, and a 2,290,000 barrels per day shortfall in July..

looking ahead, we expect that OPEC and other oil producers will cut production come January as promised, since most of the countries committed to the largest cuts normally produce less oil in winter anyhow​,​ because their domestic demand is lower​ at that time​....while the November shortfall of 1.17 million barrels per day would lead one to believe that the oil shortage would only get worse with further cuts, that does not appear to be the case, because global wintertime demand is typically much lower than the rest of the year, which we can see in the following estimates of global oil demand for 2020:

November 2019 OPEC report global oil demand for 2020

the table above came from page 32 of the December OPEC Monthly Oil Market Report (pdf page 44), and like the prior table, it shows regional and total oil demand in millions of barrels per day for 2019 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2020 over the rest of the table...on the "Total world" line in the second column, we've circled in green the figure that's relevant to OPEC's new cuts, which is their estimate of global oil demand during the first quarter of 2020...

as you can see, OPEC is estimating that during the 1st quarter of next year, all oil consuming regions of the globe will be using 99.7​8 million barrels of oil per day, which quite coincidentally is the same amount of oil produced globally in November...hence, if November's production from non-OPEC aligned producers merely holds steady through the first quarter, the global oil shortage will be limited to just what OPEC ​and their allies ​cut...but what's more likely is that the non-OPEC producers will continue to increase their production to replace what production OPEC is foregoing...since non-OPEC production increased by 730,000 barrels per day in October, and ​by ​610,000 barrels per day in November, that suggests that if the non-OPEC production increases continue at their current pace, the global supply deficit will turn to a surplus in January, and become larger each month as the ​year progresses...

This Week's Rig Count

the US rig count was unchanged over the week ending December 13th, after falling 15 out of the 16 prior weeks, and remains down by 26.2% since the end of last year....Baker Hughes reported that the total count of rotary rigs running in the US was unchanged at a 32 month low of 799 rigs this past week, which was also down by 272 rigs from the 1071 rigs that were in use as of the December 14th report of 2018, and 1130 fewer rigs than the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began their attempt to flood the global oil market...

the number of rigs drilling for oil increased by 4 rigs to 667 oil rigs this week, which was still 206 fewer oil rigs than were running a year ago, and well below the recent high of 1609 rigs that were drilling for oil on October 10th, the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 4 rigs to 129 natural gas rigs, matching the 34 month low of three weeks ago, down by 69 gas rigs from the 198 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 September 7th, addition to those rigs drilling for oil & gas, three rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, one in Washoe County, Nevada, and one in Lake County, California, in contrast to a year ago, when there were no such "miscellaneous" rigs deployed..

offshore drilling activity in the Gulf of Mexico increased by one rig to 23 rigs this week, with the addition of a new rig in Texas waters...​as a result, the 22 rigs that are drilling in Louisiana waters and ​the ​one ​thjat ​was drilling offshore from Texas this week exactly matches the Gulf rig count of a year ago, when 22 rigs were drilling offshore from Louisiana waters and one rig was drilling in Texas waters...since there are no rigs deployed off US shores elsewhere, nor were there a year ago, the Gulf of Mexico count for both years is equal to the national total in both cases..

the count of active horizontal drilling rigs was down by 2 rigs to 693 horizontal rigs this week, which was the least horizontal rigs deployed since March 31st 2017 and hence is a new 32 month low for horizontal was also 234 fewer horizontal rigs than the 927 horizontal rigs that were in use in the US on December 14th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....meanwhile, the directional rig count was unchanged at 52 directional rigs this week, and those were down by 21 from the 73 directional rigs that were operating during the same week of last year....on the other hand, the vertical rig count was up by 2 to 54 vertical rigs this week, but those were still down by 17 from the 71 vertical rigs that were in use on December 14th of 2018...

the details on this week's changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas both tables, the first column shows the active rig count as of December 13th, the second column shows the change in the number of working rigs between last week's count (December 6th) and this week's (December 13th) count, the third column shows last week's December 6th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same 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 14th of December, 2018...  

December 13 2019 rig count summary

looking at this week's table, the obvious first question one would have is how could oil rigs be up four and natural gas rigs be down 4 when the biggest increase was the 4 natural gas rigs that were added in the Marcellus shale, which included 3 new natural gas rigs in West Virginia and one ​new ​gas rig in Pennsylvania? begin with, ​the 2 rig reduction in ​Ohio's Utica shale count masks some of th​e change, as two oil targeting rigs were added in the Utica in the basin's first oil drilling since September 2018...drilling rigs in both Belmont and Jefferson counties, normally gas producing areas, were targeting oil in the Utica shale at a depth exceeding 15,000 feet...meanwhile, 4 natural gas rigs were pulled out of the Utica at the same time...other natural gas rigs were also removed from Texas's Barnett shale, near Ft Worth, and ​from ​the Haynesville, although it's not clear exactly​ ​where, since northern Louisiana saw a rig increase and the rig count in the adjacent Texas Oil District 6 was unchanged....meanwhile, the last two natural gas rigs shut down this week were pulled from basins not tracked separately by Baker Hughes and hence they don't show up in the basin table above...

meanwhile, even though the Permian basin of western Texas and New Mexico appears to have no change, it had quite a bit of action; for starters, four rigs were added in Texas Oil District 8, or the core Permian Delaware, and another rig began operating in Texas Oil District 8A, or from the northern Permian the same time, three rigs were pulled out of Texas Oil District 7C, or the southern part of the Permian Midland, and another Permian rig was pulled out of the western Permian Delaware in New Mexico...the last Permian basin rig removal could have been the rig removed from Texas Oil District 7B, which is usually thought of as east of the main Permian play, or it could have also been pulled from New Mexico, if another rig had been started in another part of the state at the same time; not easy to tell, since we aren't provided with a breakout on New Mexico drilling...

we should also note that another rig was added in Mississippi this week, and the​ state now ha​s 5 rigs operating...that now puts their count above the 4 rigs that were operating in Mississippi a year ago, even as the rig count in that state has been quite volatile, ranging from 1 to 6 rigs over the past the same time, drilling also began in Alabama this week, the first activity in that state in 2 months, and also up from no​ rigs in the same week of a year ago..


Ohio 'Anti-Protest' Bill Could Move to House Floor - An Ohio House committee could vote today to approve so-called "anti-protest" legislation. The House Public Utilities Committee is holding its seventh hearing on Senate Bill 33, which would increase penalties for those who physically damage or tamper with critical infrastructure facilities. Randy Cunningham with the Cleveland Environmental Action Network says it is similar to legislation in other states backed by the oil and gas industry after the 2016 Dakota Access Pipeline protests. "They have applied it to virtually everything you can think of: railroads, refineries, pipelines, injection wells," says Cunningham. "The goal of it is to chill the conversation, to chill dissent." Rob Eshenbaugh with Capitol Advocates represents a group of businesses and trade groups supportive of SB 33. He contends it's needed to protect public safety. "There have been increased threats to critical infrastructure in Ohio, and the enhanced penalties in this bill (are) hopefully going to be a deterrent for any of those actions in the future," says Eshenbaugh. The Ohio Senate passed SB 33 in May by a 24 to 8 vote. Opponents argue the measure would discourage protests by making organizers or groups civilly responsible for the criminal offenses of an individual participant, with penalties up to $100,000. However, Eshenbaugh says organizations would not be held responsible for one person's rogue actions. "Organizations are only held liable under the bill if they direct or compensate someone to perform an action of intentional destruction," says Eshenbaugh. "It is not simply someone that has gone onto property if they are just at a protest." Cunningham says the measure is pitting civil rights against corporate interests. "David vs. Godzilla is what it is," says Cunningham. "It is about money vs. rights. Maybe eventually the rights win out, but right now I'll bet on the money any day. And they're wasting their time if they think they're going to keep us from protesting."

ALEC Influence in Ohio Greases Skids for Anti-Protest Bill | PR Watch - When anti-protest legislation pushed by oil, gas, and utility interests was introduced in the Ohio state Senate this year, it met a receptive audience and passed easily on a mostly party-line vote. It has since moved to the state House, where almost one-third of legislators are ALEC members, and will likely pass at the beginning of 2020. The legislation, SB 33, is modeled after an ALEC proposal, and its corporate backers are big contributors to the Republican party and legislators in Ohio.ALEC is the corporate bill mill where state legislators and corporations meet behind closed doors to write and advocate for legislation on the environment, criminal justice, health care, and most of the other domestic issues that affect us.The bill, the "Critical Infrastructure Protection Act," being pushed by ALEC around the country makes it a felony for protestors to trespass on energy company property, such as pipelines, refineries, and power plants. Prompted by the well-publicized stand-off at the Dakota Access crude oil pipeline in 2016, the industry's full-court press is working. Ten states, using ALEC's template bill, have enacted increased criminal penalties through legislation very much like SB 33.     The Center for Media and Democracy (CMD) has extensively reported on the controversy surrounding this type of legislation, including an article last month on Wisconsin's bill, signed by the new Democratic Governor, Tony Evers. According to the legislature's Office of Research and Drafting, the Ohio bill "adds a new prohibition under the offense of 'criminal trespass' that expressly prohibits a person, without privilege to do so, from knowingly entering or remaining on a 'critical infrastructure facility.'" While the offense for an individual protester is a misdemeanor - or a third-degree felony for destroying or tampering with "critical infrastructure" property - the bill would hit any organization found to be "complicit" in the violation with a fine ten times the maximum allowable fine for the protester. Roxanne Groff, a former county commissioner in Ohio and spokesperson for the Buckeye Environmental Network, testified before the Ohio Senate Judiciary Committee that, This bill was created to impose fear upon citizens who have become increasingly aware and vocal about the threats to their health, and their wellbeing as a result of the oil and gas industries’ assault on the land and people of this state by extraction of oil and gas, injection of toxic radioactive waste from this extraction and the infrastructure build outs of pipelines and gas compressor stations....

Rover Pipeline decision upheld - — The 5th District Court of Appeals has upheld the ruling of a Stark County judge who dismissed the state’s lawsuit against Rover Pipeline. The Ohio Attorney General’s Office sued Rover in November 2017, alleging environmental violations in more than a dozen counties due to sediment-laden stormwater, leaks of clay-based drilling fluid and the release of water used to pressure-test the pipeline. Common Pleas Judge Kristin G. Farmer ruled in March that the Ohio Environmental Protection Agency waived its right to regulate the pipeline’s construction under the Clean Water Act. The state had a year to act on Rover’s application seeking to discharge pollutants under the Clean Water Act, and failed to do so, the judge wrote. Instead, Ohio EPA asked Rover to resubmit its application, which was approved. In a ruling this week, a three-judge panel voted unanimously to uphold Farmer’s decision. The lawsuit had asked the court to order Rover to comply with Ohio EPA’s orders and pay a civil penalty of up to $10,000 per day for each violation, as well as reimburse the Ohio EPA and pay the cost of the court action.

Nexus, Rover seek lower valuations of pipelines Officials in Wood and Sandusky counties have been notified that the operators of natural gas pipelines have appealed to the Ohio Department of Taxation for lower valuations of the lines. Wood County auditor Matthew Oestreich said the Rover and Nexus pipelines have filed appeals to reduce the valuations to 54 percent and 62 percent respectively of their original valuation assessments set by the tax department. In Sandusky County, auditor Jerri Miller said Nexus is asking for a reduction to 62 percent of the preliminary assessment. For the counties, townships and school districts and local governments along the paths of the pipelines, the appeal process itself could cause a temporary loss of tax revenues as the pipeline companies will only be required to pay taxes on the requested lower valuations until the appeal is decided – which could take more than a year, Oestreich said. If either company loses its appeal, it will be billed the difference plus interest for the time they paid taxes on the appeal value. “I hope the department of taxation adheres close to the original value their formula calculated on these pipelines. I would like to see the department of taxation protecting the local tax base and not siding with an out-of-state company poised to make billions,” Oestreich said. In October, the state tax department informed the Sandusky County auditor that the preliminary tax assessment for the section of the Nexus pipeline in the county was $257.1 million. A 38 percent reduction would lower that valuation by about $99 million to $158.2 million. The affected taxing districts in the county and the preliminary assessed valuation of the pipeline in their jurisdictions are: Rice Twp. /Fremont schools - $3.1 million; Riley Twp. /Fremont schools - $31.5 million; Riley Twp. /Clyde schools - $2 million; Sandusky Twp. /Fremont schools - $32 million; Townsend Twp. / Margaretta schools - $106 million; Washington Twp. / Fremont schools - $16 million; Washington Twp. /Gibsonburg schools - $17.4 million and Woodville Twp./Woodmore schools - $48 million.

Windfall from Rover, NEXUS pipelines likely to be far less than what was expected | Toledo Blade Two major natural gas pipeline systems built across Ohio in response to America’s fracking boom could generate far less tax revenue than promised for area schools, townships, parks, senior centers, and other services. Owners of both the Rover and NEXUS pipeline systems have filed separate requests with the Ohio Department of Taxation to have the values of their respective pipelines lowered significantly. Values vary from county to county and are ultimately determined by the state. But, in many cases, those two pipeline owners are hoping to get the values of their assets reduced about 50 percent and 30 percent, respectively. Department spokesman Gary Gudmundson said he could not provide exact figures because “taxpayer information is confidential by law.” The lengthy appeal process creates more uncertainty among cash-strapped local school districts that were depending on those taxes as a new source of income to help stabilize their finances, county auditors said. Some may have no choice but to seek higher property tax levies from voters to offset the difference between the dollars they expected from the pipelines and the dollars they’ll get. Valuations are what auditors use as a basis for charging property taxes. Pipeline companies can, by law, seek to have them lowered annually. Requests for the next taxing year were due by Dec. 6. Rover pipeline owner Dallas-based Energy Transfer LP and NEXUS pipeline co-owners DTE Energy and Enbridge, Inc., all exercised that option before the deadline. While the companies are within their rights to seek lower valuations on their assets and, thus, save on their property taxes, the process makes it especially hard on school districts — the units of government often most dependent on the windfalls — to plan ahead, said Mike Kovack, former president of the County Auditors’ Association of Ohio. Appeals typically take months. The state taxation department does not have to choose between the original valuations it sets itself and much lower figures the companies want. The agency can settle on a number somewhere in between, Mr. Kovack said. Either way it’s hard for school districts to plan if they’re counting heavily on those pipeline property taxes, he said.

Public Employees Retirement System of Ohio Raises Holdings in Chevron Co. - Public Employees Retirement System of Ohio lifted its position in Chevron Co. (NYSE:CVX) by 0.4% during the third quarter, according to the company in its most recent Form 13F filing with the Securities and Exchange Commission. The institutional investor owned 1,225,830 shares of the oil and gas company’s stock after buying an additional 4,604 shares during the quarter. Chevron makes up approximately 0.8% of Public Employees Retirement System of Ohio’s portfolio, making the stock its 21st biggest holding. Public Employees Retirement System of Ohio owned approximately 0.06% of Chevron worth $145,383,000 at the end of the most recent reporting period.

Public Employees Retirement System of Ohio Purchases New Holdings in Antero Midstream Corp - Public Employees Retirement System of Ohio purchased a new stake in Antero Midstream Corp during the 3rd quarter, Holdings reports. The fund purchased 58,643 shares of the pipeline company’s stock, valued at approximately $434,000. Antero Midstream Corporation owns and operates midstream energy assets servicing rich gas production in North America. It owns and operates an integrated system of natural gas gathering pipelines, compression stations, processing and fractionation plants, and water handling and treatment assets in the Marcellus Shale and Utica Shale basins.

Public Employees Retirement System of Ohio Grows Position in SemGroup Corp - Public Employees Retirement System of Ohio boosted its holdings in shares of SemGroup Corp by 28.0% during the third quarter, according to the company in its most recent disclosure with the Securities & Exchange Commission. The institutional investor owned 8,922 shares of the pipeline company’s stock after purchasing an additional 1,953 shares during the quarter. Public Employees Retirement System of Ohio’s holdings in SemGroup were worth $146,000 as of its most recent SEC filing. SemGroup Corporation provides gathering, transportation, storage, distribution, marketing, and other midstream services for producers, refiners of petroleum products, and other market participants. The company operates in three segments: U.S. Liquids, U.S. Gas, and Canada. The U.S. Liquids segment operates crude oil pipelines, truck transportation, storage, terminals, and marketing businesses; stores, blends, and transports refinery products and refinery feedstock through pipeline, barge, rail, truck, and ship; and operates a residual fuel oil storage terminal in the U.S.

Public Employees Retirement System of Ohio Acquires 5225 Shares of Kinder Morgan Inc - Public Employees Retirement System of Ohio raised its holdings in shares of Kinder Morgan Inc (NYSE:KMI) by 0.4% in the third quarter, according to its most recent 13F filing with the Securities and Exchange Commission. The institutional investor owned 1,232,122 shares of the pipeline company’s stock after purchasing an additional 5,225 shares during the quarter. Public Employees Retirement System of Ohio owned 0.05% of Kinder Morgan worth $25,394,000 as of its most recent SEC filing.The company operates through Natural Gas Pipelines, Products Pipelines, Terminals, and CO2 segments. The Natural Gas Pipelines segment owns and operates interstate and intrastate natural gas pipeline and storage systems; natural gas and crude oil gathering systems, and natural gas processing and treating facilities; natural gas liquids (NGL) fractionation facilities and transportation systems; and liquefied natural gas facilities.

“Government Failed You” — Pittsburgh State Rep. Drafts Bill to Stop Radioactive Fracking Waste (TENORM) From Entering Public Waters -  Pittsburgh’s Freshman State Representative Sara Innamorato is drafting a bill to regulate TENORM (Technically Enhanced Radioactive Material) from fracking waste in response to Public Herald’s leachate investigation.​ ​Innamorato’s effort would take on a regulatory loophole described in Public Herald’s August 2019 report that allows radioactive fracking waste dumped at landfills to be sent as leachate to sewage treatment plants and discharged to public waters. Fracking waste contains high levels of radionuclides known as TENORM which are water soluble and end up in the landfill leachate, but are unregulated and cannot be treated or removed by sewage plants.​  ​Rep. Innamorato told Public Herald that there’s still a lot of work to be done before this effort becomes a bill. But she’s confident her office will produce something with “teeth.” As Public Herald reported, not only is this a reality for at least 15 sewage facilities in Pennsylvania; states like Ohio, New York, North Dakota, West Virginia, and more are playing a part. Any landfill that accepts fracking waste and discharges leachate to sewage plants would undergo the same pollution to waterways. Where and how this is all happening is best illustrated in the Public Herald interactive map “How Radioactive Fracking Waste Gets Into Pennsylvania Waterways” — produced with FracTracker Alliance. Click on the map to view the details. The waste is moving into new areas. Montana’s Department of Environmental Quality (DEQ) came under fire this month for working to change TENORM regulations at landfills in order to accept waste from North Dakota’s Bakken Shale. It’s unclear as of yet where these landfills in Montana will send their leachate.​  ​In Pennsylvania, the Department of Environmental Protection (DEP) released a cradle-to-grave TENORM study in 2016 that found radionuclides throughout the life cycle of fracking waste. But these findings were successfully buried, as news organizations and NGOs alike echoed DEP’s 2015 press release: “DEP Study Shows There is Little Potential for Radiation Exposure from Oil and Gas Development.”Public Herald analyzed the study and found the Department excluded serious environmental health and safety discoveries in public statements. If DEP’s own records are correct, current amounts being discharged to waters of the commonwealth far exceed pollution levels of concern established by the EPA. Each landfill DEP tested in the study who accepted TENORM from fracking detected radiation in their leachate. In one location Radium-226 was measured in leachate at 378 pCi/L — the safe drinking water level set by the EPA is 5pCi/L. With a half-life of 1600 years, the legacy of radium from fracking will create exposure pathways for centuries in public water sediment if treated by sewage plants.

Is shale development worth the costs? A CMU study says no.   Although the massive shale gas build-out in the Appalachian Basin has produced significant economic benefits, a new Carnegie Mellon University study says all the drilling, fracking and cracking isn’t worth the environmental, health and climate damage. The study estimates air pollution from shale gas development activities in Pennsylvania, Ohio and West Virginia from 2004 to 2016 resulted in 1,200 to 4,600 premature deaths in the region, and while most of the added employment occurred in rural areas, most of the health impacts were felt in urban areas. Advocacy groups on either side of the issue reacted to the study with a mix of skepticism and praise. The Marcellus Shale Coalition, which represents oil and gas companies, cited other studies that found little pollution impact and significant economic benefits. The Breathe Project, a coalition that includes environmental advocates, public health professionals and academics, hailed the CMU study as groundbreaking and said such a comprehensive analysis is long overdue. The study is the first to put dollar values on some of the external and cumulative costs of shale gas development, and could help better evaluate the positive and negative impacts, said Jared Cohon, former CMU president and one of the study authors. Specifically, the study looked at public health, environmental impacts and climate change in assessing the industry impact. Premature deaths had an economic toll of $23 billion, based on mid-range calculations that were the median and most likely outcomes of a wide range of potential results. according to the peer-reviewed study, which appeared in the Nov. 18 journal Nature Sustainability. Climate impacts produced mid-range costs of an additional $34 billion based on emissions from 2004 to 2016 and those will persist generations longer than gas industry jobs, the study found. The jobs and related economic benefits have an estimated mid-range value of $21 billion, based on employment calculations in counties throughout the region. Meanwhile, the study found that the cumulative impacts of natural gas development on water and air quality, ecosystem, climate, labor markets and public health “are still largely unexplored and unaccounted for in public and private decision-making.”

CMU Study Shows Natural Gas In The Region Has Brought Economic Benefits, But Also Premature Deaths | 90.5 WESA - A new study by Carnegie Mellon University finds that in Pennsylvania, Ohio, West Virginia region, the economic boost from shale gas drilling has been less than the cost of premature deaths caused by pollution from the industry.  The study, published last month in the journal Nature Sustainability, estimated that between 2004 and 2016 shale development created a regional economic boost of $21 billion, compared with $23 billion in the costs related to the 1,200 to 4,600 premature deaths linked to air pollution from the industry.  Lead author Erin Mayfield, a postdoctoral fellow at Princeton University, wanted to build on the growing body of economic, environmental and health research to create a cost-benefit analysis of the gas industry over time.  “These are largely unexplored areas, and really unaccounted for in public and private decision making,” Mayfield said.  She wanted to look at cumulative impacts, both positive and negative, of the industry. “So, who are winners and who are losers?”  “We show that the biggest employment effects are in outlying rural areas. And not surprisingly, those communities have benefited in some ways from this,” Muller said. “The natural gas extraction activity, however, where we find the greatest concentration of premature mortality from the local air pollution is in both the Pittsburgh metropolitan area and also the bigger cities to the east where that air pollution eventually flows.”The study found that 54 percent of shale related jobs were in rural areas (and an additional 31 percent in rural-urban mixed areas), while 76 percent of premature deaths associated with the gas industry occurred in urban areas.  The study looked at “job-years,” defined as a full- or part-time job over a single year, not a long term job or career, created by or related to the industry. The shale industry supported an estimated 469,000 job-years over the 12-year study period.  The peak year, 2014, meant 74,000 estimated shale related jobs in the tri-state region, but also the highest estimated premature mortality.  “For every three industry jobs in a year, someone in our region had life cut short for a year,” said Matthew Mehalik, director of the Breathe Project, a non-profit in Pittsburgh.  In statement, the Marcellus Shale Coalition president David Spigelmyer said all energy sources create impacts and tradeoffs, and “…natural gas is unquestionably enhancing our environment and air quality, boosting job creation and making American more secure.”  He also pointed to the benefits to consumers from “the availability of low-cost, affordable and clean-burning American natural gas.”

Feds Approve Plan to Ship Liquefied Natural Gas to South Jersey by Rail  --Plans to build New Jersey’s first liquefied natural gas terminal moved forward when federal regulators approved the use of trains to ship the fuel to Gibbstown on the Delaware River from Wyalusing in northeastern Pennsylvania — the first route in the nation where tr --ansportation of LNG by rail would be allowed.The U.S. Pipeline and Hazardous Materials Safety Administration published its approval on Friday of the plan by Energy Transport Solutions, a logistics subsidiary of New Fortress Energy, which wants to liquefy natural gas from the abundant reserves in Pennsylvania’s Marcellus Shale, and export it via a yet-to-be-built terminal at Gibbstown in Gloucester County.The idea of carrying the super-cooled natural gas by train about 175 miles to South Jersey was an unexpected development after earlier plans to use at least 360 truck trips a day. It is unclear whether trains would substitute for trucks or will be in addition to them.The pipeline regulator said it was satisfied that Energy Transport Solutions could safely operate the trains despite protests by environmental groups that the highly explosive liquids carried in them represent a grave risk to public safety, especially if they travel through densely populated areas like Philadelphia or Camden.“PHMSA’s technical evaluators have determined that the special permit provides an equivalent level of safety to what is required under the Hazardous Materials Regulations, and recommend that the permit be granted,” the agency said in a statement. It authorized a special permit for shipments only between the two points, in a specific type of tank car; directed the applicant to submit its plans for the quantities of LNG to be shipped, and their timing, within 90 days, and said it must prepare local emergency responders to deal with any incident involving the release of LNG. The company must comply with the conditions within an estimated 6-12-month period before the shipments begin. And in an instruction that will fuel critics’ fears of a growing volume of shipments, the agency ordered the company to say how it will handle an expected increase in the volume of LNG by rail.

Marcellus LNG “Bomb Trains” Approved for Travel thru Philadelphia to New Jersey - Environmentalists on Monday decried the federal government’s approval of permits to move liquefied natural gas (LNG) by rail from northern Pennsylvania to a new port terminal in Gibbstown, N.J., across the river from Tinicum. The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) on Friday approved a request by Energy Transport Solutions LLC to move LNG, produced from fracking Pennsylvania shale gas wells, to the Repauno Port and Rail Terminal in Greenwich Township. The special permit would allow the company to move as many as 100 rail cars of fuel a day from a plant in Wyalusing, Pa., to the marine terminal, built on the site of the former DuPont Repauno Works in New Jersey. LNG is made from natural gas that has been cooled to -260 degrees to convert it into a liquid, and would be carried in double-walled insulated tank cars specifically designed to transport cryogenic materials. The Trump administration has championed LNG exports as a means to influence international policy, but climate activists say the exports enable more fossil fuel development. Local environmental groups, including the Empower NJ coalition that opposes expansion of fossil fuel use, opposed the permits on safety and environmental grounds, and denounced the permit approval as “reckless.” So did the chairman of the U.S. House Committee on Transportation and Infrastructure, Oregon Democrat Peter DeFazio, who condemned the approval as “deeply disturbing” and “irresponsible.” The route is not prescribed, but Norfolk Southern serves the Wyalusing area, and its lines cross Philadelphia and feed traffic across the Delair Bridge, which crosses the Delaware River between Port Richmond and Pennsauken, N.J., just below the Betsy Ross Bridge. The permit could entail the use of “unit trains” that include 20 or more rail cars carrying the same product. According to PHMSA’s final environmental assessment, moving LNG by rail is more cost-efficient and has fewer environmental impacts than transporting it by truck, and “will not result in significant impacts to the human environment.”

Pipeline to move fracked gas across Pennsylvania as critics cry foul -  A subsidiary of the company responsible for the Dakota Access Pipeline has begun construction on a pipeline that will move as much as 700,000 barrels of liquid natural gas across Pennsylvania. Local groups are concerned about the project‘s safety. Just hours after Sunoco Logistics‘ two pipelines – known as the Mariner East 2 pipeline project – received permits from the Pennsylvania Department of Environmental Protection (DEP), construction crews began work on the 350-mile line system, to the Times Herald. The 20-inch Mariner East 2 and the 16-inch Mariner East 2X pipelines will move flammable natural gas fluids – including propane, butane, and ethane – extracted from the Marcellus and Utica shale wells in Ohio, Pennsylvania, and West Virginia to the Marcus Hook Industrial Complex along the Delaware River in southeast Pennsylvania. The combined initial capacity for the two lines will be 275,000 and 250,000 barrels of liquid per day, respectively. The capacity of the larger Mariner East 2 could reach 450,000 barrels per day, according to reports. The Mariner East 2 project will use the horizontal directional drilling technique to install piping between 20 and 180 feet underground, according to the the Times Herald. The project‘s path will cross more than 2,000 streams, wetlands, paved roads and railways across Pennsylvania, the Tribune-Review . In response to the project, which has been in the works for roughly two and a half year, ecological advocacy groups have pushed the state to hold Sunoco to a rigorous standard of environmental stewardship, but to no avail, they have . Prior to the state DEP‘s final approval of the Mariner East 2 project, environmental advocacy groups had appealed the issuance of permits, saying the DEP had failed to consider the negative effects of the pipelines. The groups – including the Clean Air Council, the Mountain Watershed Association and the Delaware River Waterkeeper – said citizens along the Mariner East 2 route have flagged “additional discrepancies” in Sunoco‘s latest permit requests, and that the company‘s applications are “both incomplete and full of critical errors.” Environmental advocates are demanding an immediate stop to construction and are calling for a reevaluation, if not a wholesale rejection, of Sunoco‘s latest permit application.

Chevron to take $10bn write down on shale gas glut - Chevron has put shale gasfields up for sale in the prolific US Appalachian region as it plans to write down more than $10bn from these and other businesses, underlining how persistently low natural gas prices have stung big producers. The oil major holds hundreds of thousands of net acres in the Marcellus and Utica shale regions running through the Appalachian states of Pennsylvania, West Virginia and eastern Ohio. Gas production from Appalachia has climbed 18-fold in the last decade to almost 34bn cubic feet per day, according to the US Energy Information Administration. The booming supply has kept gas prices stubbornly cheap at about $2.50 per million British thermal units, the lowest 20 years. Chevron acquired its Appalachian assets when it purchased Atlas Energy for $5.5bn in 2011. In 2018 it produced 240m cu ft/d from the region. Late Tuesday Chevron said it was evaluating alternatives including divestment of its Appalachian shale assets as well as international projects and Kitimat LNG, a liquefied natural gas export project in Canada in which it holds a stake. It also took an impairment charge on Big Foot, an offshore oil project in the Gulf of Mexico. The writedowns combined will trigger impairment charges of $10bn-$11bn in the fourth quarter, more than half of them related to Appalachia, Chevron said. Strong gas production has led to a race to built terminals capable of liquefying it for export abroad. By the middle of next decade this battle for market share may lead to “material oversupply,” analysts at Tudor Pickering Holt said. Chevron said it would exit its 50 per cent interest in Kitimat LNG in British Columbia, where its partner is Woodside Petroleum of Australia. The stake “may be of higher value to another company,” Chevron said. The announcement came as Chevron announced a capital spending plan of $20bn for 2020 focused on oil-rich areas in the Permian Basin of the US south-west, deepwater projects in the US Gulf and a project at the its Tengiz oilfield in Kazakhstan.

Antero Resources plans to sell assets in Marcellus, Utica - Another big name in the Appalachian shale play plans to sell off assets in 2020. Antero Resources Corp. (NYSE: AR), a pure-play in the Marcellus and Utica with a big presence in West Virginia, announced plans to sell between $750 million and $1 billion in assets in 2020 in an effort to reduce its debt. Antero is the largest natural gas producer in West Virginia, with 547 million cubic feet of production in 2017, according to data from the West Virginia Oil and Natural Gas Association. That's more than 200 million cubic feet of production more than No. 2, EQT Corp. (NYSE: EQT). Antero has a much smaller presence in Pennsylvania, with three wells in Washington County and about 100 permits in the state, according to the 2019 Pittsburgh Business Times Book of Lists. "Antero is in the advantageous position of having a variety of options available for asset monetization," said Antero President and CFO Glen Warren in a statement. "These options include undeveloped leasehold, minerals, producing properties, an extensive hedge book and midstream ownership." Antero has 584,000 net acres in Appalachia and production of 3.4 billion cubic feet of natural gas per day, with 10.4 trillion cubic feet of producing reserves. Antero already announced it would get the asset sales started with a $100 million sale of Antero Midstream common stock to Antero Midstream (NYSE: AM), part of its $715 million stake in Antero Midstream. It also plans to cut $375 million in Antero's capital and operating budgets in 2020. And in September, Antero announced it would idle a pioneering wastewater treatment plant it built two years ago south of Morgantown, West Virginia.

Chevron plans to leave Appalachia, following the footsteps of other giants - California-based energy company Chevron Corp. is putting its Appalachian oil and gas business up for sale, the company reported this week. It has about 400 employees in the unit and a regional office in Coraopolis. Chevron controls about 890,000 acres in the Marcellus and Utica shales across Pennsylvania, West Virginia and Ohio. The Appalachian shale operations contributed to more than half of a massive impairment charge that the company revealed for the fourth quarter. That charge, which writes down the value of assets on Chevron’s books, will be between $10 billion and $11 billion, the company disclosed Tuesday. Chevron burst onto the scene in Appalachia in 2011 with a $4.3 billion acquisition of shale gas firm Atlas Energy Inc. Two years later, it paid $17 million for a stretch of land in Moon Township where the company planned to build a new regional headquarters. In 2014, those plans were put on indefinite hold and never materialized. The following year, the energy giant cut more than 150 positions from its Appalachian division as natural gas prices slumped. Still, Chevron maintained a high profile in the region, working to weave itself into its business and cultural networks. In leaving the region, Chevron follows in the footsteps of other multinationals that tried out the Marcellus and Utica shale regions but moved on in favor of other projects around the globe. Indian conglomerate Reliance Industries Ltd bought Pennsylvania Marcellus assets in 2010 only to sell them off for a third of the price in 2017. Noble Energy Inc., a Texas-based firm that also has projects in West Africa and Israel, made a bet on Appalachia with its $3.4 billion joint venture with CNX Resources in 2011. Six years later, it sold its stake in the venture and left this region. Royal Dutch Shell, the Dutch giant whose chemicals subsidiary is building a massive ethane cracker plant in Beaver County, shelled out $4.7 billion for Warrendale-based East Resources in 2010. For years now, its drilling activity in Pennsylvania has been pared down significantly after underwhelming results and asset sales.

Pennsylvania gas-fired power plant's early completion could weigh on power prices — Commercial startup Tuesday of the 1,050-MW, natural-gas fired CPV Fairview Energy Center in Pennsylvania occurred several months ahead of schedule, which could offer downside to PJM Interconnection winter power prices and marginal upside to power burn. Competitive Power Ventures and Osaka Gas developed the $1 billion power plant in Jackson Township near Johnstown, Pennsylvania, that will serve the PJM markets. CPV Fairview Energy Center and Tyr Hickory Run Energy Station totaling 2.1 GW were expected to come online in the first quarter of 2020 and are currently the only combined-cycle gas turbines expected online in 2020, according to a Monday S&P Global Platts Analytics' research note. When operating at full capacity the nameplate heat rate is below 6,500 Btu/kWh, according to Platts Analytics. This heat rate will likely ensure the plant runs at a high capacity factor, offering marginal upside to gas burns in the region and the potential to lower PENELEC zone prices. Considering the high efficiency and anticipated low gas price, Platts Analytics anticipates CPV Fairview could displace some less efficient gas in the region, but a large portion of the coal-fired generation in PENELEC runs self-scheduled at base load. "Thus, the ability for CPV Fairview to influence West Hub price outside of the PENELEC zone will largely be contingent upon how much power can be transferred to major load centers located in Eastern PJM and displace more expensive generation in these regions," Platts Analytics said.

Natural Gas Boom Fizzles as a U.S. Glut Sinks Profits - — A decade ago, natural gas was heralded as the fuel of the future. In shale fields across the country, hydraulic fracturing uncorked a lucrative new source of supply. Energy giants like Exxon Mobil and Chevron snapped up smaller companies to get in on the action, and investors poured billions of dollars into export terminals to ship gas to China and Europe. The boom has given way to a bust. A glut of cheap natural gas is wreaking havoc on the energy industry, and companies are shutting down drilling rigs, filing for bankruptcy protection and slashing the value of shale fields they had acquired in recent years. Chevron, the country’s second-largest oil and gas giant after Exxon, said on Tuesday that it would write down $10 billion to $11 billion in assets, mostly shale gas holdings in Appalachia and a planned liquefied natural gas export facility in Canada. The move was an energy company’s clearest acknowledgment yet that the industry has been far too optimistic about the prospects for natural gas. While cheap natural gas continues to take market share from coal in the electricity sector, supply of the fuel has far outstripped demand. As a result, once-booming gas fields in Arkansas, Louisiana and Texas have become quiet backwaters. Some analysts said the gas slump could persist for some time because the cost of wind and solar energy has tumbled in recent years, making those renewable sources of energy more attractive to power producers. Nowhere are the declining fortunes of natural gas more in evidence than in Appalachia, where the Marcellus field centered in central and western Pennsylvania was once viewed as the most promising in North America. With gas prices slashed nearly in half from a year ago, the number of drilling rigs operating in Pennsylvania has dropped to 24, from 47, over the last 12 months. EQT, one of the premier producers in the Marcellus, recently cut nearly a quarter of its work force, eliminating 196 positions. That is a far cry from the picture Chevron painted when it acquired Atlas Energy almost exactly 10 years ago for $3.2 billion, while assuming $1.1 billion in debt, cementing its foothold in southwestern Pennsylvania. At the time, George L. Kirkland, then Chevron’s vice chairman, predicted that the “strong growth potential of the asset base and its proximity to premier natural gas markets make this targeted acquisition a compelling investment.” Other energy companies have also acknowledged losses, though not to the same extent. Exxon Mobil wrote down the value of its American natural gas assets by $2.5 billion in recent years after buying the natural gas producer XTO Energy for more than $30 billion in 2010.

Blame Sunspots: Climate Science Denial Continues at Shale Gas Pipeline Industry Conference   Last month, 11,258 scientists from virtually every country in the world published a study on climate change, writing that they collectively declared “clearly and unequivocally that planet Earth is facing a climate emergency.” Despite this widespread scientific agreement, shale pipeline executives attending this year’s Marcellus Utica Midstream conference last week in Pittsburgh, Pennsylvania, heard a very different message on the climate.“There's a premise that has now become standard that I don't accept: the idea that we know,” Mark Mathis, president of the Clear Energy Alliance, told the gathered pipeline executives. “For a scientist, for a climatologist to say, 'we know that we're the cause,' okay, 'and the consequences are extreme' — well, we've got these giant natural factors, you know, sun spot activity, oceans, cloud formations, these are all extraordinarily complex things, okay?”“There's a lot that we don't understand,” Mathis continued. “We're just now trying to get our finger on it.” It’s a mantra that’s been heard for decades from fossil fuel advocates — but it’s worn increasingly thin as the world comes to grips with the political and scientific reality of the ongoing climate crisis. The United Nations warned in March that the world has “only 11 years left to prevent irreversible damage from climate change.” At the December 3–5 pipeline conference, Mathis called for more study, and falsely claimed that the science does not back up the notion that fossil fuel–burning has caused climate change. For the record, the science does in fact back up the notion that people — mainly by burning fossil fuels — are causing the climate to rapidly warm. Climate scientists have carefully examined the role of the sun and sunspots in climate change, as Marshall Shepherd, director of the University of Georgia’s Atmospheric Sciences Program and former president of the American Meteorological Society, explains in detail in Forbes. The short version: Scientists have measured the amount of the sun’s energy arriving at the top of our atmosphere since 1978 and have found no rising trend. In fact, a study released the same day that Mathis spoke at the Marcellus Utica Midstream conference found that climate models have proved to be remarkably on point. Even some of the earlier climate models going back to the 1970s, which have been refined and updated in significant ways since, accurately predicted the warming that we’ve seen in the past 40 to 50 years.

New U.S. Energy Secretary Slams NY for Blocking Gas Pipelines (Reuters) - New U.S. Energy Secretary Dan Brouillette slammed New York state regulators on Thursday for blocking pipelines that would bring natural gas from Appalachia to New England, but did not specify whether the Trump administration could do anything to push the projects forward. "Certain bad actors are trying to slow job creators and decrease the benefits for consumers," said Brouillette, who succeeds former secretary Rick Perry, a figure in the House of Representatives' impeachment probe who stepped down amid questions about his role in Ukraine. Brouillette said the government must deal with what he called threats to energy delivery. "Due to one state’s extremist policies the entire New England region is cut off from receiving cheaper American natural gas," said Brouilette, who was sworn in by President Donald Trump on Wednesday. Brouillette praised the gas industry which has seen prices pushed toward a 25-year low as it is produced as a byproduct of the shale oil boom. The glut threatens to force energy companies to write off billions of dollars worth of assets. New York State has blocked the construction of several pipelines that would transport fracked natural gas from the Marcellus shale in Pennsylvania to New England, including Williams Cos Inc's Constitution and Northeast Supply Enhancement and National Fuel Gas Co's Northern Access. During an extreme cold spell early last year, a tanker of liquefied natural gas, or LNG, arrived in the Boston Harbor from a sanctioned facility in the Russian Arctic. The Trump administration blamed the need to import this LNG on New York's policy on the pipelines. The Federal Energy Regulatory Commission (FERC), an independent agency of the Energy Department that oversees pipeline construction, has been battling New York for years on permitting for Northern Access. State regulators have denied that pipeline and others on environmental grounds.

6 more protesters arrested at Weymouth compressor site - — Six people were arrested near the base of the Fore River Bridge on Wednesday as protesters again tried to stop crews from preparing for the construction of a 7,700-horsepower natural gas compressor station fiercely opposed by nearby residents and elected officials. The protests at the edge of the Fore River are escalating as compressor opponents find themselves with fewer legal and political avenues for stopping a project that they say will vent toxic gases into nearby neighborhoods and put the entire region at risk. Last week, as crews were starting to prepare the site, four protesters were arrested, though none were charged. Want news like this sent straight to your inbox? Head over to to sign up for alerts and make sure you never miss a thing. You pick the news you want, we deliver. The protesters arrested Wednesday were Kiki Fluhr, of Weymouth; Andrea Cuetara, of West Roxbury; the Rev. Betsy Sower, of Weymouth; the Rev. Michelle Walsh, of Quincy; Sue Donaldson, of Cambridge; and Carolyn Barthel, of Mendon. They were charged with trespassing and disturbing the peace, but the Norfolk County district attorney’s office asked to have criminal charges reduced to civil infractions in Quincy District Court. The six women were then released from custody and met by supporters who had brought snacks. “I expect there will be ongoing protest at the site,” the Rev. Sower said after her release.

Report finds Vermont Gas pipeline is 'generally' in compliance – – An independent investigator hired by the state found the Addison County natural gas pipeline to be “generally” in compliance with state and federal requirements with a few exceptions. In a report filed Wednesday with the state Public Utility Commission, the investigator confirmed that construction plans for the Addison County natural gas pipeline were not stamped by a professional engineer and that parts of the pipeline under a swamp were not buried as far as required. But the report also says that Vermont Gas “was diligent in their efforts” to comply with state regulators and federal safety regulations, often exceeding those standards.  Three months after the pipeline was completed in April 2017, the state Public Utility Commission began looking into claims that the pipeline was not buried deep enough. The state’s Agency of Natural Resources and Department of Public Service requested last year to expand the investigation into pipeline construction methods and operation.James Dumont, an attorney representing five Monkton and Hinesburg residents who oppose the pipeline, filed a motion in November 2018 to expand the investigation further to assess whether a professional engineer had signed off on the pipeline construction plans.The $165 million pipeline runs 41 miles from Colchester to Middlebury, where natural gas is injected into the company’s smaller, low-pressure distribution lines and carried to customers. The exhaustive report is a critical component for the PUC’s decision, but the investigation is far from over.

They Built a Life in the Shadow of Industrial Tank Farms. Now, They’re Fighting for Answers. The seventh in an ongoing first-person series by InsideClimate News reporter Sabrina Shankman about the growing fears of residents in South Portland, Maine, as they try to solve a mystery: Are the fumes emanating from the storage tanks of the nation's easternmost oil port harming their kids? The Falatkos spent 14 years renovating their South Portland home to feel just so, with a free library box out front and bird feeders along the side. With four kids, ages 9 to 16, they don't plan on going anywhere—even knowing what they know now. Their idyllic home is in a neighborhood that is sandwiched between two petroleum tank farms, each less than a quarter-mile from their doorstep. The tanks have been there far longer than the Falatkos, but they only recently learned—along with the rest of the city—that some of them were emitting far more dangerous chemicals than their permits allow. These chemicals, called volatile organic compounds, are at the root of a smell that can permeate South Portland. When the air is especially bad, people complain of headaches and say the air stings their noses. Some VOCs, like benzene, are known carcinogens and can contribute to respiratory illness. Others, like naphthalene, can also have neurological impacts. Since the state began monitoring South Portland's air this summer, both have been found at times at elevated levels. When the Falatkos tested their air with state-issued canisters, the samples were among the most alarming gathered in the 12-week study. Now, five monitors are scattered across the city, sampling the air for 24 hours every six days. The Falatkos and other concerned residents worry that the 24-hour monitors are located too far from the tanks to accurately measure their emissions. Many of these people were unknowingly breathing the tank fumes for years. Now that they know that some tanks were in violation of the Clean Air Act, they don't want to waste another minute. At the City Council meeting that night, Maine's state toxicologist would be offering the first insight into the potential health implications of an emissions problem that had, in many ways, rocked the Falatkos' world since the city first learned about it in March.

W.Va. AG Morrisey Files Amicus Brief Urging Supreme Court To Overturn ACP Ruling - A group of 18 states, led by West Virginia Attorney General Patrick Morrisey, is urging the U.S. Supreme Court to overturn a lower court ruling that blocked construction of the Atlantic Coast Pipeline under the Appalachian Trail.  In an amicus brief filed Monday, Morrisey argued if a December 2018 decision by the 4th U.S. Circuit Court of Appeals is upheld, the 1,000 miles of federal land along the Appalachian Trail would become off limits to this and other natural gas pipelines and into “a near-impenetrable barrier to energy development.” Last December, the 4th U.S. Circuit Court of Appeals ruled the U.S. Forest Service should not have granted the 600-mile natural gas pipeline a permit to cross under national forest lands, including the Appalachian Trail.  Judge Stephanie Thacker cited Dr. Suess’ “The Lorax” in the opinion and said the agency failed to examine environmental impacts of the project when it issued the approval.  “We trust the United States Forest Service to 'speak for the trees, for the trees have no tongues,'" Thacker wrote. "A thorough review of the record leads to the necessary conclusion that the Forest Service abdicated its responsibility to preserve national forest resources." The court threw out the pipeline’s right of way for the Appalachian Trail and found that the Forest Service does not have the authority to grant the Atlantic Coast Pipeline approval to cross under it.  The ruling could have big impacts for the Atlantic Coast Pipeline’s route. Pipeline developer Dominion Energy appealed the ruling to the U.S. Supreme Court. In the friend of the court brief, Morrisey and 17 other state attorneys general said, if upheld, the lower court’s ruling could turn all federal trails into barriers to energy development.Environmental groups who brought the case, including Cowpasture River Preservation Association, Sierra Club and others, argue in a brief filed with the Supreme Court that the 4th Circuit’s ruling should stand. In addition to the Atlantic Coast Pipeline’s Appalachian Trail right-of-way, other permits and issues remain unresolved before the project can resume construction.  Oral arguments in the case are set for Feb. 24, 2020.

DEQ: New law won’t slow pipeline project - Amid concerns about the proposed Atlantic Coast pipeline, Virginia lawmakers last year approved a more thorough approval process for natural gas pipelines. But according to state officials, the new law won’t apply to the 7.7-mile expansion of an existing pipeline proposed in Fauquier and Prince William counties because of the timing of the law.  The application for the Williams Partners Southeastern Trail expansion project was filed April 11, 2018 – about three months before the new law went into effect on July 1, 2018 – meaning the new rules won’t apply, according to the Virginia Department of Environmental Quality.  “Since the application was submitted prior to the effective date of the statute, neither a Virginia Water Protection permit or an upland 401 water quality certification is required,” said DEQ Director David Paylor in a Nov. 25 letter to the Fauquier Board of County Supervisors. The law requires that new natural gas pipelines greater than 36 inches in diameter receive a state water protection permit and additional water quality certifications, including an individual review of each proposed water-body crossing.The proposed 7.7 mile “Manassas Loop” pipeline is 42 inches in diameter and will cross 20 water bodies in Fauquier and Prince William counties, according to the Federal Energy Regulatory Commission’s environmental assessment of the project. The local area affected by the natural gas pipeline expansion. The green boxes show existing transcontinental compressor stations. Existing transcontinental pipelines are shown in blue. The red line marked with a 1 shows a new section dubbed the "Manassas Loop." Fauquier Board Chairman Chris Butler said the DEQ’s response is not reasonable, and that the project should go through the permitting process just as it would for any other natural gas pipeline project.  “I think anyone undertaking such a project should have to go through the same process as any other. Stormwater management is a huge issue, as well as disturbance of agricultural land,” Butler, R-Lee, said in an email. “We want to process to be fair to and for everyone.”

North Carolinians battle the $7.5-billion Atlantic Coast Pipeline | Grist – short documentary - Residents living in the rural parts of Eastern North Carolina are no stranger to environmental hazards. Various industries have pinpointed the region — where the environmental justice movement was born — for projects, such as coal ash dumps, liquid fertilizer plants, and concentrated hog farms. Local grassroots activists have fought off many of these efforts. The latest threat?The proposed 600-mile Atlantic Coast Pipeline, which is slated to carry natural gas from West Virginia to near the North Carolina/South Carolina border.

The U.S. Dominates New Oil And Gas Production – Forbes - The American fracking for oil and natural gas boom will continue on through the 2020s. And why not? Since fracking took off in 2008, we have more than doubled our proven oil reserves to ~65 billion barrels. Natural gas reserves have surged over 80% to ~430 trillion cubic feet. Already the largest oil and gas producer, the U.S. is set to increase its share of ~17% of global oil production and ~23% of gas. In the 2020s, the U.S. is set to supply over 60% of new oil and gas (see Figure below).This is according to experts at Rystad Energy, “an independent energy consulting services and business intelligence data firm” based in Norway. Rystad says the U.S. shale industry will continue to mount production even if prices drop. The reality is that oil and gas companies already have. Oil prices have been sliced in half since the triple-digits seen in mid-2014, yet U.S. crude oil production has still jumped over 50% to nearly 13 million b/d. For 2019 alone, the weekly oil rig count has plummeted 25% to 663 rigs as of Friday, yet weekly output has risen another 1.2 million b/d. Natural gas prices have fallen 17% this year and gas rigs are down 34%, yet gas U.S. output has still risen over 10%.As companies focus on “cash flow discipline and free cash flow generation,” Rystad says that even with an 11% reduction in shale oil investments next year, U.S. tight oil production alone will be closing in on 11 million b/d by 2022, up from 9.1 million b/d this month. This jump in shale output comes even as WTI prices fall to $54 in 2020 and 2021. For natural gas, although the associated gas supply coming from the Permian will help keep U.S. prices low, another 10% rise in U.S. shale gas output to above 100 Bcf/d is to be expected over the next two years. This means that we will soon be producing 50% more gas than Russia, just having passed it in 2009. Indeed, Rystad’s bullish outlook for U.S. shale is hardly alone. The Paris-based International Energy Agency reported in November that the U.S. will supply 85% of the new oil and 30% of the new gas through 2030. The current bear oil and gas market will not last forever - nothing ever does. Surviving through the pain of lower pricing, the industry has so sharpened its knife that higher prices will offer drastically easier times.

Natural Gas Rush Drives a Global Rise in Fossil Fuel Emissions - A surge in natural gas has helped drive down coal burning across the United States and Europe, but it isn't displacing other fossil fuels on a global scale. Instead, booming gas use is fueling the global growth in greenhouse gas emissions, according to a new study by researchers at Stanford University and other institutions. In fact, natural gas use is growing so fast, its carbon dioxide emissions over the past six years actually eclipsed the decline in emissions from the falling use of coal, the researchers found. Renewable energy sources such as wind and solar are also failing to cut emissions fast enough, the report says, as much of their growth has provided new energy supplies instead of displacing fossil fuels. The findings of the study, published Tuesday, support those from other recent studies that found the world is continuing to rely on fossil fuels—including coal—to meet growing energy demand, even as renewable energy sees soaring growth. "Globally, most of the new natural gas being used isn't displacing coal, it's providing new energy. That's the key interaction, and that's true for renewables even," said Rob Jackson, a professor of Earth system science at Stanford's School of Earth, Energy & Environmental Sciences and the report's lead author. "We need renewables that displace fossil fuels, not supplement them." Jackson's paper, published in the scientific journal Environmental Research Letters, is one of three included in Global Carbon Project's annual update on the global carbon budget.They show that carbon dioxide emissions from fossil fuels are expected to grow by 0.6 percent this year. That would be significantly slower than last year, when emissions grew by 2.1 percent. But it would mark the third straight year of growth, after three years of stable emissions. The assessment does not include the methane emissions released by producing and shipping fossil fuels.Each year of growth makes it harder and more expensive to meet the goals of the Paris climate agreement of limiting global warming to well below 2 degrees Celsius (3.6°F) from pre-industrial levels.

Challenges remain for bumping up Appalachian NGL demand - Appalachian Basin natural gas producers have long hoped that natural gas liquids demand growth would relieve the pain of low gas prices, but significant roadblocks remain to getting to market the bulk of NGLs produced in the basin. Appalachia's production of NGLs -- including ethane, propane and butane -- has increased significantly in recent years, along with the rise of gas production from the Marcellus and Utica shales. The US Department of Energy projects Appalachian Basin ethane production will surge to 640,000 b/d by 2025, more than 20 times 2013 levels. Historically, ethane sales in the Northeast have been dominated by contracted deals between producers and buyers, driven by the producers' need to recover the ethane in order to bring their gas to within pipeline specifications, according to S&P Global Analytics.  In the next several years, ethane demand is expected to be boosted by in-region petrochemical projects, the largest of which (and furthest along) is a steam cracker being built by Shell in Monaca, Pennsylvania. The 1.5 million mt/year plant, which will crack ethane molecules to manufacture polyethylene used in plastics manufacturing, is expected to add about 100,000 b/d of ethane demand in the region. . Another source for increased ethane demand comes from expansion of existing pipeline projects, such as the recently closed open season on the Appalachia-to-Texas (ATEX) ethane pipeline. Owner Enterprise Products Partners plans to expand the 145,000 b/d pipeline to carry 45,000 b/d of additional ethane to markets in the Gulf Coast region. There are also two pipelines that can transport ethane out of the Appalachian region to Canada, Energy Transfer Partners' Mariner West pipeline and Kinder Morgan's Utopia Pipeline, which together have an export capacity of about 100,000 b/d. A third source of NGL demand pull is expected to come from completion of Energy Transfer's Mariner East 2 and Mariner East 2x (ME 2X) pipelines. Platts Analytics projects that Mariner East 2, which is currently in service at a reduced capacity, would deliver 354,000 b/d of ethane, propane and butane to a marine export terminal at Energy Transfer's petrochemical complex in Marcus Hook, Pennsylvania.   Platts Analytics does not expect Mariner East 2 and ME 2x to have a significant impact on demand growth as the ethane volumes shipping on the Mariner East system are under long-term contracts and there isn't enough of a spot market for ethane to increase demand for volumes above what is already under contract. The story is different for heavier NGLs, specifically for propane and butane, where the upside potentially is substantial, as netbacks to producers are estimated to be 5 cents to 10 cents/gal higher for exports from Marcus Hook compared with those from the Gulf Coast.

Williams Sees Gulf Coast LNG Exports Driving Atlantic-Gulf Pipeline Expansions - Tulsa-based pipeline giant Williams is expecting robust demand growth on its Atlantic-Gulf corridor natural gas pipelines over the coming years, driven largely by liquefied natural gas (LNG) exports, executives said Thursday during the company’s analyst day in New York City.LNG exports are forecast to account for more than half of the 24.4 Bcf/d of demand growth in the United States for the 2018-2025 period, CEO Alan Armstrong said, citing forecasts from Wood Mackenzie.Gas flows to LNG facilities on the flagship Transcontinental Gas Pipeline Co. LLC (Transco) pipeline stood at about 2.25 Bcf/d as of November, up from around 0.6 Bcf/d in January 2017. Williams currently delivers about 30% of all LNG feed gas in the United States.Senior Vice President Chad Zamarin, who handles corporate strategic development, said Williams plans to seek to connect gas supply from the Haynesville Shale and Permian Basin to the Transco mainline to meet growing gas demand from LNG exporters on the Gulf Coast.Although the Permian now suffers from a lack of long-haul takeaway capacity, the economics today do not support an investment in a large-diameter, long-distance pipeline from the basin, Zamarin said. Armstrong highlighted that emerging economies will account for the overwhelming majority of energy demand growth between now and 2040, presenting an opportunity for Lower 48 LNG exporters. Williams has a backlog of 19 projects that it is actively pursuing, including eight to transport gas to LNG facilities, seven to serve industrial demand or local distribution companies, and four to transport gas to power generators.The company has $3.2 billion of expansion projects in execution in the Atlantic-Gulf corridor, COO Michael Dunn said.These projects have targeted in-service dates ranging from 2019-2023, and include theNortheast Supply Enhancement (fall 2021), Leidy South (late 2021), Regional Energy Access (4Q2023), and Gateway (4Q2019) expansion projects, which could add about 2 Bcf/d of combined capacity to serve Maryland, New Jersey, New York and Pennsylvania.Plays in the Northeast, namely the Marcellus and Utica shales, will continue to be the country’s largest suppliers of gas over the coming years, Zamarin said. He noted there is more than 10 Bcf/d of excess takeaway capacity coming out of the Northeast.

Kinder Morgan's Elba Island LNG poised for first export shipment - All eyes in the liquefied natural gas industry are on Kinder Morgan's Elba Island LNG export terminal in Georgia, where a tanker has docked and observers are waiting to see if it will leave with the facility's first export shipment. Following a two-week voyage from The Netherlands, the Greek-flagged LNG tanker Maran Gas Lindos arrived at the Savannah, Ga., LNG plant on Sunday, data from the tanker tracking website Marine Traffic shows. Kinder Morgan confirmed the arrival of a tanker at the facility but declined to comment further. Citing concerns over commercial confidentiality, Kinder Morgan's commercial partner, the European oil major Shell, also declined to comment.Despite the two companies remaining tight-lipped, observers of the liquefied natural gas industry are waiting to see if Maran Gas Lindos will leave with the facility's first export shipment. Located on an island in the Savannah River, the facility has 10 small-scale liquefied natural gas production units known as trains that, once in operation, will be able to make 2.5 million metric tons of LNG per year. Kinder Morgan began the months-long startup process at the export terminal in February. Crews have been testing the equipment by using natural gas fed to the facility via pipeline for months. The company reported that the plant started commercial service in October, but the facility has yet to send out its first export shipment.

The Disconnect Between Natural Gas - Crude Oil Pricing -- December 9, 2019 - From Rigzone, shale has "de-lined" pricing for natural gas and crude oil:The diversion between oil and gas prices came in 2008-2009. This is right when the U.S. shale oil and gas revolution took off, when the deployment of hydraulic fracturing and horizontal drilling technologies became widespread. So just looking over this century, there have really been two distinct periods for oil and gas: the “pre-shale era” (2000-2008) and the “shale era” (2009-present).   Talk about coincidental. Saturday I pointed out that crude oil is international in scope whereas natural gas is much more regional. Natural gas can be transported long distances, but like crude oil that comes at a cost, and .... well, here is Rigzone again --This is all noteworthy because both U.S. oil and gas production have boomed since 2009. Domestic crude output has risen 150 percent, with gas up 60 percent. The vital difference between these two commodities, however, is that oil is easily transportable and therefore sold on an immense international market with linked prices. For oil consuming nations, outside forces and decisions reverberate around the world. The U.S. shale oil boom is simply not able to shelter the domestic market like shale gas has. Gas remains a regional product with distinct markets: over 70 percent of the world’s oil usage is internationally traded, versus just 30 percent for gas. I also mentioned that I could not imagine the price of natural gas dropping any further. But here is Rigzone again: Looking forward, higher oil prices will generally mean lower U.S. gas prices. That is because of the Permian basin in West Texas, the largest oil field in the world. Higher prices will lead to more oil drilling and more associated gas supply. To illustrate, despite not having a single gas-directed rig in 16 months, the Permian now accounts for almost 20 percent of U.S. gas output. In the reverse, lower oil prices can lift gas prices by lowering gas production. The reality is that gas remains a secondary resource to oil, and its market is just too small to have a material impact on oil prices.

The Disconnect Between Natural Gas - Crude Oil Pricing -- Part 2 -- December 9, 2019 - Link here to part 1. I do not think it is yet widely recognized just how profound - and widespread - are the effects of the divergence of Henry Hub pricing (aka US production) and benchmarks for crude (WTI, Brent, amongst many). Focusing only upon the cost/price impacts on US LNG exports, get a load of these ...

  • Algeria is cutting back on piped gas exports to Europe 
  • Cyprus is mulling over an LNG terminal (FSRU to start) rather than commit to a short, 12 inch pipeline from the nearby Israeli gas field as the ~$5.50/mmbtu LNG price is cheaper than the ~$6/mmbtu price of the piped gas 
  • Singapore is on track to completely end its imports of piped gas from nearby Malaysian and Indonesian fields when contracts expire in 5 years as imported LNG will be substantially cheaper 
  • New, massive Siberian/China gas pipeline may not provide cheaper gas than LNG in southern regions of China due to cost of transportation 
  • Turkey was importing LNG via the world's largest FSRU rather than increasing purchases of Gazprom's piped gas as the LNG was almost 2 bucks/mmbtu cheaper.

One common thread to these developments is that historical pricing for piped gas is tied to indexed crude oil pricing.  As the US-centric Henry Hub pricing continues to maintain a surreal level of rock bottom numbers, traditional LNG or piped gas suppliers are simply getting rocked out of their boots. These players include Australia, Qatar, Algeria, Russia ... virtually any existing or emerging country looking to export natural gas. ... just as political and social factors come into play with oil revenues vis a vis domestic monetary distribution, the natural gas producers are in the same boat. With LNG module fabrication yards in China and Italy affiliated with McDermott, Fluor, BHGE, et al, cranking out ready-to-assemble components ... With small and mid scale operators plunging in with innovations at blinding speed ... It is simply incontestable to state that the global order in the energy world will see upheavals in the coming years unlike anything witnessed in years gone by.

Warmer Weekend Weather Changes Torpedo Natural Gas Prices - Natural gas prices gapped lower Sunday evening, with prompt month prices falling as low as 2.158 before rebounding somewhat, though still closed today just over 10 cents lower than back on Friday.  This also marked the lowest close of the life of the current January contract.
The reason for the leg lower? As is most often the case at this time of the year, the weather is to blame. Our "Pre-Close" update sent out to clients back on Friday highlighted this risk, taking a slightly bearish stance, despite the market having sold off considerably already at the end of last week.  The change wound up even exceeding our expectations, with both the GEFS and the ECMWF EPS showing very large warmer changes compared to the last runs the market saw back on Friday afternoon.  Today's models did bend back marginally colder, but the damage had been done, with the overall pattern over the next couple of weeks now set to average warmer than normal in key areas for natural gas consumption, as seen in our official forecast maps.  While lower prices appear to be contributing to stronger trends in the supply / demand balance, it is not enough to support the market as long as weather stays warmer.  Is this warmer change sustainable, or will this week's models gravitate back toward the colder side?

Weekly Gas Storage: Inventories Decrease by 73 Bcf - Working gas in storage was 3,518 Bcf as of Friday, December 6, 2019, according to EIA estimates. This represents a net decrease of 73 Bcf from the previous week. Stocks were 593 Bcf higher than last year at this time and 14 Bcf below the five-year average of 3,518 Bcf. At 3,518 Bcf, total working gas is within the five-year historical range. All regions except the South Central, and salt count in South Central region experienced a net decrease this week. Stocks in every region except the East, Midwest and South Central nonsalt are below the five-year average.  The Pacific region is the farthest below the five-year average, at 11.5% below the average.

US natural gas storage volume slips by 73 Bcf to 3.518 Tcf: EIA — US working natural gas volumes in underground storage dropped by 73 Bcf last week, decreasing by more than the five-year average for only the second time this heating season, while the remaining NYMEX Henry Hub winter strip made modest gains following the number's release on Thursday morning. Storage inventories fell to 3.518 Tcf for the week ended December 6, the US Energy Information Administration reported Thursday. The EIA's estimate just missed an S&P Global Platts' survey of analysts calling for a 74 Bcf draw. The survey has missed the estimate by an average of 2 Bcf over the past four weeks. The withdrawal was slightly less than the 75 Bcf pull reported during the corresponding week in 2018, but was more than the five-year average draw of 68 Bcf, according to EIA data. As a result, stocks were 593 Bcf, or 20.3%, more than the year-ago level of 2.925 Tcf and 14 Bcf, or 0.4%, less than the five-year average of 3.532 Tcf. The draw was much stronger than the 19 Bcf pull reported for the week ended November 29. During the first week of December, population-weighted temperatures across the US dropped 3 degrees. Total demand rose by 8.1 Bcf/d to average 106.7 Bcf/d, according to S&P Global Platts Analytics. Although the Henry Hub winter strip added several cents following the above-average draw, it remains below the upcoming summer strip. Henry Hub future prices for the balance of the winter dipped below the summer 2020 strip even before peak winter demand starts as supply has outpaced demand by 6.1 Bcf/d so far this winter, doing little to reduce storage inventories, according to Platts Analytics. The balance-of-winter Henry Hub strip last closed at $2.22/MMBtu. Meanwhile, the summer strip, April through October, averaged just higher at $2.23/MMBtu. Even if the US experiences unseasonably cold winter weather in January and February, it will likely not be enough to offset the storage surplus and production gains. The weight of supply will also eventually erode any premium the 2020 summer strip currently holds compared to the balance of winter 19-20 strip. An early forecast by Platts Analytics shows a net withdrawal of 92 Bcf for the week ending December 13, which is 20 Bcf less than the five-year average draw. It would flip the slight deficit to the five-year average to a surplus.

Revised Line 3 Pipeline study addresses potential impact of oil spill on Lake Superior - - A revised Environmental Impact Statement filed Monday states there would be "no risk" to Lake Superior should an oil spill happen from the proposed Line 3 Pipeline Replacement project.The Department of Commerce said it selected the crossing of the Little Otter Creek in the Lake Superior watershed for modeling in the EIS."The Little Otter Creek site was chosen because it is the location in Minnesota where a hypothetical oil release is more likely to enter the St. Louis River (with the potential to reach Lake Superior) than the other options under consideration," a letter to the Public Utilities Commission said."By design the model did not take into account any response, mitigation or cleanup efforts for 24 hours and even then, none of the simulations resulted in oil reaching Spirit Lake or entering Lake Superior even in high flow conditions," Julie Kellmner, an Enbridge spokesperson said.In June, the appeals court ruled the original EIS was inadequate because it failed to "specifically address the potential impact of an oil spill into the Lake Superior Watershed".The revised EIS states the "most significant" environmental effects of the spilled oil in Little Otter Creek would be the potential for effects on fish as concentrations of toxic components of the oil in the water column may be high for short periods of time due to entrainment and dissolution in the turbulent waters located in the rapids, as well as the overflow, of the Fond du Lac Dam. As part of the review process, the Public Utilities Commission is holding a public comment period on the 13,500 page EIS.

Fresh Line 3 review: ‘Unlikely’ any spilled oil would reach Lake Superior  - Minnesota officials have released a revised environmental review of the proposed Line 3 oil pipeline replacement, a step that will restart the regulatory approval process for the oft-delayed, controversial project. The new environmental impact statement, or EIS, completed by the Minnesota Department of Commerce, was revised to include an analysis of the impacts of a potential oil spill into the Lake Superior Basin. The addition was made after the Minnesota Court of Appeals ruled in June that the EIS needed to consider such a spill. Environmental groups and tribes had sued to try to block the project, arguing, among other things, that the project’s EIS was inadequate. The Court upheld the majority of the environmental review but sent it back to the state commerce department to update it with the additional analysis of Lake Superior. The updated review analyzes a hypothetical oil spill into Little Otter Creek near Cloquet, which eventually flows into the St. Louis River, before tumbling over rapids and waterfalls into Lake Superior. The new analysis found that even with a worst-case spill that released oil for 24 hours into the creek, “it is unlikely that any measurable amount of oil would reach Lake Superior.” Enbridge officials called the release of the revised EIS a very important step forward for the project. The spill analysis, by design, did not include any response from Enbridge or other emergency crews for a 24-hour period. “In reality,” the company said in a statement, “Enbridge crews would respond immediately and aggressively to actively address the spill and begin cleanup.” Line 3 was built in the 1960s, one of five pipelines Enbridge operates that transport oil from Alberta, across northern Minnesota, to its terminal in Superior, Wis. But the line is cracking and corroding and requires regular maintenance. Because of those integrity concerns, Enbridge has reduced the amount of oil it pumps through the pipeline to about half its original capacity. The company has proposed replacing the line with a new one, which would be able to pump nearly 400,000 barrels of additional oil per day, along a new route across northern Minnesota. Environmental and tribal groups have bitterly fought the project for years, arguing it would worsen climate change, and risk spills in sensitive lakes and rivers in northern Minnesota, including land where Native Americans retain rights to hunt, fish and gather wild rice.

Byhalia Connection pipeline would run from Memphis to Mississippi - A nearly 45-mile crude oil pipeline that would run from Memphis to Marshall County, Mississippi, is being proposed by a joint venture of Plains All American Pipeline and Valero Energy Corp. The pipeline, named the Byhalia Connection, would connect two existing crude oil pipelines: the Diamond Pipeline that supplies the Valero Memphis Refinery with crude oil and the Capline Pipeline that runs between Illinois and the Gulf Coast. The currently proposed route has the pipeline start near North Rivergate Road in South Memphis. It would then snake south into Mississippi and go east into the Hernando area. The pipeline would then cross Interstate 55 before traveling through DeSoto County and going into Marshall County, south of Collierville. Karen Rugaard, manager of communications and public affairs for Plains All American Pipeline, said the proposed route comes after months of discussions with local leaders and landowners, but added that it could change. Byhalia will hold open houses about the pipeline starting in January.

An oil spill in the Atchafalaya Basin has been contained, floating boom remains - A containment boom remains at the site of an oil leak from a barge near Butte La Rose that was reported last week. The oil leaked out of a hole in a Thyseen Petroleum barge moored in Bayou Bouillon, a tributary of the Atchafalaya River, according to the Louisiana Department of Environmental Quality. The hole spilled up to 50 barrels, or 2,100 gallons of oil. The leak was reported to authorities on Dec. 2. One dead red-eared slider turtle was collected from the spill site by the Louisiana Department of Wildlife and Fisheries. The release was secured by pumping the remaining crude oil out of the barge. Containment boom and absorbent boom were placed to contain and collect the spilled product. The oil that was thick enough to be recovered has been collected, but emulsified oil and a sheen remain. The cause of the leak is under investigation, according to the U.S. Coast Guard District 8. Enforcement action is under review, according to LDEQ spokesman Gregory Langley. Dean Wilson, executive director of the environmental group Atchafalaya Basinkeeper, flew over the site of the spill Wednesday. "I think they got it under control," he said. "There’s nothing that we can tell from the air."

Talos Energy goes on $640M buying spree in Gulf of Mexico - The Houston offshore oil and gas producer Talos Energy announced the results of a $640 million buying spree, picking up a slew of assets in the Gulf of Mexico from multiple companies backed by Riverstone Holdings and other private equity firms. Talos, which focuses on both the U.S. and Mexican sides of the Gulf, would acquire substantially all the assets of Houston portfolio companies ILX Holdings and Castex Energy, as well as additional offshore acreage from Dallas-based Venari Resources. Talos said the deals will give the company 19,000 barrels of oil equivalent per day production, as well as multiple exploration prospects. The additions give Talos 72,000 barrels of daily oil equivalent output overall. Houston-based ILX and Castex are both portfolio companies owned by New York-based Riverstone Holdings. Venari Resources is backed by the private equity firms Warburg Pincus, Kelso & Company, Temasek, and The Jordan Company. While Talos is a publicly traded company, its largest owners are Riverstone and the private equity firm Apollo Global Management. Talos plans to pay for the assets through a mix of cash, debt and the issuance of new Talos shares. The deals are expected to close in the first quarter of 2020.

U.S. allows Tellurian to start site prep work on Louisiana Driftwood LNG export plant - (Reuters) - U.S. energy regulators approved Tellurian Inc’s request to start site preparation work at its proposed $27.5 billion Driftwood liquefied natural gas (LNG) export project in Louisiana. The U.S. Federal Energy Regulatory Commission (FERC) said on Wednesday that Driftwood could start vegetation clearing and grading, demolition and removal of existing buildings, and dredging of marine berths, among other activities. “With FERC’s approval, we are doing some preliminary work on the site,” Tellurian spokeswoman Joi Lecznar said in an email on Thursday, noting “we have progressed to completing over 27% of our engineering, and we have ordered some equipment in order to prepare for construction.” Driftwood is designed to produce 27.6 million tonnes per annum (MTPA) of LNG or about 3.6 billion cubic feet per day (bcfd) of natural gas. One billion cubic feet of gas is enough to fuel about 5 million U.S. homes for a day. Tellurian has said it plans to start building the liquefaction plant in early 2020 and produce the first LNG from the facility in 2023.

Another Gulf Coast LNG Project Hits Milestone - One week after announcing a milestone on a Louisiana liquefied natural gas (LNG) export project, McDermott International, Inc. on Monday reported progress on another major liquefaction terminal project in neighboring Texas. Train 1 of the Freeport LNG project has begun commercial operation, McDermott noted in a written statement emailed to Rigzone. A joint venture of McDermott, Chiyoda International Corp. and Zachry Group constructed the train. “The past few months have brought significant accomplishments for Train 1 of the Freeport LNG project – starting with introduction of feed gas in July, first liquid in August, shipment of first cargo in September and now commercial operation,” commented Mark Coscio, McDermott’s senior vice president for North, Central and South America. “Congratulations to the joint venture project team whose commitment to safety and quality has remained strong throughout the project.” Train 1 is the first of three trains that Zachry, McDermott and Chiyoda are working on at Freeport LNG, located on Quintana Island near Freeport, Texas. According to McDermott, the Zachry-led joint venture’s project scope includes three pre-treatment trains, a liquefaction facility with three trains, a second loading berth and a 165,000-cubic-meter full-containment LNG storage tank. McDermott added that trains 2 and 3 are on track to meet previously announced schedules, with first liquid from Train 2 achieved on Dec. 6, 2019, and initial LNG production from Train 3 expected during the first quarter of 2020.

Texas Deepwater Oil Port Project Advances -Enbridge Inc. and Enterprise Products Partners L.P. have agreed to jointly develop and market a deepwater offshore crude oil export terminal capable of fully loading very large crude carrier (VLCC) vessels, Enbridge reported Monday. The companies have signed a letter of intent under which they will finalize an equity participation agreement granting Enbridge an option to purchase an ownership interest in Enterprise’s Sea Port Oil Terminal (SPOT) if SPOT receives a deepwater port license.According to a written statement from Enterprise, the U.S. Maritime Administration (MARAD) is reviewing the SPOT application and the project’s construction hinges on obtaining required approvals and licenses. Enterprise also noted the SPOT project would comprise onshore and offshore facilities including a fixed platform approximately 30 nautical miles off the Brazoria County, Texas, coast in approximately 115 feet of water. The company added that SPOT would be designed to load VLCCs at rates of approximately 85,000 barrels per hour – equating to approximately 2 million barrels per day. “This collaboration leverages our jointly owned and highly competitive Seaway system and capitalizes on each of  our capabilities to drive out highly capital efficient export infrastructure for our customers,” Enbridge President and CEO Al Monaco stated. Monaco also noted that Enbridge’s involvement in SPOT will help the company provide its North American light and heavy crude customers with access to the Houston-area refining market and growing global demand.

Natural Gas Flaring Is On The Rise And Texas Is Mostly To Blame | Texas Standard podcast - When there aren’t enough pipelines available, oil and gas companies will burn off the natural gas that comes as a byproduct of oil extraction. The practice is called “flaring,” and the U.S. Energy Information Administration reports that it’s growing nationwide. But it’s happening the most in Texas.  Matt Smith is the director of commodity research for ClipperData. He says new data shows that oil and gas companies are burning off over 1% of everything they extract from underground, and releasing it into the atmosphere. “A lot of this natural gas is … coming out of oil wells,” Smith says. “As oil production continues to rise, you’re continuing to get more natural gas, which just isn’t being captured.” What you’ll hear in this segment:

  • – Whether flaring or so-called venting is worse for the environment
  • – Why flaring is so common in Texas
  • – What can be done to reduce flaring

Texas Oil Regulator Defends Flaring, Slams Warren Frack Ban -  One of Texas’ top oil and gas regulators defended the agency’s practice of granting shale producers permits to flare natural gas and slammed proposals by Democratic presidential candidates to ban fracking. The Texas Railroad Commission, which doesn’t actually regulate train traffic, oversees the shale industry in America’s biggest oil and gas-producing state. That includes the controversial practice of flaring, by which producers burn off gas that comes up with their crude oil. The commission has recently attracted criticism for effectively approving every flaring request that comes its way. Pipeline operator Williams Cos. is now suing the agency over its decision to grant a permit to Exco Resources Inc., despite the fact that the producer has the option to connect to a Williams gas pipeline. “That’s a very unique case that we almost never see,” Ryan Sitton, a Republican commissioner at the agency, said on Bloomberg Television Thursday. “All we did was grant a permit for seven months to allow the producer to continue to flare while we try to work this out.”The Railroad Commission has granted almost 7,000 permits to flare or vent natural gas this fiscal year, the most ever and a more than 40-fold increase from a decade ago. Texas, home to the Permian Basin, accounted for just over half of total vented and flared gas in the U.S. last year, the Energy Information Administration said last week. The Texas Railroad Commission has granted almost 7,000 permits this year For more on Texas gas flaring permits, click hereSitton said Williams was asking Exco to pay rates that were “ten times” the market rate for gas pipeline capacity. “We weren’t going to force a producer to pay exorbitant rates,” he said.When asked about proposals from Democratic presidential candidates including Elizabeth Warren to ban hydraulic fracturing, the process by which shale rock is broken apart to release oil and gas, Sitton called it a “political ploy.” “The rhetoric does not match the economics,” he said. “I don’t think we’re going to see that.”

Texas on track to complete fewer oil and gas wells in 2019: regulator - (Reuters) - Texas is on track to complete fewer oil and gas wells this year, the state regulator said in a statement on Tuesday, as companies tighten spending to adjust to lower oil prices and a push from investors to focus on returns. The state’s oil and gas regulator has processed 8,629 well completions so far this year, marking nearly a 16% decline versus the same period last year, the Railroad Commission of Texas said. U.S. oil prices have hovered below $60 a barrel for most of the year, prompting many energy firms to cut staff and reduce budgets, even as major oil exporting countries have curbed production. Last week, members of the Organization of the Petroleum Exporting Countries (OPEC) and allies agreed to deepen those cuts by 500,000 bpd to 1.7 million barrels per day through March 2020. Although fewer wells have been completed in Texas this year, U.S. production has continued to surge and is expected to rise another 930,000 bpd next year to average 13.18 million bpd, the EIA said on Tuesday. That is lower than its previous growth forecast of 1 million bpd. Although the rate of U.S. crude production growth is anticipated to slow in 2020 due to a decline in drilling rigs, it is still on pace to set new records in 2019 and 2020. The EIA anticipates that decline to be offset by greater rig efficiency and well productivity, it said on Tuesday. Hydraulic fracturing companies that pump sand, water and other chemicals into the ground to help complete wells have been hard hit by lower activity. Last week, consultancy Primary Vision estimated some 50 hydraulic fracturing spreads left the Permian Basin in 2019.Leading hydraulic fracturing company Halliburton Co has had several rounds of layoffs this year across its North America business, and Pumpco Energy Services, a unit of Superior Energy Services, last week became the latest firm in the oilfield services sector to cut jobs.

Analysis: US oil, gas rig count falls by 4 to 691, Permian totals slide - The number of active US oil and gas rigs tumbled by four to 691 this week, the lowest count since March 2017, with a slowdown in the prolific Permian Basin leading the decline, data from consultants Enverus showed.The Permian lost six rigs, with totals now down 103 since last November, as operators look to tighten budgets and improve drilling efficiencies in a lower-price environment. The bulk of the decline has occurred in the Texas portion of the basin. Still, despite the steep rig falloff, production continues to set new records in the basin, with additional oil and gas growth expected in 2020.With only one month left in the year, 2019 production is forecast to grow a little over 800,000 b/d year over year. In 2020, growth is expected to continue, however, at a slightly slower rate, increasing just shy of 700,000 b/d on year. Natural gas production in the Permian is also forecast to increase from 4.3 Bcf/d in 2019 to 5 Bcf/d in 2020, according to Platts Analytics. During the last wave of quarterly earnings reports, most operators in the Permian either reiterated their existing capital spend guidance or tightened it slightly — a signal that efficiency gains are still managing to offset some of the pressures brought on by a weak price environment and lack of capital infusion. Capital and production efficiencies have proven their worth. A number of producers — including Nobel, Devon, Cimarex, Parsley Energy, Pioneer Natural Resources and Marathon Resources–have managed to not only tighten or meet their budgets, but also increase their production guidance. As with prior quarters, operators continued to budget around the $50/b mark, prioritizing free cash flow generation and increased returns to investors. Some operators, like EOG Resources, already wary about the historical volatility of commodity prices, noted if crude prices improve, they will refrain from growing their guidance further and continue to focus on existing plans. Week over week, US oil and gas fields lost a net total of four rigs from 695 to 691. The Bakken, Marcellus and SCOOP-STACK all added one rig each, while Ohio’s Utica Shale slipped by one to 13.

Oil Company Baker Hughes Commits to 100% Clean Power in Texas - Baker Hughes Co., one of the world’s largest oil-services companies, is pledging to power all its Texas operations with wind and solar. Switching to renewables at more than 170 of the Houston-based company’s facilitates in the state will eliminate 12% of its global greenhouse gas emissions, according to a statement Wednesday. While Royal Dutch Shell Plc, Total SA and other oil giants have begun taking steps to address climate change, Baker Hughes and its peers -- the hired hands of the oil patch -- have largely sat on the sidelines. Baker Hughes now aims to eliminate carbon emissions on a net basis by 2050. The move comes as clean energy has become affordable enough to compete with fossil fuels. That’s especially true in Texas, where oil production is driving up demand for power and wind is the cheapest source available. Exxon Mobil Corp. last year agreed to buy 500 megawatts of wind and solar power in Texas.

US Loses Thousands of Upstream Jobs in November -The U.S. saw a sharp decline in support activities for mining in November, according to data released Friday from the U.S. Bureau of Labor Statistics.The U.S. saw a sharp decline in support activities for mining in November, according to data released Friday from the U.S. Bureau of Labor Statistics (BLS).The BLS, which categorizes oilfield services under “support activities for mining,” reported a loss of 5,700 jobs for the month.The nation added 100 jobs in mining support activities in October, but has experienced declines every other month this year.     Additionally, jobs in oil and gas extraction declined by 800 in November after adding 300 in October.Citing a challenging market environment, several upstream companies have continued to reduce their staff, including natural gas producer Range Resources, shale and gas p roducer Gulfport Energy and frac sand supplier U.S. Silica.   

The company behind the Keystone pipeline shouldn't be allowed to run a gas station at this point --  Of all the many reasons to oppose the Keystone XL pipeline—the continent-spanning death funnel and conservative fetish object—the utter bad faith of TC, the Canadian energy giant formerly known as TransCanada, is right at the top of the list. It is a truism in this shebeen a) that pipelines leak, and b) that, when an inevitable leak happens, the companies that build and own pipelines will lie about it. What many people don’t realize is that TC already owns and operates the Keystone 1 pipeline. Last month, because it is a pipeline and pipelines leak, the Keystone 1 loosed almost 400,000 gallons of oil onto the landscape of North Dakota. And, because it is a pipeline company, TC is now accused of low-balling the extent of the damage. From CNN:Initial reports of the leak released by TC Energy and North Dakota's Department of Environmental Quality estimated about 2,500 square yards of land were affected by the spill. Now, they have both revised the size of the impacted area to 4.8 acres, or 23,232 square yards -- that's almost ten times the original estimate.The new estimate includes both the surface and subsurface impact of the leak. The initial 2,500-square-yard estimate was based on visual observations alone, the company told CNN. "During our initial response to the incident, we immediately sectioned off a larger area (approx. 25,000 square yards) around the visibly impacted section to secure the area, provide for wildlife deterrent and air monitoring purposes," a TC Energy representative told CNN in an email. Despite this initial identification of 25,000 square yards to be blocked off, TC Energy did not update their website to reflect this number until Tuesday -- after media reports of the large increase in impact estimates were released. Honest to blog, enough with these people. There is no reason in the world to allow this company to run so much as a filling station at this point, let alone allow it to build and operate a death-funnel that transports the dirtiest fossil fuel ever discovered through some of the most delicate and valuable farmland on the planet.

Well spills oil in western North Dakota after tank bolt comes off — A vibration in an oil tank apparently caused a bolt to come off and spill more than 20,000 gallons of oil in western North Dakota, the North Dakota Oil and Gas Division said. The spill happened Saturday at a well about 6 miles west of Watford City. Newfield Production Co. reported Sunday that 20,160 gallons of oil was released after an equipment failure at the location. All of the spilled oil has been recovered. The spill was contained by dikes, state Oil and Gas Division spokeswoman Katie Haarsager said. A state inspector has been to the site and will continue to monitor the cleanup and remediation.

Wison Offshore & Marine starts work on Arctic LNG 2 project - Wison Offshore & Marine has begun work on Novatek Arctic LNG 2 project at the Zhoushan yard in China. Wison Offshore & Marine said on Wednesday that the fabrication of Arctic LNG 2 project began on November 29, 2019. According to the company, the module fabrication contract was awarded by Technip France S.A., a wholly-owned subsidiary of TechnipFMC. The French company was awarded an EPC consolidated contract valued at $7.6 billion by Novatek in late July. Novatek, the largest independent natural gas producer in Russia, is the operator of the Arctic LNG 2 project. As for the project, the Arctic LNG 2 project comprises three LNG trains at 6.6 million tons per annum each. Wison’s work scope is engineering, procurement, fabrication, and commissioning of modules in train one with a total weight of 48,000 mt. The project participants include Novatek (60 percent), Total (10 percent), CNPC (10 percent), CNOOC Limited (10 percent) and the Japan Arctic LNG, consortium of Mitsui & Co and JOGMEC (10 percent). It is worth noting that with the continuous support of Novatek, TechnipFMC, Wison achieved first steel cutting ahead of schedule, which might save time and decrease costs during project execution.

Wanted: Fossil fuel whistleblowers -- Monday, December 9, 2019 -- A new campaign seeks to expose climate-related corruption at fossil fuel companies, amid a slate of court battles and media exposés about the industry's accounting of its greenhouse gas emissions and liability for climate change. The National Whistleblower Center's Climate Corruption Campaign, announced this morning, aims to educate potential whistleblowers about laws protecting them. The effort also hopes to help them lawyer up to prosecute companies for fraud, public misinformation campaigns about climate science and other wrongdoing. "Individuals working in the fossil fuel and logging industries with evidence of fraud and other law-breaking in their companies should know that there are safe ways to report crime without losing their jobs," NWC Executive Director John Kostyack said in a statement. "Our campaign will help secure for whistleblowers protections from retaliation and, where feasible, rewards for helping prosecutors win large-scale penalties." The NWC, a nonprofit whistleblower advocacy group, says it's the first sustained effort of its kind. The group has enlisted attorney Sharon Eubanks, who in the early 2000s led the federal government's successful Racketeer Influenced and Corrupt Organizations Act (RICO) enforcement case against the tobacco industry, to contribute to the whistleblower campaign. Eubanks, who recently joined NWC as chief counsel, testified before a House panel in October, when she drew comparisons between science misinformation campaigns run by Exxon Mobil Corp. and the tobacco industry (Climatewire, Oct. 24). In short, she said Exxon embarked on a decadeslong conspiracy to cast public doubt on climate science, even as its own scientists did work that confirmed the emerging scientific consensus that greenhouse gas emissions were warming the planet.

‘Major milestone’: US could become a sustained net oil exporter as soon as next year, IEA says  - The International Energy Agency (IEA) believes the U.S. is on track to become a sustained net oil exporter in either late 2020 or early 2021, after briefly achieving this “major milestone” earlier in the year. In September, the U.S. exported 89,000 barrels per day (b/d) more petroleum (crude oil and other petroleum products) than it imported, according to official data published earlier this month. The U.S. Energy Information Administration (EIA), an independent entity within the Energy Department, said this was the first time it had happened since monthly records began in 1973. A decade ago, the EIA recorded the world’s largest economy was importing 10 million b/d more petroleum than it was exporting. But, it said long-running changes in U.S. trade patterns for both crude oil and other petroleum products had resulted in a steady decline of net U.S. petroleum imports. “On a historic note, in September, the United States momentarily became a net oil exporter… This is a major milestone on its path to becoming a sustained net exporter, which is likely to be late in 2020 or early in 2021,” the IEA said in its closely-watched report published on Friday. “However, this does not mean that energy independence has been achieved: The United States remains a major crude oil importer.” Energy independence The U.S. 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, according to the EIA. But, at present, the U.S. still imports a large share of the petroleum it consumes and relies on those imports to help meet demand.

Trump Offers Hunter Biden Job In Energy Department Based On Oil Industry Experience —Touting his impressive record of serving on the board of a notable natural gas company, President Donald Trump offered Hunter Biden a job in the U.S. Department of Energy Monday based on his experience in the oil industry. “Given his unparalleled background in this sector, I am pleased to have Hunter Biden joining the Energy Department as the new Deputy Secretary for the Office of International Affairs,” said Trump, explaining that Biden’s long list of contacts with major Eastern European petroleum firms would be indispensable in promoting the administration’s interests as they pursue energy contracts abroad. “Hunter grew up in politics, so he’s primed for the job, and he came very highly recommended by several big-time energy executives. He’s a really great guy who knows how to get things done in this business. Hunter will start tomorrow, getting right to work securing the best deals possible for the American people.” At press time, Trump nominated Hunter Biden to replace a retiring Rick Perry as energy secretary at the end of the year.

CP Rail train hauling crude oil derails east of Saskatoon --A section of Highway 16 east of Saskatoon is closed after a train derailment and fire early Monday morning.Canadian Pacific Railway said the train hauling crude oil derailed west of Guernsey, Sask., at around midnight and no injuries were reported. Officials have not said how many cars were involved or how many caught fire but said there are no evacuations at this time. Truck driver Ken Popadynec drove by the crash shortly after it happened.   “The flames, like it was so thick, I couldn’t see my headlights. It was so thick.”  Melanie Loessl was woken up by firefighters knocking on her door to advise her of the derailment and warn she may have to evacuate.  She then received a call from her daughter who lives down the road and right across from where the train derailed. Loessl went to her home and watched as flames and smoke rose into the sky.“We couldn’t believe it,” she said. “We were thinking, ‘what if those other rail cars are going to blow up?'”Loessl was unable to leave her home as she was trapped behind the blockade.“The whole field across from our yard is full of trucks and campers and backhoes and bulldozers.”  CP said emergency and hazmat crews were sent to the scene to work with local first responders to minimize the impact on the surrounding area.There is no impact on any local waterways, a CP spokesperson said.  Humboldt RCMP said the highway between Guernsey and Plunkett is closed until further notice due to a lack of visibility from the fire.

1.5 million litres of crude oil spilled in Saskatchewan CP train derailment -- The Transportation Safety Board of Canada (TSB) released new details regarding the Canadian Pacific Railway train derailment near Guernsey, Sask.  The train originated in Rosyth, Alta., — right next to Hardisty, which is home to a large oil storage and terminal facility — and was destined for Oklahoma.It was heading east and travelling at about 70 kilometres per hour when it derailed just after midnight on Monday.TSB said Wednesday its preliminary examination suggests 19 of the 34 cars that derailed lost its entire load, releasing an estimated 1.5 million litres of crude oil into the ground and atmosphere.The spill became engulfed in fire, which burned for approximately 24 hours.“A more precise determination of the tank car damage and the amount of product released will be made as product is recovered and the investigation progresses,” the TSB said in a statement.It noted the findings are preliminary and subject to change. The TSB said the derailed cars included a mix of Class 117R and CPC-1232 Class 111 tank cars.   Class 117R cars are an upgraded version considered to have improved safety features over the cars that were involved in the 2013 fatal explosion and fire in Lac Megantic, Que.The TSB website says in 2015, Transport Canada announced that Class 111 tank cars (including the CPC-1232 tank cars) in flammable liquid service would be gradually phased out.No waterways appear to be affected, and no injuries were reported. The Ministry of Environment was monitoring the air quality and did not issue any advisories.Ongoing work continues as the TSB sent six investigators to the site, where they continue to examine mechanical and track components. Guernsey is roughly 115 kilometres east of Saskatoon.

Thunberg Urges NO and CA to Wind Down Production-- Greta Thunberg and 15 other youth climate activists urged Norway and Canada to wind down their oil and gas production, which they said violates children’s rights around the world. In letters to the prime ministers of both countries, the campaigners contrasted their self-professed roles as international leaders in the fight against climate change against their planned increase in fossil-fuel production, according to a statement from law firm Hausfeld LLP, which represents the petitioners. Higher output breaches commitments under the United Nations Convention on the Rights of the Child, the activists said. It’s not the first time Thunberg, 16, has gone up against Norway, which neighbors her native Sweden. In October, she criticized the Scandinavian countries’ emissions record, and cited Norway’s oil policies as one of the reasons for rejecting the Nordic Council Environment Prize. “Norway must honor its responsibilities to children everywhere,” Thunberg and the 15 other activists said in the letter to Norwegian Prime Minister Erna Solberg. “It must demonstrate how a major fossil fuels producer and exporter can transition away from these pollutants, blazing a trail for other fossil fuel-reliant economies to follow.” The same 16 petitioners, including children from Nigeria, the U.S. and the Marshall Islands, filed a legal complaint with the UN in September against France, Germany, Brazil, Argentina, and Turkey for not doing enough to tackle climate change. Their latest missives coincide with the UN’s COP25 meeting in Madrid, where Thunberg arrived last week after sailing back across the Atlantic following her trip to the UN Climate Climate Action Summit in New York in September. Norway is western Europe’s biggest oil and gas producer. After three years of decline, its crude production is set to surge next year following the start of the giant Johan Sverdrup field in the North Sea. Output will then drop again from the middle of the next decade. Canada, which has the world’s third-biggest proven oil reserves, pumped more than OPEC’s second-biggest contributor Iraq in 2018, according to BP Plc data. The North American nation’s energy regulator expects crude output to grow by almost 50% by 2040.

Mexico’s Giant Oil Find May Not Be Cure-All for Ailing Pemex - Even as Mexico’s president and Petroleos Mexicanos’s CEO touted the country’s most important find in three decades, it appears to be far from a panacea for the beleaguered state driller. Pemex called the Quesqui deposit -- which is believed to contain 500 million barrels of proven, probable and possible, or 3P reserves -- the most important discovery since 1987. Another onshore field Ixachi discovered during the previous administration was touted as the largest find in 25 years, with some 1.3 billion barrels of 3P reserves. The discovery -- of very light oil, or condensate, and natural gas -- is a welcome development for the beleaguered state driller that has experienced almost 15 years of output declines and has about $100 billion in debt, the highest of any oil company. But one analyst cautioned against over-optimism at this point. “Productivity-wise, it seems to be smaller than Ixachi,” said Pablo Medina, vice president of Welligence Energy Analytics, an energy consultant. “There hasn’t been a development plan submitted for it, so it’s too early to talk about reserves based off one single well.” The field is expected to reach 69,000 barrels a day of oil production and 300 million cubic feet of gas production next year, Pemex said in a statement on Friday. Pemex is drilling another delineation well and the volume could increase by as much as 200 million barrels, Pemex’s Chief Executive Officer Octavio Romero Oropeza said in a press conference with President Andres Manuel Lopez Obrador on Monday. Turnaround Struggle Pemex has been struggling to turn around production declines and revamp its refineries to make the country more self-sufficient, a major goal of the administration. The company said that oil output will reach 1.778 million barrels a day by the end of December, up from 1.712 million at the start of the month -- but still down by half since 2004. In June, Fitch Ratings Inc. cut Pemex’s bond rating to junk, and the company could face a fresh downgrade by another credit agency. The find could help Pemex’s credit rating by boosting reserves, according to Romero. Mexico will incorporate an additional 500 million barrels of proven reserves next year, bringing the total to 7.5 billion barrels, he said.

Public Opposition is 'Root Cause' of Fracking Failures in UK – Government Report - Industry and government blamed public opposition to fracking for the slow progress of the UK shale gas industry, according to a secret official report finally released. The document, prepared by civil servants for 10 Downing Street in 2016, was disclosed to journalists from Greenpeace’s Unearthed after a 22-month Freedom of Information campaign. It is heavily redacted. 34 of the 46 pages are completely blacked out. Only the front page has no redactions and says: “No part of this report or its appendices is to be released under the Freedom of Information Act”. But the document does reveal industry frustration at what was seen as barriers to shale gas. It is also clear that government was willing to take many steps to speed up fracking. Based on interviews with 28 representatives of industry and government, the report concluded that progress had so far been slow: “Industry and government agree that the root cause for this is the current low public acceptance of shale, which drives a set of more practical barriers”. It said public opposition was driven by “concerns re: local quality of life and safety, environmental protection, crowding out of renewables.” The document, prepared by the Implementation Unit in the Cabinet Office, looked at how these barriers could be overcome. Most of the recommendations are redacted. But those that remain indicate that government saw public acceptance as a communications issue. It acknowledged that “public acceptability concerns may remain at least until several wells fracked w/out [without] incident.”

Shell shuts unit at Pernis oil refinery after crude spill (Reuters) - Royal Dutch Shell said on Monday it had shut a unit at its Pernis oil refinery in the Netherlands after a crude spill a day earlier. Shell did not specify the unit concerned, but industry monitor Genscape said the 200,000 barrel per day (bpd) crude unit (CD6) was shut on Monday morning. Genscape said one of the furnace stacks of the cogeneration unit was also shut on Monday morning. Shell did not immediately respond to a Reuters request for comment. The refinery is Europe's largest and has a capacity to process 404,000 bpd of crude. 

As Winter Comes, Pipeline Wars Heat Up - For all of 2019, December has been a magnet. A number of major geopolitical issues come to head this month and many of them have everything to do with energy. This is the month that Russian gas giant Gazprom was due to finish production on three major pipeline projects – Nordstream 2, Turkstream and Power of Siberia. It is only Nordstream 2 that continues to lag behind because of insane levels of pressure from the United States that is dead set against this pipeline coming online. And the reason for that is the last of the major energy issues surrounding Gazprom needing resolution this month, the gas transit contract between it and Ukraine’s Naftogaz. The two gas companies have been locked in legal disputes for years, some of which center on Crimea’s decision to break away from Ukraine and rejoin Russia in 2014. Most of them, however, involve disputes over costs incurred during the previous and expiring gas transit contract.  Ukraine has sued Gazprom in courts, like in Sweden, that rule not by the tenets of contract law but rather through the lens of social justice. These have been political decisions that allowed Naftogaz to seize Gazprom’s European assets, further complicating any resolution to the conflict. These policies were pursued aggressively by former Ukrainian President and long-time US State Department asset Petro Poroshenko and they have done nothing to help Ukraine. All they have done is strip-mine the country of its assets while keeping a war to prevent the secession of the Donbass alive.  Opposition to Nordstream 2 in the US is all about leveraging influence in Ukraine and turn it into a client state hostile to Russia sharing a border with Russia. If there’s no gas transit contract and there’s no Nordstream 2 then US LNG suppliers can sell gas there and deprive Russia of the revenues and the business. It’s truly that simple. But that strategy has morphed over the years into a convoluted chess match of move/countermove in the vain hope of achieving something that looks like a victory. But this isn’t a game of real chess but rather a timed match. Because the end of 2019 was always coming. And Ukraine would eventually have to decide as to which direction it wanted to go. Moreover, that same choice was put in front of the EU who have clearly, in the end, realized that the US under President Trump is not a long-term reliable partner, but rather a bully which seeks its goals through threat and intimidation. Stay with the US or green light Nordstream 2. The choice in Europe was clear. Nordstream 2 gets finished, as Denmark finally granted the final environmental permit for its construction in October.

US to impose sanctions on companies involved in European Nord Stream 2 pipeline - The US House of Representatives adopted sanctions by a large majority on Wednesday against firms involved in the Nord Stream 2 gas pipeline. The firms and their managers are threatened with the withdrawal of their visas and the freezing of their wealth in the United States. Nord Stream 2 connects Russia directly with Germany across the Baltic Sea. From there, the gas is distributed by land to other European countries. The pipeline runs parallel to Nord Stream 1, which has been in operation since 2011, doubling its capacity from 55 billion to 110 billion cubic metres. Germany currently uses almost 90 billion cubic metres of gas per year. The Turkish Stream pipeline, which runs from southern Russia across the Black Sea to Turkey, is also impacted by the sanctions. However, the laying of that pipeline, against which the sanctions are directed, has already been completed. Nord Stream 2 is also largely complete. Over 1,000 of 1,230 kilometres of pipeline have already been laid. Half of the €10 billion cost is being covered by Russia's Gazprom, while the other half is divided among the five European companies, OMV, Wintershall Dea, Engie, Uniper, and Shell. The German government also supports the project. Both parties in the US Congress backed the sanctions, which were introduced by Republican Senator Ted Cruz and Democratic Senator Jeanne Shaheen. It was adopted by 377 votes to 48 within the framework of the $738 billion military budget, the largest in the country's history.   Trump is expected to sign it into law by the end of the year. Nord Stream 2 has long come under criticism in Eastern Europe and the United States. American politicians have accused Germany of making itself dependent on Moscow, strengthening Russian President Vladimir Putin, and weakening Ukraine, which until now has been the main transit country for Russian gas, allowing it to cash in on high transit charges and use its control of pipelines to apply political pressure. Poland and the Baltic states also oppose Nord Stream 2 because they fear Germany and Russia reaching an accommodation at their expense. The German side rejects this, claiming that Nord Stream 2 is essential for its own and Europe's energy independence. They also accuse the United States of trying to drive up gas prices so as to be able to supply Europe with expensive American liquified natural gas (LNG). The importance attached to the project by Germany is shown by the fact that former Chancellor Gerhard Schröder has served as a member of the Nord Stream supervisory board for 14 years, formally as a Gazprom representative. German political and business figures angrily denounced the sanctions and sharply criticised the United States. German Foreign Minister Heiko Maas declared that Europe's energy policy “will be decided in Europe, not in the United States. We are opposed in principle to external interventions and extraterritorial sanctions.” The head of the German-Russian Chamber of Foreign Trade (AHK), Matthias Schepp, urged the German government to take counter-measures.

Gas flaring remains issue for Russia - While the Russian government is looking for ways to fulfill the aims of the Paris Climate Accord, further support for the petrochemical industry may help tackle one of Russia’s most pressing ecological issues – flaring of gases associated with oil extraction. Associated petroleum gas (APG) is a byproduct of oil exploration. When there is no strong commercial case or enough incentives to bring the gas to market, petroleum producers simply flare it, releasing residual methane and toxins into the atmosphere. Flaring is therefore in essence an economic waste that is harmful to the environment.  Large amounts of burned gas cause major ecological harm. Visible from space, flaring produces large amounts of black carbon that can travel thousands of kilometers. Even when located far from populated areas, it still carries risks of increased rates of asthma and various respiratory problems, as well as posing threats to the environment, including accelerated ice melting due to temperature increases. Although the practice has been in decline since 2004, it is still considered routine throughout oilfields worldwide in the absence of adequate infrastructure to utilize and transport the APG. Recent data via satellite imaging showed the volume of burned-off gas increased globally by 3% to 145 billion cubic meters between 2017 and 2018, which is equivalent to the annual gas consumption of Central and South America. Despite being a global phenomenon, four nations are alone responsible for almost half of all flared gas. Data from the World Bank show that Russia is responsible for 15%, Iraq and Iran 12%, and the United States 10%. Last year the United States contributed the biggest share of the increase of gas flaring. Driven by booming oil production in Texas and North Dakota and recovery from the slump of the previous years, gas flaring in the US spiked by more than 7%, marking the largest shift of all other major flaring countries. Despite efforts to curb gas flaring, the practice continues to tick up. Russia, considered the global leader in APG flaring, has contributed to recent declines, marking a shift toward improving energy efficiency and stricter legislation. However, it’s unclear whether it can sustain decreases in the future.

UK judge blocks Nigerian courts oil spill damages order against Shell - Royal Dutch Shell Plc units won a U.K. ruling preventing London courts from enforcing a $516 million Nigerian judgment for damages caused by an oil spill half a century ago. Judge Jason Coppel on Thursday overturned an attempt to carry over a 2010 ruling by a Nigerian court to the U.K., saying that those proceedings were unfair because Shell was denied an opportunity to present a defense. Shell’s Nigerian units have been beset by lawsuits, many of them in U.K. courts, for their part in oil spills on the Niger Delta. The oil conglomerate has often sought to transfer the cases to Nigeria, with one even going to the U.K. Supreme Court to decide its jurisdiction. Thursday’s case originated from a claim brought in 2001 by the Ejama-Ebubu community. They claimed that an oil spill by Shell had made their water sources unfit for human consumption. Shell disputed responsibility for the spill and said it had made substantial progress clearing it up. After nine years of wrangling, in which Shell was alleged by a Nigerian judge to have tried to frustrate proceedings, the court awarded the community the damages plus interest, which by that time had increased the award to more than 10 times its initial value of 33 million pounds. Shell appealed to the Nigerian Supreme Court, initially having their application dismissed. A further hearing is due to take place in January. Meanwhile, the claimants had the original Nigerian award registered in London using a century-old law, allowing the U.K. courts to enforce the award if necessary. Thursday’s judgment sets aside the registration, preventing its enforcement in the U.K. Nicholas Ekhorutomwen, a lawyer for that Ejama-Ebubu community, said they were “disappointed” with the decision and would appeal.

Australia to appear before United Nations - On August 21, 2009, the Montara-H1 well blew out on the wellhead platform. An uncontrolled spill continued pumping up to 2,000 barrels of oil per day into the Timor Sea until November 3, after a relief well was drilled and the leak stopped. The blowout caused the worst oil spill in the history of Australia's offshore oil and gas industry. Overnight prominent international barrister Monica Feria-Tinta from Twenty Essex chambers announced she had brought a human rights claim against the Commonwealth of Australia on behalf of 13 communities from West Timor, Indonesia. The claim against Australia was filed in Geneva and formally lodged with the United Nations Special Rapporteurs to Australia on Wednesday last week. The communities argue the leak from the Montara wellhead platform not only damaged the environment, but the health and livelihoods of fishers and seaweed farmers from 13 regencies in West Timor. "As instructed Counsel leading the case, I prepared the complaint and filed it on behalf of 13 regencies of West Timor and East Nusa Tenggara," Feria-Tinta told Energy News in a statement. "It is a ground-breaking ‘diagonal' human rights claim, set to create an important precedent on reparation for transboundary harm," she said. The basis for the claim draws on findings from the 2010 government Montara Commission of Inquiry report. The report found evidence that "hydrocarbons entered Indonesian and Timor Leste waters to a significant degree." Feria-Tinta will argue that Australia's federal government ignored the West Timor and East Nusa Tenggara communities affected by the spill, allowing extensive environmental damage and communities to suffer economic losses due to the spill. Specifically the claim alleges that Australia broke international law by not preventing cross-border human rights risks. Articles on Prevention of Transboundary Harm from Hazardous Activities were adopted by the International Law Commission at its fifty-third session, in 2001. "A key principle in that area is the principle that " polluter pays". The applicable law also crucially includes international human rights law which entails the right to a healthy environment,"

Oil Market Report - December 2019 – Analysis – IEA – Highlights: Global oil demand increased by 900 kb/d y-o-y in 3Q19, the strongest annual growth in a year. Nearly three-quarters of the growth occurred in China. Indian demand rose 135 kb/d, but OECD deliveries fell for the fourth straight quarter and are expected to decline 75 kb/d overall in 2019. For 2019 and 2020 we have left unchanged our global oil demand growth forecasts at 1 mb/d and 1.2 mb/d, respectively. Faced with potential oversupply in early 2020, OPEC+ countries agreed to deepen existing cuts to 2.1 mb/d in 1Q20. This implies a reduction in supply of 500 kb/d from current levels. Despite the additional curbs and a reduction in our forecast of 2020 non-OPEC supply growth to 2.1 mb/d, global oil inventories could build by 0.7 mb/d in 1Q20. In November, global oil supplies held steady at 101.36 mb/d, down 1.2 mb/d y-o-y. The sharp drop in refining margins in November in all markets revealed the delicate balancing act between global crude oil and product markets. Labour strikes in November in several countries were factors in the downward revision to our 4Q19 throughput forecast, now expected to be flat y-o-y. In 2020, refining throughput growth is also revised down to 1 mb/d, after a 0.2 mb/d decline in 2019. OECD commercial stocks drew 32.5 mb in October to 2 904 mb. They were 2.9 mb below the five-year average and covered 60.6 days, one day below the average. Preliminary data for November showed total inventories falling in all regions, by 23.5 mb. Short-term floating storage of crude oil fell 2.1 mb in November to 62 mb. The number of Iranian VLCCs used for floating storage decreased by one to 26. ICE Brent futures rose above $64/bbl following the OPEC+ meetings. Physical markets appear to have tightened with steeper backwardation for both North Sea Dated and Dubai, and rising differentials for many crudes, particularly sweet grades. Product cracks eased, with the exception of naphtha which was boosted by petrochemical demand. HSFO cracks continued to be pressured by the IMO regulations and fell to record lows.

China November crude oil imports hit record high as refiners race to use up quotas - (Reuters) - China’s crude oil imports hit a record high on a daily basis in November, as refiners operated at high run rates to use up annual import quotas. The world’s top oil buyer imported 45.74 million tonnes of crude, equivalent to 11.13 million barrels per day (bpd), according to data released by the General Administration of Customs on Sunday. That compared with 10.72 million bpd in October and 9.61 million bpd in November last year. For the first 11 months of 2019, China brought in a total of 461.88 million tonnes, or 10.09 million bpd, up 10.4% from the same period last year, the data showed. As the year draws to a close, private refineries, known as teapot refiners, are ramping up output to use up their crude import quotas for the year in order to be able to apply for more quotas next year. State-backed oil refiners, meanwhile, have maintained stable throughput levels. Looking ahead, Sinopec’s Maoming refining plant has scheduled an overhaul in December, but two mega-refineries - Zhejiang Petrochemicals and Sinopec’s Zhanjiang refinery - are expected to start purchasing more crude in December to prepare for a ramp-up in their operations. Customs data showed that China sold 7.31 million tonnes of refined oil products overseas in November, up 63.5% from a year earlier. Exports for the first 11 months were 60.22 million tonnes, up 14.2% from the same period last year. Total natural gas imports, including liquefied natural gas (LNG) and pipeline, in November rose 3.3% from the same period last year to 9.45 million tonnes, customs data showed.

China's crude imports, fuel exports, are as vital as OPEC+ cuts: Russell (Reuters) - China’s record imports of crude oil in November underscore both the challenges and risks facing OPEC and its allies as they attempt to drive prices up by deepening output cuts. The market often focuses on the Organization of the Petroleum Exporting Countries and its allies, including top exporter Russia, because the group holds regular meetings that capture the attention of the media and allow for considerable commentary over what the group is planning. A case in point was the OPEC+ group’s decision at its Dec. 6 meeting in Vienna to deepen output cuts by 500,000 barrels per day (bpd), with number one exporter Saudi Arabia leading the way by trimming an additional 400,000 bpd more than its quota. What receives less attention is the fact that for 2019 the demand side of crude oil is almost entirely a China story. China’s imports of 11.13 million bpd in November were a record high on a daily basis, and brought imports for the first 11 months of the year to 10.09 million bpd, up 10.4% from the same period in 2018. With 11 months of the year completed, China’s imports are running at about 957,000 bpd more than for the same period last year. Given that the International Energy Agency (IEA) forecasts total global oil demand to increase by about 1 million bpd for 2019, it’s clear that without China’s ravenous crude appetite, the demand side of the equation would be extremely weak. The new OPEC+ measures mean the total output cut from the group, which accounts for about 40% of world’s crude production, is 1.7 million bpd, and potentially higher with the extra Saudi commitment. The move, if successfully implemented, will tighten the global crude oil market, but doubts remain as to whether prices will move substantially higher, or whether what OPEC+ is effectively doing is putting a floor on how low the price can fall.

China Sets Up National Pipeline Company-- China announced the creation of its long-planned national oil and gas pipeline company, officially kicking off one of its biggest energy revamps aimed at helping supply keep pace with swelling demand. The move marks a “key step” in China’s efforts to deepen reforms of its oil and gas sector, the official Xinhua News Agency said Monday. The government will merge the networks operated by its three state-owned giants under a single company, an important step toward removing barriers that have hampered domestic production, and which dovetails with efforts to use more gas instead of coal. A main development to watch is the valuation of assets, said Neil Beveridge, an analyst at Sanford C. Bernstein & Co. It may take six to nine months for that detail to emerge, based on a similar reform of telecom carriers in 2015 that created China Tower Corp., Beveridge said. The pipeline company’s creation has been considered since at least 2014 and is part of President Xi Jinping’s drive to streamline industrial capacity among state-owned enterprises. The government is seeking to spur wider natural gas distribution and upstream exploration by shifting ownership from competing producers into a single operator, which can make decisions based on overall national energy needs. The reform is also designed to help smaller private or foreign firms, which have found access to infrastructure blocked or prohibitively expensive. With the assets stripped from the hands of the big three state firms, other companies can gain access and move supply to where it’s needed.

China Quietly Ramps Up Oil Production In Iran - The supergiant Azadegan oil field, comprising major north and south sites, is as important to Iran’s overall strategic plan to survive the current sanctions environment and to prosper when they are lifted as the flagship South Pars supergiant gas field and the added-value products of its petrochemicals sector. Last week Iran’s Petroleum Engineering and Development Company (PEDEC) announced that five new development wells and an appraisal well are to be spudded in North Azadegan to maintain current production levels. understands from various senior energy sources in Iran that this is only part of the picture, with much bigger plans having been agreed for rollout in the coming six months with the help of China and Russia.  Located around 80 kilometres west of Ahvaz, close to the Iraqi border, the entire 900 square kilometre Azadegan field is the third-largest hydrocarbon reserve in the world after the Ghawar oil field in Saudi Arabia and the Burgan oil field in Kuwait. Its total reserves are estimated at about 42 billion barrels of oil, with around 7 billion barrels currently deemed recoverable. The first exploration well was drilled in 1976 but, despite its potential, a long lead time across the four main layers – Sarvak, Kazhdomi, Godvan, and Fahilan – of the site has meant that the pace of production has been slower than at many neighbouring fields, especially those over the border in Iraq.  A key reason for this was the attitude of Chinese firms active in Iran around that time, which can be broadly characterised as doing the minimum necessary to generate some oil flows from the fields back into China whilst not spending too much money. This attitude, though – particularly when Iran was already in the process of negotiating the Joint Comprehensive Plan of Action (JCPOA) in the run-up to its being agreed in 2015 – resulted in the National Iranian Oil Co. (NIOC) cancelling China National Petroleum Corp’s (CNPC) contract to develop Phase 11 of the South Pars natural gas field in 2013. A year later – with CNPC having drilled only 7 of the 185 wells it had planned at the South Azade­gan field - the NIOC also cancelled this development contract with the Chinese company as well. As it stands, with CNPC still the key foreign developer at North Azadegan, the relationship dynamic between Iran and China has shifted again. With re-imposed U.S. sanctions still in place, Iran cannot afford to alienate China and over the past few months has offered it extremely advantageous deals to return to previous developments or to take on an even greater role in existing ones. The most notable of these have been South Azadegan and Phase 11 of the supergiant South Pars non-associated gas field, although others are in the offing.

OPEC+ finalizes deal to cut 500K additional barrels -- OPEC and Russia agreed Friday to a stronger-than-expected deal to further scale back oil production and help offset an oncoming glut of new crude flowing from Texas shale and other non-OPEC countries. The surprisingly deeper cutbacks, led by Saudi Arabia, are designed to keep crude prices from plunging below $50 per barrel and could help prop up a struggling Houston energy sector that has shed jobs and cut costs all year. The U.S. benchmark for crude oil jumped to nearly $60 a barrel Friday — its highest level since September missile attacks in Saudi Arabia — and settled at $59.20 a barrel. “It’s also a good day for our friends in Oklahoma and Texas,” said Saudi Arabia’s new energy minister, Prince Abdulaziz bin Salman, after announcing the pact. On paper, the deal follows the broad strokes of the agreement outlinied earlier week, bascially deepening the production cuts to 1.7 million barrels a day from 1.2 million at least through March. But what sent oil prices leaping was a commitment by Saudi Arabia to hold production some 400,000 barrels a day below its quota of 10.14 barrels a day and similar commitments by previous quota violators such as Russia, Iraq and Nigeria to make additional cutbacks and comply with the agreement. Ultimately, any long-term gains for oil prices will depend on the Organization of the Petroluem Exporting Countries and its allies, collectively known as OPEC+, following through with their promises and working to balance oil supply and demand through the entirety of 2020, said Jamie Webster, senior director at Boston Consulting Group’s Center for Energy Impact in Washington, who attended the OPEC meetings in Vienna. “The proof will be in the pudding though with how many barrels they actually take off,” Webster said.

OPEC's Decision To Cut Production Is A Risky One, Here's Why - OPEC and Russia delivered an agreement to cut oil production by a total of 500,000 barrels per day for in the first quarter of 2020. According to new production quotas, which were released on OPEC’s website, Saudi Arabia and the other Gulf oil producers will shoulder most of the cuts, with Saudi Arabia committing to cut even more that its quota. This will be a real test the power of OPEC+ in the current market, and in particular, whether the cartel can instigate a durable price bump. In a market primarily concerned with global economic weakness, lagging demand growth and high production from North American shale oil, this was a risky move by member nations. Evidence has indicated that the market might be unwilling to respond to such production cuts in the sustained fashion OPEC producers desire.Market response to OPEC’s headlines has been fairly muted so far. Brent traded up a little over 2% after the cut was announced but then lost half of the gains in a short period. If today’s decision fails to sustain a higher price for oil, it will be seen as a desperate move by a weak organization. OPEC and OPEC+ will have trouble convincing the market to pay attention the next time they act. It was a particularly risky move to make at this juncture because this is a large enough cut that OPEC and Russia hope it will influence the market, but, given the institutional cheating, the cut seems unlikely to be able to make a real difference in global oil output. Saudi Arabia’s oil minister, Prince Abdulaziz bin Salman, gamely tried to convince the media, analysts and market watchers that over-producers would curb their production inline with their agreed upon quotas. Both the Nigerian and the Iraqi oil ministers spoke directly about their intentions to cut production. Nigeria said that as November ended its production was in completely compliance. “Our production is at OPEC cut levels,” the Nigerian oil minister said. “Going forward we are still very committed.”

Saudi Arabia Faces Trouble Making New OPEC Oil Deal Stick - Like so many in the past, the latest deal by the world’s major oil producing countries to reduce supply and boost prices relies on persuading the cheats to adhere to the output cuts they’ve agreed to. I don’t hold out much hope that they will change their behavior and that will leave Saudi Arabia with a choice between two bad options — continue to bear a disproportionate share of the burden, or open the taps to teach them a lesson. Saudi Arabia’s new oil minister Prince Abdulaziz Bin Salman brought a quasi-religious language to his attempt to bolster a new output deal ahead of Friday’s OPEC+ gathering in Vienna. “Like religion, if you are a believer you have to practice. Without practice you are an unbeliever.” “I do not assume that anyone here in the room is an unbeliever, but I would reiterate to our friends that further commitment and further conformity would allow us all to benefit.” That message was very clearly directed at Iraq and Nigeria — the members who have so far failed to meet their obligations under the existing deal — although he stopped short of naming them. The new output target for Saudi Arabia — 9.744 million barrels a day — means that it is once again bearing the lion’s share of the burden. From an almost identical starting point, Russia is cutting about a third of that amount. But this time, while the kingdom is dangling the carrot of deeper, unilateral output cuts, it is also brandishing a big stick. The agreement, which comes into effect on Jan. 1, will be reviewed in early March and, to quote the post-meeting press release, “is subject to full conformity by every country.” The straightforward mathematics of oil deals leaves members with nowhere to hide. Saudi Arabia could turn a blind eye, as it has in the past. But that doesn’t seem in keeping with the style of the new oil minister. It was telling that his colleagues from the two countries with the weakest compliance record were both at the post-meeting press conference and were effectively invited to say how they would improve their performance. It almost felt like being witness to some kind of Maoist self-criticism session. So what’s Saudi Arabia’s other option? It would be essentially to say, if you’re not going to pull your weight, then neither are we. This is exactly what the kingdom intimated it has in mind, I was told by a member of one of the other delegations at the meetings, who asked not to be named because he isn’t authorized to speak to the press. The kingdom has tried this route in the past. Each of those output boosts triggered a spectacular price crash. And a similar response in March 2020 would have exactly the same effect. The prince no doubt hopes that the prospect of such an event will scare the laggards into complying.

Saudi Prince’s First OPEC Outing Brings Last-Minute Oil Surprise - Prince Abdulaziz bin Salman has attended OPEC meetings for three decades, but this was the first time he’s been the star turn. For two days, Saudi Arabia’s new oil minister appeared to have stage fright. As he shuttled between Vienna’s ultra-luxury Park Hyatt hotel and the headquarters of the Organization of Petroleum Exporting Countries, he said almost nothing to the massed reporters ready to transcribe his every word. He set the tone for the entire meeting. Normally chatty officials said they couldn’t talk. Ministers used backdoor entrances to their hotels. The traditional manic media scrum that opens the meeting was canceled. Then after two days of often fractious talks on the cartel’s oil policy, he sprung two surprises at the closing press conference: Saudi Arabia will voluntarily cut supply deeper than the new deal requires, and the kingdom is gunning for a $2 trillion valuation for its newly public oil producer, Aramco. The two are linked. By trying to juice the oil market, he wants to do a favor for his half-brother, Crown Prince Mohammed bin Salman, who’s staked his reputation on the $2 trillion figure. Saudi Aramco will start trading on Riyadh’s Tadawul exchange on Wednesday with a value of about $1.7 trillion.Although he’s the ultimate Vienna insider, his first meeting in charge contrasted with his immediate predecessor, Khalid Al-Falih, a brainy but brusque technocrat who was rarely shy of the cameras. His style owes more to Ali Al-Naimi, who ran the Saudi energy minister from 1995 to 2016 and liked to keep the market guessing to give policy changes more impact. The prince also shares Naimi’s taste for consensus building. Al-Falih had leaned heavily on his oil-market alliance with Russia, first forged just three years ago. Prince Abdulaziz sought to win over OPEC’s established members, persuading those producing over their limit that they need to carry their share of the burden. 

Saudi energy minister talks OPEC+ unity, backs Aramco to soar - (Reuters) - OPEC and its allies would only ease supply curbs and pump more oil once global crude inventories fall and pricing reflects a tighter market, Saudi Arabia’s energy minister told Reuters. Saudi Arabia spearheaded a deal on Friday with Russia and the other so-called OPEC+ oil producers to deepen output cuts through the first quarter of 2020. In his first interview with Reuters since he became energy minister in September, Prince Abdulaziz bin Salman said he expected OPEC+ producers to continue cooperating beyond March. “The jury is still out where will we be in March,” he said regarding the level of supply the market will need then. OPEC+ producers pump more than 40% of the world’s oil and have constrained output since 2017 in an effort to balance rapidly rising output from the United States. While all oil producers would like to increase output, Saudi Arabia would only do so when it saw global inventories fall, he said. Saudi Arabia would like to see stocks within the range of the last five years and the average of 2010-2014, he added. “The more we are inside this contour, the better...” he said, adding another indicator would be prompt oil prices moving higher than longer dated ones, known as backwardation, which reflects a tighter market.

Oil Near 12-Week High after Surprise Saudi Curbs- Oil traded near the highest level in almost 12 weeks after Saudi Arabia surprised the market Friday with a significant supply cut beyond what was agreed to with fellow OPEC+ members. Futures in New York edged lower after climbing 1.3% Friday to cap a 7.3% weekly advance, the most since mid-June. The kingdom voluntarily pledged to pump 400,000 barrels a day less than mandated by OPEC+, translating to total overall curbs for the group of 2.1 million barrels a day. Goldman Sachs Group Inc. raised its 2020 Brent forecast after the move, saying it was a shift to managing short-term physical imbalances rather than trying to correct long-term imbalances through open-ended commitments. The announcement came after hedge funds had earlier slashed bullish wagers on WTI crude. Meanwhile, there was more gloom on the demand side with data showing Chinese exports fell unexpectedly in November. “The OPEC+ decision may have a put a slightly higher bottom under crude prices,” said Vandana Hari, founder of Vanda Insights in Singapore. “But as the dust settles on Vienna deal, it’s only going to be natural for the oil market to return its focus to the U.S.-China trade war and its global economic fallout.” West Texas Intermediate for January delivery fell 30 cents, or 0.5%, to $58.90 a barrel on the New York Mercantile Exchange as of 7:26 a.m. in London. The contract closed at $59.20 on Friday, the highest since Sept. 17. Brent for February settlement dropped 22 cents, or 0.3%, to $64.17 a barrel on the London-based ICE Futures Europe Exchange. The contract rose 1.6% on Friday, ending the week 3.1% higher. The global benchmark crude traded at a $5.36 premium to WTI for the same month. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman sent prices soaring on Friday with the promise to take the kingdom’s production down to levels not seen on a sustained basis since 2014, data compiled by Bloomberg show. After two days of grueling talks in Vienna that focused on adjusting OPEC+ quotas, Russia, Iraq, Kuwait and U.A.E. were among the nations that took the largest cuts other than the Saudis.

OPEC sees small 2020 oil deficit even before latest supply cut (Reuters) - OPEC on Wednesday pointed to a small deficit in the oil market next year due to restraint by Saudi Arabia even before the latest supply pact with other producers takes effect, suggesting a tighter market than previously thought. In a monthly report, OPEC said demand for its crude will average 29.58 million barrels per day (bpd) next year. OPEC pumped less oil in November than the average 2020 requirement, having in previous months supplied more. The report retreats further from OPEC's initial projection of a 2020 supply glut as output from rival producers such as U.S. shale has grown more slowly than expected. This will give a tailwind to efforts by OPEC and partners led by Russia to support the market next year. OPEC kept its 2020 economic and oil demand growth forecasts steady and was more upbeat about the outlook. "On the positive side, the global trade slowdown has likely bottomed out, and now the negative trend in industrial production seen in 2019 is expected to reverse in 2020," the report said. Oil prices were steady after the report's release, trading near $64 a barrel, below the level some OPEC officials have said they favour. The Organization of the Petroleum Exporting Countries, Russia and other producers, a group known as OPEC+, have since Jan. 1 implemented a deal to cut output by 1.2 million bpd to support the market. At meetings last week, OPEC+ agreed to a further cut of 500,000 bpd from Jan. 1 2020. The report showed OPEC production falling even before the new deal takes effect. In November, OPEC output fell by 193,000 bpd to 29.55 million bpd, according to figures the group collects from secondary sources, as Saudi Arabia cut supply. Saudi Arabia told OPEC it made an even bigger cut in supply of over 400,000 bpd last month. The kingdom had boosted production in October after attacks on its oil facilities in September briefly more than halved output. The November production rate suggests there would be a 2020 deficit of 30,000 bpd if OPEC kept pumping the same amount and other factors remained equal, less than the 70,000 bpd surplus implied in November's report and an excess of over 500,000 bpd seen in July.

Saudis Not Getting Bullish About Oil for 2020- A year after a rare bullish call on oil, Saudi Arabia isn’t counting on much of an uplift from crude prices in 2020. The world’s biggest oil exporter has designed next year’s budget under the assumption that Brent will average about $65 per barrel, according to calculations by Ziad Daoud, Bloomberg’s chief economist in the Middle East. EFG Hermes puts the budget’s assumed oil price at $60 to $62, while Capital Economics has it between $55 and $60. That’s barely higher than where the global benchmark crude traded on Tuesday and compares with a price of $80 that was originally built into Saudi Arabia’s public finances for 2019. Saudi Arabia doesn’t disclose its oil-price assumption. Analysts see Brent at just under $61 a barrel next year, according to the median of forecasts compiled by Bloomberg. “The budget this time around is based on a more realistic oil-price assumption,” Daoud said. “The basing of last year’s budget on an extremely bullish assumption for crude was an aberration because of a sharp decline in prices that wasn’t reflected in the final budget.” Saudi Arabia has led a campaign to support crude prices, surprising the oil market last week with deeper production cuts after talks in Vienna with OPEC and its partners. For next year, the kingdom sees a wider budget deficit and projects its oil revenue at 513 billion riyals ($137 billion), a decline of almost 15% from 2019, according to plans unveiled on Monday. “The widening of the deficit, despite spending cuts, is a clear reflection of the fiscal challenges facing the Saudi budget at current oil prices,” said Mohamed Abu Basha, head of research at Cairo-based investment bank EFG Hermes.

Oil markets hit by profit-taking ahead of China tariff deadline: Kemp - (Reuters) - Hedge funds scaled back their bets on higher oil prices last week, with futures and options markets hit by a wave of selling after a jump in positions the week before. While much of that can be put down to profit taking, the shaky economic outlook and rapidly approaching deadline for more U.S. tariffs on Chinese goods means fund managers are likely to moderate their bullishness for the time being. Hedge funds and other money managers sold the equivalent of 107 million barrels in the six major futures and options contracts linked to petroleum prices in the week to Dec. 3 (  That reversed three-quarters of the 144 million barrels purchased the previous week, according to position records published by ICE Futures Europe and the U.S. Commodity Futures Trading Commission. Sales were concentrated in NYMEX and ICE WTI (-42 million barrels), Brent (-18 million) and U.S. gasoline (-26 million), with smaller sales in U.S. diesel (-11 million) and European gasoil (-9 million). The distribution was the mirror image of the previous week’s purchases, which suggests much of the selling was driven by short-term profit-taking after a sustained rally in oil prices through most of October and November. Positions were reported before Saudi Arabia and its partners in the expanded OPEC+ group of major oil exporters announced an agreement to deepen their production cuts in the first quarter of 2020. The selling suggests many investors were not optimistic about the willingness and ability of the OPEC+ countries to eliminate predicted surpluses in the crude market next year.   The surprise cut could normally be expected to prompt a fresh wave of fund buying but price reaction has been muted so far, suggesting traders see the agreement as codifying the status quo rather than removing extra barrels from the market.  Meanwhile the United States' threat to impose a further round of tariff increases on imports from China with effect from Dec. 15 is unsettling financial markets. The risk is for a major escalation of the trade conflict, or at best an extension to the current undeclared truce. Until some uncertainty surrounding the economic outlook and oil consumption is resolved, it is hard to see most hedge fund managers doing anything other than limiting their bullish commitment.

Oil prices slip as weak China exports highlights trade war impact - Oil prices fell on Monday after data showing China's overall exports of goods and services shrank for a fourth straight month, sending shivers through a market already concerned about damage being down to global demand by theU.S.-China trade war.Brent futures were down 21 cents, or 0.3%, at $64.18 per barrel by 0220 GMT, after gaining about 3% last week on the news that OPEC and its allies would deepen output cuts.West Texas Intermediate oil futures were down 28 cents, or 0.47% to $58.92 a barrel, having risen about 7% last week on the prospects for lower production from 'OPEC+', which is made up of the Organization of the Petroleum Exporting Countries (OPEC) and associated producers including Russia.Monday's sudden chill came after customs data released on Sunday showed exports from the world's second-biggest economy in November fell 1.1% from a year earlier — a sharp reversal from expectations for a 1% rise in a Reuters poll.The weak start to the week came despite data showing China's crude imports jumped to a record, revealing just how deep jitters are embedded in the market over the U.S.-China trade row that has stymied global growth and oil demand.The sagging export data is "a casualty again of the protracted trade war," said Stephen Innes, chief Asia market strategist at AxiTrader.Washington and Beijing have been trying to agree a trade deal that will end tit-for-tat tariffs, but talks have dragged on for months as they wrangle over key details.Monday's declines also went against signs on Friday that China was easing its stance on resolving its trade dispute with the United States, confirming on Friday that it was waiving import tariffs for some soybean and pork shipments.The price drops also put an end to a strong run in previous sessions fueled by hopes for the OPEC+ production curb deal.On Friday, those producers agreed to deepen their output cuts from 1.2 million barrels per day (bpd) to 1.7 million bpd, representing about 1.7% of global production.

Oil Prices Fall Modestly -West Texas Intermediate (WTI) and Brent crude oil prices finished lower Monday.WTI for January delivery shed 18 cents to settle at $59.02 per barrel. The benchmark traded Monday within a range from $58.23 to $59.25.February Brent also posted a modest loss, declining 14 cents to end the day at $64.25 per barrel.“Both WTI and Brent cannot seem to trade up,” said Tom McNulty, Houston-based managing director with Great American Group. McNulty commented that production cuts announced Friday by the OPEC+ alliance will fail to overcome the following three factors:

  • Negative global trade data
  • The “certainty” that alliance members will cheat on their production quotas
  • The likelihood that the large debt burdens of North American oil producers will cause the region’s crude output to rise, regardless of oil prices.

The theme of small price movements extended to reformulated gasoline (RBOB). The January RBOB contract price edged slightly upward Monday, gaining nearly one cent to settle at $1.65 per gallon.The price of Henry Hub natural gas, however, showed a more dramatic change during Monday’s trading. January gas futures lost 10 cents to close at $2.23 – a loss of more than four percent against Friday’s settlement price.McNulty observed that Monday’s significant drop in the natural gas contract price shows “how sensitive it is to a warm weather forecast, when we have so much supply.”

Oil Steady as Stockpiles Offset Trade Anxiety -- Oil was steady near a 12-week high as investors weighed a forecast drop in American crude inventories against a looming deadline for the U.S. to impose more tariffs on China. Futures in New York were little changed after declining 0.3% Monday. U.S. stockpiles shrunk by 2.5 million barrels last week, a Bloomberg survey showed before government data due Wednesday. The White House is scheduled to put tariffs on a further $160 billion of Chinese goods Sunday, although Agriculture Secretary Sonny Perdue said they’re unlikely to be implemented. Oil closed at the highest level since mid-September on Friday after the Organization of Petroleum Exporting Countries and its allies surprised the market with deeper-than-expected output cuts. Attention has now turned back to the seemingly intractable U.S.-China trade war and whether the two sides can nail down a much-hyped phase one agreement. “The focus has shifted to demand as concerns over supply have been largely reduced,” said Will Sungchil Yun, a commodities analyst at HI Investment & Futures Corp. in Seoul. “All eyes are now on the outcome of trade negotiations between the world’s top two economies.” West Texas Intermediate for January delivery fell 5 cents to $58.97 a barrel on the New York Mercantile Exchange as of 7:57 a.m. in London. The contract closed 18 cents lower on Monday after jumping 7.3% last week. Brent for February settlement declined 4 cents to $64.21 a barrel on the London-based ICE Futures Europe Exchange after slipping 0.2% Monday. The global benchmark crude traded at a $5.34 premium to WTI for the same month. It would be the second straight weekly drop in U.S. stockpiles if the Bloomberg survey is confirmed by Energy Information Administration data. Inventories are still near the highest since mid-July after rising in 10 of the 11 weeks through Nov. 22.

Oil prices slip again as specter of trade war, demand concerns haunts market -  Oil prices dropped on Tuesday for a second straight session as the cons of a slowing global demand outlook outweighed the pros of OPEC’s agreement with associated producers at the end of last week to deepen crude output cuts in early 2020. Brent futures were down 11 cents, or 0.2%, at $64.14 per barrel by 0204 GMT while West Texas Intermediate oil futures were down 7 cents, or 0.1% to $58.95 a barrel. The benchmarks fell 0.2% and 0.3% respectively on Monday. “The euphoria (on output cuts) was short lived, with an unexpected fall in exports from China highlighting the impact of the trade conflict,” said ANZ Bank in a note on Tuesday. Data released on Sunday showed exports from China in November fell 1.1% from a year earlier, confounding expectations for a 1% rise in a Reuters poll. That weakness came amid with fresh fronts in the trade war between Washington and Beijing that has stymied global economic growth coming up fast: Washington’s next round of tariffs against some $156 billion Chinese goods are scheduled to take effect on Dec. 15. U.S. President Donald Trump does not want to implement the next round of tariffs, U.S. Agriculture Secretary Sonny Perdue said on Monday — but he wants “movement” from China to avoid them. “With the swathe of new tariffs due to kick in on 15 December, the market is watching negotiations closely,” said ANZ. Analysts said that, though overshadowed for now, the move by ‘OPEC+’ — the Organization of the Petroleum Exporting Countries (OPEC) and associated producers like Russia — to deepen output cuts from 1.2 million barrels per day (bpd) to 1.7 million bpd would remain a mid-term support factor. “While risks remain into year-end on U.S.-China trade talks, the OPEC decision removes a fundamental uncertainty,” said Stephen Innes, market strategist at AxiTrader. “So, prices aren’t about to fall off a cliff anytime soon if OPEC has a say in the matter.”

Oil rises but U.S.-China trade war weighs on demand outlook - (Reuters) - Oil prices inched up on Tuesday as OPEC’s deal with associated producers last week to deepen output cuts in 2020 continued to provide a floor for prices, but U.S.-China trade tensions clouded the demand outlook. Brent crude settled up 9 cents at $64.34 a barrel, and West Texas Intermediate oil rose 22 cents, or 0.4%, to $59.24 a barrel. The benchmarks fell 0.2% and 0.3%, respectively, on Monday. Last week, the Organization of the Petroleum Exporting Countries and associated producers like Russia agreed to deepen output cuts from 1.2 million barrels per day (bpd) to 1.7 million bpd to support prices. However, a Dec. 15 deadline for the next round of U.S. tariffs on Chinese imports weighed on markets. “Now that the producers announced a production cut last week, the market is holding just below three-month highs,” said Gene McGillian, director of market research at Tradition Energy. “Without a U.S.-China trade deal, the market is having trouble heading into a new leg in this rally.” U.S. President Donald Trump does not want to implement the next round of tariffs, U.S. Agriculture Secretary Sonny Perdue said on Monday - but he wants “movement” from China to avoid them. The Wall Street Journal reported that officials from both sides were laying the groundwork for a delay of a fresh round of tariffs. Also the growth rate of China’s imports of major commodities has accelerated in recent months, indicating Beijing’s stimulus efforts may be bearing fruit and that the impact of a trade war may not be as bad as feared. But investors remained on edge ahead of other events this week, with the British election on Thursday and U.S. and European Central Bank meetings.

Oil Prices Settle Higher - West Texas Intermediate (WTI) and Brent crude oil edged upward during the second trading day of the week. The January WTI contract gained 22 cents Tuesday to settle at $59.24 per barrel. It traded within a range from $59.52 to $58.52. Brent crude for February delivery posted a more modest nine-cent gain, ending the day at $64.34 per barrel. Vance Scott, Houston-based managing director in the energy practice at global multi-industry consulting firm AlixPartners LLP, observed that crude prices have risen markedly since last week’s OPEC+ announcement of a deal to reduce alliance members’ oil production quota by an extra 500,000 barrels per day (bpd) – bringing total agreed-upon output curbs to 1.7 million bpd. “However, even with this recent rally, the market remains cautious on those countries’ ability to hold the line, and there is uncertainty in how condensate factors into the overall pricing calculus,” said Scott. “Plus, there are other constraining factors on the horizon.” Scott explained that constraints include the fact that Permian, Eagle Ford and Haynesville producers are highly leveraged. Given their hedged positions, they likely will not enjoy the near-term price rally and continue to drive production volumes to make their interest and debt-maturity payments before their hedges roll off, he added. “That said, North American volume growth will likely be somewhat offset by stabilizing economies elsewhere,” continued Scott. “Plus, there’s the news this week that the U.S.-Mexico-Canada, or USMCA, trade deal could be getting close to passage in the U.S. Congress. A key wildcard in the overall picture, though, remains the mixed messages of late on the U.S.-China trade front, where both sides seem to be talking around each other.” Tuesday’s price movement was also modest for reformulated gasoline (RBOB) – but downward. January RBOB lost well under one cent, settling at $1.65 per gallon

WTI Slips From 12-Week Highs After Surprise Crude Inventory Build - Oil prices held near three-month highs today, helped by OPEC+ production plans, trade deal optimism, and, as we will see tonight, hope that inventories are starting to drop.“For the market to push even higher, the key element is the signing of a trade agreement” between China and the U.S., said Gene McGillian, manager for market research at Tradition Energy. “That will rekindle expectations of economic growth and fuel demand growth.” Nevertheless, “we don’t have proof that there’s actually going to be a trade agreement,” he said. After rising for 10 of the last 11 weeks, crude inventories are expected to decline for the 2nd week in a row... API:

  • Crude +1.41mm (-2.5mm exp)
  • Cushing -3.53mm (-2.3mm exp)
  • Gasoline +4.92mm (+2.5mm exp)
  • Distillates +3.24mm (+1.6mm exp)

But, against expectations, API reported a surprise 1.41mm barrel crude build - the 11th build of the last 13 weeks... and product inventories also showed big builds.   Notably, despite inventories at their highest since July, oil closed at its highest since September...

Oil prices slip on surprise U.S. crude inventory build - (Reuters) - Oil prices fell on Wednesday after industry data showed a surprise build in crude oil inventory in the United States and as investors waited for news on whether a fresh round of U.S. tariffs on Chinese goods would take effect on Sunday. Brent futures fell by 37 cents, or 0.6%, to $63.97 per barrel by 0121 GMT. U.S. West Texas Intermediate crude slipped by 30 cents, or 0.5%, to $58.94 a barrel. “Oil fell from its highest close in almost three months after the API inventory reported a build bearish to consciences while uncertainly over the December tariff deferral added to the soft tone,” referring to U.S. crude’s close on Dec. 10. U.S. crude stocks clocked a surprise rise in the most recent week while gasoline and distillate inventories also rose, data from industry group the American Petroleum Institute shows. Crude inventories rose by 1.4 million barrels in the week to Dec. 6 to 447 million, while analysts were expecting a fall of 2.8 million barrels. The weekly EIA report is due later on Wednesday. The U.S. is on track to become a net exporter of crude and fuel for the first time on record on an annual basis in 2020, the EIA said, due to a production surge that has dramatically reduced its dependence on foreign oil. Also adding to global supply, U.S. producers Exxon Mobil Corp (XOM.N) and Hess Corp (HES.N) plan to export the first-ever shipments of crude oil from Guyana between January and February, a milestone for Latin America’s newest oil producer, sources with knowledge of the plans said. U.S.-China trade tensions continued to cloud demand outlook with a Dec. 15 deadline for the next round of U.S. tariffs on Chinese imports weighing on markets. Investors are also eyeing other major events this week including the British election on Thursday and U.S. and European Central Bank meetings for further trading cues.

WTI Tumbles After Unexpected Crude Inventory Rise, Huge Product Builds - Oil prices remain lower overnight after API reported a surprise crude build (and products also built notably) but the constant hype of OPEC+, Aramco's launch, and a trade deal 'any minute' are still providing a bid... “The post-OPEC bullish jolt is all but a distant memory,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London. “Oil prices have struggled for traction this week as demand concerns returned to the fore. The cautionary mood is likely to prevail as investors await fresh cues on the trade front.”The question is - will official data confirm API's bearish data. DOE

  • Crude +822k (-2.5mm exp)
  • Cushing -3.393 (-2.3mm exp) - biggest draw since Feb 2018
  • Gasoline +5.405mm (+2.5mm exp) - biggest build since Jan 2019
  • Distillates +4.118mm (+1.6mm exp) - biggest build since July 2019

After the prior week's surprise crude draw, analysts expect further inventory drops in the last week (despite API's surprise build) but official data showed a 822k barrel build (smaller than API but still a build). This is the 11th weekly build of the last 13 weeks...

Oil drops on surprise U.S. crude build but tariff deadline eyed –   (Reuters) - Oil prices dropped almost 1% on Wednesday following a surprise build in U.S. crude inventories, and as investors waited to see if a fresh round of tariffs by Washington on Chinese goods would come into force on Sunday. Brent futures settled at $63.72 per barrel, down 62 cents. West Texas Intermediate crude fell 48 cents to settle at $58.76 per barrel. U.S. crude stockpiles rose unexpectedly last week, while gasoline and distillate inventories jumped sharply higher, the Energy Information Administration said. Crude inventories rose 822,000 barrels last week, compared with analysts’ expectations in a Reuters poll for a 2.8 million-barrel drop. At 447.9 million barrels, crude stocks were about 4% above the five-year average for this time of year, the EIA said. However, stocks at the Cushing, Oklahoma, delivery hub for WTI fell 3.4 million barrels last week, their biggest decline since February 2018, the EIA said. U.S. inventories of gasoline jumped 5.4 million barrels and distillates, which include diesel and heating oil, rose 4.1 million barrels - both more than double analysts’ expectations. U.S. gasoline RBc1 and heating oil HOc1 futures were down about 2%. “The inventory data was rather bearish when you consider the fall in refinery run rates and the cratering of gasoline demand,” Gasoline demand “had held up most of the year, quite extraordinarily.” Refinery utilization rates fell 1.3 percentage points last week to 90.6% of total capacity. Finished motor gasoline consumption fell to 8.8 million barrels per day (bpd), the lowest since February, according to EIA data.

Oil prices stabilise on OPEC supply deficit forecast (Reuters) - Oil prices steadied on Thursday with the market mood switching to relief as OPEC forecast a supply deficit next year, from doom and gloom over data showing a surprise increase in U.S. crude inventories. Brent futures rose 19 cents, or 0.3% to 63.61 a barrel by 0100 GMT, after skidding 1% on Wednesday on the U.S. stocks build-up. West Texas Intermediate crude was down 9 cents at $58.85 a barrel, following a 0.8% drop the previous session. The Organization of the Petroleum Exporting Countries (OPEC) on Wednesday said it now expected a small deficit in the oil market in the next year, suggesting the market is tighter than previously thought - even before the latest pact with other producers to curb supply takes effect. The revised forecast by OPEC marks a further retreat from a prediction of a glut in 2020 as U.S. production growth begins to slow. Still, U.S. inventories are on the rise. Crude stockpiles last week rose unexpectedly, gaining more than 800,000 barrels, compared with a Reuters poll that forecast a 2.8 million barrel decline. Inventories of petroleum products also increased with gasoline stocks surging by more than 5 million barrels and distillates gaining a bit over 4 million barrels - with both more than double expectations. “The overall report was very bearish as demand fell off a cliff and total stockpiles climbed to the highest level in seven months,” said Edward Moya, senior market analyst at OANDA. Beyond the balance between inventories and supply, investors are also awaiting news on negotiations between Washington and Beijing to end a long-running trade war and get an agreement before another round of U.S. sanctions kicks in.

Oil prices settle higher on trade deal optimism, central-bank stimulus -Oil futures settled higher on Thursday, nearly recouping all losses from a day earlier, following a tweet from President Donald Trump that hinted the U.S. was close to a trade deal with China. “Getting VERY close to a BIG DEAL with China. They want it, and so do we!”Trump tweeted on Thursday, prompting a move higher in oil prices in the minutes after the tweet. A deal would ease worries about a slowdown in energy demand. “The tweet itself was somewhat direct and bullish on the surface, but I think you have a market that is beyond fatigued in terms of the deal or no deal cycle we’ve been in for months now,” Robbie Fraser, senior commodity analyst at Schneider Electric, told MarketWatch. “For a tweet to have real impact at this point, it’s going to need to start offering details and substance rather than the latest round of speculation.” As of Thursday afternoon, Bloomberg News reported, citing people briefed on the plans, that U.S. negotiators reached terms of a phase-one trade deal with China, which awaits Trump’s approval. Prices already were on the rise after central banks signaled a willingness to keep interest rates low and maintain economic stimulus for the foreseeable future which may help to boost the global economy and buoy crude demand. The Federal Reserve on Wednesday said its decision to hold benchmark interest rates unchanged in a range of 1.5% and 1.75% is at least partly due to worries about the potential harm from Sino-American trade clashes. In addition to the Fed, on Thursday the European Central Bank announced its decision to keep its main deposit rate at negative 0.5%, while maintaining its rate of asset purchases at €20 billion a month, as widely expected by analysts.

Oil Prices Finish Higher Amid Mix of Factors  - West Texas Intermediate (WTI) and Brent crude oil finished higher Thursday, buoyed reports of progress on the U.S.-China trade front and other factors. January WTI settled Thursday at $59.18 per barrel, reflecting a 42-cent gain. The benchmark traded within a range from $58.75 to $59.72. Also rising Thursday was the February Brent contract, which added 48 cents to settle at $64.20 per barrel. Traders have for months monitored developments in ongoing trade negotiations between the United States and China. On Thursday, various media reports stated that a tentative deal had been reached. Thursday morning, President Trump tweeted that a “BIG DEAL” with China was near. “Crude oil is up today due to a combination of macro factors: China, OPEC cuts, easy U.S. monetary policy and decent inventory numbers,” “All of these factors lead to a bullish view on the crude outlook in a relatively calm year-end market. Without any radical changes between now and New Year’s, Brent and WTI will likely continue their slow climb.” Anish Kapadia, U.K.-based oil and gas consultant and managing director with Akap Energy Ltd., told Rigzone the most recent data from the International Energy Agency (IEA) show an above-normal decline in crude inventories for October versus the five-year average. Also he noted that November OPEC production was 300,000 barrels per day (bpd) lower month-on-month, driven by Saudi Arabia, Angola and Iraq. “Given the fragile global economy, it was also positive to see no downward revisions to demand growth for 2019 and 2020, maintained at 1 million bpd and 1.2 million bpd, respectively,” Kapadia said. “On the more bearish side Venezuela has shown some signs of a mild recovery in production, and Libyan production continues to surprise on the upside with further potential growth in 2020.” Reformulated gasoline (RBOB) posted a slight increase. January RBOB gained well under one cent, finishing the day at $1.63 per gallon.10:20 AM

Oil nears three-month high as trade hopes, UK election boost sentiment - (Reuters) - Oil rose on Friday to its highest in nearly three months as investors cheered progress in resolving the U.S.-China trade dispute and a decisive general election result in Britain. Washington and Beijing announced a “Phase one” agreement that reduces some U.S. tariffs in exchange for increased Chinese purchases of American farm goods. Brent LCOc1 futures, the global benchmark, gained $1.02, or 1.6%, to settle at $65.22 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 rose 89 cents, or 1.5%, to $60.07. Both contracts settled at their highest since Sept. 16, up a little over 1% for the week. China has agreed to buy $32 billion of additional U.S. farm products over two years as part of a phase one trade pact, U.S. Trade Representative Robert Lighthizer told reporters on Friday, adding the deal would be signed the first week of January. Chinese officials, however, offered no specifics on the amount of U.S. agricultural goods Beijing agreed to buy, a sticking point in negotiations to end the 17-month trade war between the world’s two largest economies. Britain’s ruling Conservative Party won a large majority in Thursday’s general election, paving the way for Prime Minister Boris Johnson to remove the country from the European Union. Uncertainty about Brexit had also weighed on oil prices. “With a large win for Boris Johnson in the UK general election and an ‘almost there’ for the U.S.-China trade war, it’s up we go for Brent crude,” said Bjarne Schieldrop, an analyst at SEB. “Oil demand growth will likely rebound along with a rebound in global manufacturing.” A drop in the U.S. dollar .DXY coupled with a strong pound also helped boost commodities.

Oil ends at 3-month high as the U.S. and China reach a preliminary phase one trade deal - Oil futures ended higher on Friday, with U.S. and global benchmark prices at their highest levels since mid-September, after the U.S. and China said they have reached a preliminary agreement on a phase one trade agreement.The lack of a trade agreement had been a major headwind to crude demand, but oil prices got a boost Thursday when President Donald Trump tweeted that the U.S. was “getting VERY close to a BIG DEAL with China.”Some reports then emerged saying that Trump approved a phase-one trade deal with China, possibly averting new tariffs on some $160 billion in consumer goods that were set to take effect Sunday, and bolstering hope that the harm done to global economic growth may fade.China confirmed Friday that it reached a deal on the text of a phase one pact, according to a translation reported by CNBC, but that the deal would need to first go through legal procedures before it is signed. Trump separately announced a phase one deal Friday and scrapped tariffs on Chinese goods that were set to go into effect on Sunday.“The trade war is back in focus for the energy markets and the lack of clarity surrounding the status of the deal” caused significant volatility on Friday, said Tyler Richey, co-editor at Sevens Report Research. U.S. benchmark prices briefly topped $60 a barrel for the first time since September, “which is positive from a near term momentum standpoint,” he said. “However, the key resistance band between $60 and $62 [a] barrel dating back to late May remains intact for now, leaving oil stubbornly rangebound for the time being.” West Texas Intermediate crude for January delivery rose 89 cents, or 1.5%, to settle at $60.07 a barrel on the New York Mercantile Exchange. For the week, prices for the front-month contract rose 1.5%, according to Dow Jones Market Data.

Oil Prices Up for the Week - West Texas Intermediate (WTI) and Brent crude oil futures settled higher Friday, buoyed by progress on trade between the United States and China and the outcome of Thursday’s U.K. general election.The January WTI contract gained 89 cents to settle above the psychologically important $60-mark – $60.07 per barrel, to be exact. The light crude marker traded within a range from $59.27 to $60.48. Compared to the Dec. 6 settlement, WTI is up nearly 1.5 percent. February Brent ended that day at $65.22 per barrel, reflecting a $1.02 gain. For the week, Brent is up 1.3 percent.“It was another rollercoaster ride for crude oil this week as the daily saga of U.S.-China trade relations ebbed and flowed while a bearish inventory report, a slight increase in drilling activity and bullish carryover from last week’s OPEC meeting all fueled the volatility,” said Tom Seng, Assistant Professor of Energy Business at the University of Tulsa’s Collins College of Business. Seng referenced the Trump administration’s announcement Friday that China had agreed to a “phase one” of a potential trade deal and that the U.S. will only impose 50 percent of new tariffs set to take effect on Dec. 15. Moreover, he pointed out the outcome of the U.K. election – giving Prime Minister Boris Johnson and his center-right Conservative Party a stronger mandate – adds some certainty to the country’s direction and bolsters chances for Brexit to move forward. Citing the latest Weekly Petroleum Status Report from the U.S. Energy Information Administration (EIA), Seng observed the oil market resource revealed:

  • A 0.8 million-barrel increase in U.S. commercial crude inventories, countering a 2.8 million-barrel decrease projected by Wall Street Journal analysts and a 1.4 million-barrel decline reported by the American Petroleum Institute
  • 448 million barrels of total crude oil in storage – four percent higher than the five-year average for this time of year
  • A 3.4 million-barrel decline in oil storage at the Cushing, Okla., hub to 40.4 million barrels total, or approximately 53 percent of capacity
  • A one-percent rise in refinery utilization to 16.54 million barrels per day (bpd)
  • A 17-percent year-on-year decrease in oil imports
  • Steady U.S. oil production at 12.85 million bpd

Aramco Soars in Debut to Hit Market Value of $1.88 Trillion - Saudi Aramco shares surged after the oil producer’s initial public offering, valuing the company at a record $1.88 trillion in the culmination of a four-year effort by the kingdom to list its crown jewel. The stock jumped the daily 10% limit to 35.20 riyals when trading began at 10:30 a.m. in Riyadh as Aramco board members, Saudi officials and invited guests cheered at a ceremony at the Fairmont Hotel in the kingdom’s capital. The shares stayed there through the market close, putting Crown Prince Mohammed bin Salman’s goal of a $2 trillion valuation within reach. Aramco raised $25.6 billion in the biggest-ever IPO, selling shares at 32 riyals each and overtaking Microsoft Corp. and Apple Inc. as the most valuable listed company. The start of trading in Riyadh marks the end of a saga that’s been intertwined with the crown prince’s rise to global prominence and his Vision 2030 plan to reform the Saudi economy. First announced in an interview with the Economist in January 2016, the IPO came after a tumultuous period that included the murder of government critic Jamal Khashoggi and the imprisonment of prominent Saudis in Riyadh’s Ritz Carlton. The sale ultimately fell short of the $100 billion international offering with a valuation of $2 trillion that the prince once proposed. Saudi officials pulled out all the stops to ensure that the stock traded higher after an offering that international investors largely rejected, citing the valuation and concerns including governance issues and possible security threats. The stock price also should be underpinned by demand from index-tracking funds, since Aramco will be added to emerging-market benchmarks. “Aramco should easily get to the $2 trillion valuation as soon as tomorrow; there is plenty of appetite for it,” “And more money should flow soon with the international index inclusions. The start couldn’t be better.” Aramco, the world’s largest oil producer, is so big that it easily dwarfs the rest of the companies in the Saudi market, which have a combined value of about $500 billion. Adding in Aramco at its current market value, the kingdom’s bourse becomes the world’s seventh-biggest stock market, overtaking Canada, Germany and India. Saudi Arabia, though, only sold 1.5% of the company’s capital, meaning that barely any of its shares will trade.

Saudi Aramco hits $2 trillion market cap on second day of trading  — Shares of Saudi Aramco surged on their second day of public trading, pushing the kingdom’s record IPO to a gargantuan $2 trillion valuation and briefly touching Crown Prince Mohammed bin Salman’s long-held target for the company. Share rose 10% to 38.7 riyals apiece ($10.32) but slipped back to 37 riyals within minutes of the market open. The figure, nearly $1 trillion higher than the world’s next-largest public companies Microsoft and Apple, was long ridiculed and regarded with disbelief by much of the international financial community. Riyadh on Wednesday made history by listing 1.5% of its state-run oil giant on its local stock exchange, the Saudi Tadawul, in what was the largest IPO on record. Shares went limit up, rising 10% in price as trading started, giving the company a valuation of $1.88 trillion on its first day of trading. While the massive valuation will be seen as a win for the Saudi crown prince, it lacked the international interest the kingdom had hoped for, relying instead on local investors after the company canceled overseas roadshows in London and New York. The long-awaited IPO of world’s most profitable company forms the centerpiece of Crown Prince Mohammed bin Salman’s Vision 2030 program aimed at transforming the Saudi economy. The crown prince first floated the idea in 2016, stunning market observers with his suggestion of the $2 trillion valuation. That figure was brought down by financial advisors and banks earlier this year to a range of between $1.5 trillion and $1.7 trillion.

Saudi Aramco hits Crown Prince's $2 trillion goal despite valuation doubts (Reuters) - Saudi Aramco hit the $2 trillion target sought by de-facto Saudi leader Crown Prince Mohammed bin Salman on Thursday as its shares racked up a second day of gains, despite some scepticism about the state-owned oil firm’s value. Aramco’s initial public offering (IPO) is the centerpiece of the Saudi crown prince’s vision for diversifying the kingdom away from its oil dependence by using the $25.6 billion raised to develop other industries. But that is well below his 2016 plan to raise as much as $100 billion via a blockbuster international and domestic IPO. Riyadh scaled back its ambitions after overseas investors baulked at the proposed valuation and only 1.5% of Saudi Arabian Oil Co (Aramco) shares were listed on the Riyadh stock exchange on Wednesday, a tiny free float for such a huge company. Aramco shares hit 38.7 riyals ($10.32), lifting its market value above $2 trillion and closed at 36.8 riyals, a rise of 4.5% from Wednesday’s close and valuing the company at $1.96 trillion, Refinitiv data showed. While a 10% jump in the stock on its debut, the maximum allowed by the Riyadh exchange, was hailed by the Saudi government as a vindication, support was largely from loyal Saudi and Gulf rather than overseas investors. But Bernstein analysts put Aramco’s value at around $1.36 trillion, which compares with U.S. energy giant Exxon Mobil’s (XOM.N) market capitalization of less than $300 billion.

Saudi Aramco is called a ‘polarizing stock’ as investors question its independence - Saudi Arabia made history this week as it debuted its crown jewel, Saudi Aramco, for public trading on the kingdom’s stock exchange. Shares shot up to the maximum allowed for the world’s largest-ever IPO at its launch, surging 10% on Wednesday and again on Thursday to briefly hit a valuation of $2 trillion before paring gains. The listing of 1.5% of the kingdom’s state-run oil giant reached a $1.88 trillion market cap on its first day of trading, putting it well above that of Microsoft and Apple. The astronomic $2 trillion figure, long pursued by Saudi Crown Prince Mohammed bin Salman since he announced his idea of the float in 2016, defied the expectations — and the ridicule — of much of the global finance community. But weak international interest, suspicions of heavily government-influenced local demand and scrapped plans to book-build outside the Gulf region have raised the question of how genuinely successful the public listing really is ⁠— and whether it could perform similarly if tested in international markets. “It’s not exactly what you might call a free market price,” John Rutledge, chief investment officer at investment firm Safanad, told CNBC in Abu Dhabi shortly after trading began on the Saudi Tadawul. “I think it was a managed sale with a lot of government involvement,” said Rutledge, who served as an economic advisor to three U.S. administrations and the government of Kuwait. “They managed creating the book of buyers, but they also determined how many shares were sold. And so with that, you’ve got both levers. You can make the market cap almost whatever you want at that level.”

Saudi Arabia plans for lower 2020 oil revenues on OPEC cuts, global trade disputes | S&P Global Platts — After three years of record budgets to spur growth, Saudi Arabia said Monday it plans to scale back government spending through 2022, forecasting lower oil revenues and a lesser reliance on its lifeblood industry as its ambitious economic reforms take hold. The Middle East's largest economy and the world's largest crude exporter plans to spend Riyal 1.02 trillion (US$272 billion) in 2020, down 2.6% from 2019, according to its budget statement. Government expenditures will fall further to Riyal 990 billion in 2021 and Riyal 955 billion in 2022, it added, as the kingdom expects its initiatives to diversify its economy away from oil and foster new industries to begin to bear fruit. Crude oil production cuts implemented by OPEC, largely at the behest of Saudi Arabia, will weigh on 2020 revenues, which are expected to fall 14.8% from 2019 levels to Riyal 513 billion, the kingdom said. The budget deficit will widen to 6.4% in 2020 from 4.7% in 2019 as the government earns less from oil. In addition to the OPEC cuts, the budget cited "challenging global economic and international market conditions," including global trade disputes. Crown Prince Mohammed bin Salman said in a statement that Budget 2020 arrives amid a global economic climate that presents "challenges, risks and protectionist policies, which requires flexibility in managing the public finances and enhancing the ability of the economy to address these challenges and risks." The government said it would extend a cost-of-living allowance to state employees, military personnel, retirees and students -- started in January 2018 to head off citizen complaints over rising costs -- through the end of 2020. The Saudi government does not publish its fiscal breakeven oil price, but in a report in October, the International Monetary Fund forecast that Saudi Arabia would need a breakeven oil price of $83.60/b in 2020 to balance its budget.

Saudi Arabia’s finance minister rejects claims the kingdom is running short of cash  - The finance minister of Saudi Arabia rejected claims that the kingdom is slowly running out of money, saying that it’s in a better financial position that many other nations across the globe. “No we are not running out of money,” Mohammed al-Jadaan told CNBC’s Hadley Gamble when asked about recent perceptions regarding its reserves. In November, the former chief of the CIA David Petraeus highlighted the issue, telling CNBC that he believed Saudi Arabia is “gradually running out of money,” aiming his comments at the country’s sovereign wealth fund. Saudi Arabia does not openly publish the amount of assets it holds within its wealth fund, known as the Public Investment Fund (PIF). The Institute of International Finance estimated in a report in June that the kingdom has assets worth around $300 billion with roughly a quarter of its holdings overseas. The Sovereign Wealth Fund Institute puts the figure closer to $320 billion. Speaking to CNBC in Riyadh after Monday’s budget announcement, Al-Jadaan stated that the kingdom currently held the third-largest pot of foreign cash reserves in the world. He added that it had “significant funds” and a “lot of assets” were at the country’s disposal. “Unlike so many other countries we also have government reserves, deposits, with the central bank that other governments don’t have,” he said. “That stands today at about 500 billion Saudi riyals, short of 500 billion Saudi riyals,” he added, saying that the country’s aim was to build the reserves as it controlled its expenditure.

Newsweek Journalist Quits After Editors Kill Report on Syria Chemical Attack Scandal — A top journalist has resigned from his post after management killed his report on the bombshell news that the Organization for the Prohibition of Chemical Weapons (OPCW) suppressed a mountain of evidence suggesting that the 2018 Douma Chemical Weapons Attack in Syria was staged. Newsweek’s Tareq Haddad announced on Twitter that, rather than accepting top-down censorship on an important issue, he was publicly walking away from his job at the New York-based magazine.“I have collected evidence of how they suppressed the story in addition to evidence from another case where info inconvenient to US government was removed, though it was factually correct,” Haddad said, adding that he will publish full details about the event shortly but that “I was threatened with legal action” from his employers, who had inserted a confidentiality clause into his contract for just such an occasion as this. He also stated that he is seeking legal advice from specialists in whistleblowing and that, “At the very least, I will publish evidence I have without divulging the confidential information.”The shocking news that the OPCW fixed its own report in order to frame the Syrian government for a chemical weapons attack that likely did not even happen, according to its own expert investigators, has been roundly ignored by corporate media, but not by MintPress News, who has covered the news in depth.Members of the OPCW team have come forward, expressing their “gravest concern” about the “selective representation of the facts” and the “intentional bias” “undermining the credibility of the report.” Even former OPCW Director-General Dr. Jose Bustani stated that the whistleblowers’ testimonies have “confirmed the doubts and suspicions” he already had about the organization and Syria.The alleged chemical weapons attack was immediately used as a justification for foreign intervention in the conflict. Within days, the U.S., France and the United Kingdom launched bombings campaigns on the country, risking a potential nuclear conflict with Russia to the g reat approval of corporate media. Not one of the top 100 American newspapers by circulation opposed the extremely hasty actions.

The Average Cost Of An Illegally Purchased M16 - In 2017, Statista put together an infographic about the price of an AK-47 on the black market and the weapon had an average cost of anywhere between $1,135 in Belgium and $2,100 in Syria. Calibre Obscura, a fascinating website and Twitter account devoted to research on arms in the hands of non-state groups, has now published data on the average price of an M16 in various countries.  Focusing on the Middle East and North Africa, the price levels are based on local sources, focusing on the M16A2 and A4 variants of the American assault rifle in late 2019. Those weapons end up on sale in a variety of ways from the Taliban capturing them from Afghan army and police units to those same security forces themselves deciding to sell their weapons to various groups. It is also likely that U.S.-manufactured weapons have been captured from Saudi forces in the Yemen conflict where they have subsequently gone on sale.As the chart shows, perhaps the great arbitrage trade in the world is shipping M16s from Syria to Lybia... just be careful... Across the Middle East and North Africa, the gun has the highest average price in Tripoli where it is said to cost in excess of $12,000, though it is thought to be practically unobtainable there.Elsewhere, it's far cheaper, however, fetching between $2,500 and $3,000 in parts of Yemen. In Helmand province in Afghanistan and Idlib in Syria, the weapon can be purchased for less than $1,000.

What really happened in Iran? – Pepe Escobar - On November 15, a wave of protests engulfed over 100 Iranian cities as the government resorted to an extremely unpopular measure: a fuel tax hike of as much as 300%, without a semblance of a PR campaign to explain the reasons. Iranians, after all, have reflexively condemned subsidy removals for years now – especially related to cheap gasoline. If you are unemployed or underemployed in Iran, especially in big cities and towns, Plan A is always to pursue a second career as a taxi driver.Protests started as overwhelmingly peaceful. But in some cases, especially in Tehran, Shiraz, Sirjan and Shahriar, a suburb of Tehran, they quickly degenerated into weaponized riots – complete with vandalizing public property, attacks on the police and torching of at least 700 bank outlets. Much like the confrontations in Hong Kong since June.President Rouhani, aware of the social backlash, tactfully insisted that unarmed and innocent civilians arrested during the protests should be released. There are no conclusive figures, but Iranian diplomats admit, off the record, that as many as 7,000 people may have been arrested. Tehran’s judiciary system denies it. According to Iran’s Interior MinisterAbdolreza Rahmani Fazli, as many as 200,000 people took part in the protests nationwide. According to the Intelligence Ministry, 79 people were arrested in connection with the riots only in Khuzestan province – including three teams, supported by “a Persian Gulf state,” which supposedly coordinated attacks on government centers and security/police forces. The Intelligence Ministry said it had arrested eight “CIA operatives,” accused of being instrumental in inciting the riots. Now compare it with the official position by the IRGC. The chief commander of the IRGC, Major General Hossein Salami, stressed riots were conducted by “thugs” linked to the US-supported Mujahedin-e Khalq (MKO), which has less than zero support inside Iran, and with added interference by the US, Israel and Saudi Arabia. Salami also framed the riots as directly linked to “psychological pressure” from the Trump administration’s relentless “maximum pressure” campaign against Tehran. He directly connected the protests degenerating into riots in Iran with foreign interference in protests in Lebanon and Iraq.Predictably, the American narrative framed Lebanon and Iraq – where protests were overwhelmingly against local government corruption and incompetence, high unemployment, and abysmal living standards – as a region-wide insurgency against Iranian power.

How Iran Got North Korean Subs  - Tensions continue to mount between Washington and Iran, with every week bringing forth a new round of diplomatic threats and accusations. Most recently, Revolutionary Guards commander Maj. Gen. Hossein Salami gave a blistering speech in which he assured the Iranian parliament that the “vulnerability” of American aircraft carriers will prevent the U.S. military from challenging Iranian power in the Persian Gulf. Such rhetoric is par for the course for Iranian officials and state media, who project unwavering confidence in Iranian military capabilities.But just how capable is Iran’s conventional military, and do they really have the means to effectively resist a U.S. offensive? The National Interest previously looked at this nuanced question with overviews of Iran’sair force and surface navy. We now turn to what is arguably the core of Iran’s conventional military strength, and the reason why it boasts the fourth-strongest navyin the world: its submarine force. Perhaps the most striking aspect of Iran’s submarine roster is its sheer size, especially in relation to the rest of its navy. Whereas Iran’s combined output of operational corvettes, frigates, and destroyers hardly exceeds 10, it currently fields a whopping 34 submarines. The vast majority of these are midget-class--or “littoral”--diesel-electric vessels, with roughly two dozen from Iran’s homemade Ghadir class and several more from the North Korean Yugo class. Impressively, the Ghadir is much smaller but still has strong offensive capabilities; Ghadir vessels boast the same 533 mm torpedo tubes as the handful of Iran’s much larger Kilo vessels, only fewer at two versus six. To be sure, Iran’s heavy concentration of mini-submarines makes for unflattering comparisons with the much more robust submarine fleets of its American and Russian counterparts. However, their roster makes a great deal of military sense within the context of Iran’s strategic objectives. Iran has no need to project power sea power around the world, or even across the Middle East. Instead, the Iranian navy is constituted and organized around the specific goal of securing the Persian Gulf and specifically the Hormuz Strait. The limited range of Iran’s diesel-electric submarines is irrelevant in therestrictive and shallow confines of the Gulf, while their near-undetectability mine-laying capability makes them ideal candidates for patrol and ambush operations against hostile surface vessels.

Exclusive: U.S. says drone shot down by Russian air defenses near Libyan capital (Reuters) - The U.S. military believes that an unarmed American drone reported lost near Libya’s capital last month was in fact shot down by Russian air defenses and it is demanding the return of the aircraft’s wreckage, U.S. Africa Command says. Such a shootdown would underscore Moscow’s increasingly muscular role in the energy-rich nation, where Russian mercenaries are reportedly intervening on behalf of east Libya-based commander Khalifa Haftar in Libya’s civil war. Haftar has sought to take the capital Tripoli, now held by Libya’s internationally recognized Government of National Accord (GNA). U.S. Army General Stephen Townsend, who leads Africa command, said he believed the operators of the air defenses at the time “didn’t know it was a U.S. remotely piloted aircraft when they fired on it.” “But they certainly know who it belongs to now and they are refusing to return it. They say they don’t know where it is but I am not buying it,” Townsend told Reuters in a statement, without elaborating. The U.S. assessment, which has not been previously disclosed, concludes that either Russian private military contractors or Haftar’s so-called Libyan National Army were operating the air defenses at the time the drone was reported lost on Nov. 21, said Africa Command spokesman Air Force Colonel Christopher Karns.

Turkey Ready To Deploy Troops In Libya Against Haftar Offensive: Erdogan - Turkey and Libya have signed an expanded maritime, security and military cooperation agreement which gives Turkey the right to deploy troops there if requested by authorities in Tripoli, President Erdogan has told state-run TRT television in an interview on Monday. "In the event of such a call coming, it is Turkey's decision what kind of initiative it will take here." Erdogan said, as reported by Reuters. "We will not seek the permission of anyone on this," he underscored. This at a moment the country is still divided between Gen. Khalifa Haftar's advancing LNA forces and the UN-backed Government of National Accord (GNA) in Tripoli. Turkey has been the most aggressive backer of Tripoli, offering military equipment and even air power, while the UAE has provided most weaponry for Haftar's 'rebel' army in the developing proxy war. While Washington officially recognizes the GNA, the Trump administration has for months verbalized support for Haftar, long seen as the 'CIA's man in Libya'. "Haftar is nothing but a pirate," Erdogan said earlier this year after six Turkish sailors were briefly detained by pro-Haftar forces. Erdogan also claimed that based on the bilateral memorandum, signed on Nov. 27, Turkish forces entering Libyan territory or waters at the request of the GNA would not be a violation of the UN arms embargo on the war-torn country."With this new agreement between Turkey and Libya, we can hold joint exploration operations in these exclusive economic zones that we determined. There is no problem," Erdogan said. "Other international actors cannot carry out exploration operations in these areas Turkey drew (up) with this accord without getting permission. Greek Cyprus, Egypt, Greece and Israel cannot establish a gas transmission line without first getting permission from Turkey," he warned.

Turkey’s Erdoğan threatens to send troops into Libya- Turkey is prepared to send troops into Libya should the war-ravaged north African nation’s besieged government in Tripoli ask for Ankara’s aid, President Recep Tayyip Erdoğan warned Tuesday. The threat of intervention came as the Libyan capital, a metropolitan area comprising some two million inhabitants, appeared to be on the brink of an all-out battle between the collection of militias supporting the Tripoli-based, UN-recognized Government of National Accord (GNA) of Prime Minister Fayez al-Sarraj and the so-called Libyan National Army (LNA), which is aligned with a rival government based upon the Libyan House of Representatives in the eastern port city of Tobruk. Libya, once the wealthiest country in Africa, boasting the continent’s largest oil reserves, was transformed into a so-called failed state and plunged into a permanent state of chaos and bloodshed by the 2011 US-NATO war for regime change. A seven-month-long bombing campaign was launched in support of CIA-backed Islamist militias to destroy Libya’s security forces and vital infrastructure and overthrow the government of Muammar Gaddafi, who was tortured and murdered by an Islamist l Turkey is the sole power providing significant material support to the GNA of Prime Minister al-Sarraj in Tripoli. The Tobruk government and the LNA, which is commanded by the 76-year-old “Field Marshal” Khalifa Haftar, has won backing from Egypt, the United Arab Emirates, Jordan, Saudi Arabia, France and Russia. Washington’s attitude toward the conflict has been ambiguous. While the US formally recognizes the GNA in Tripoli and has called for a ceasefire, President Donald Trump spoke personally to Haftar last April as his forces were mounting a previous siege of Tripoli and, afterwards, praised him for playing a “significant role in fighting terrorism and securing Libya’s oil resources.” A former Gaddafi general turned CIA asset, Haftar spent two decades living near the CIA’s headquarters in Langley, Virginia, collaborating in US plots against the Gaddafi government, before returning to Libya shortly after the NATO war began in 2011 to lead NATO-backed “rebels.” Haftar’s forces have appeared to gain the upper hand amid reports of Russian aid in the form of military contractors as well as warplanes and air defense systems that have given them control of Libyan airspace.On Wednesday, US Secretary of State Mike Pompeo said that he had discussed Libya the day before with his Russian counterpart, Sergei Lavrov, in Washington, and had insisted that there was “no military solution.” He also reiterated US support for an arms embargo imposed against Libya in 2011, an embargo that was blatantly violated by the CIA in supplying arms to the Islamist militias in the country, weapons that later found their way to Al Qaeda-linked forces in Syria and elsewhere.

Israel Conducted Nuclear Missile Test Aimed At Iran - FM Zarif - Iran is crying foul after Israeli's Defense Ministry confirmed a major test of a mystery new "rocket propulsion system" on Friday morning.  “The defense establishment conducted a launch test a few minutes ago of a rocket propulsion system from a base in the center of the country,” the ministry said. “The test was scheduled in advance and was carried out as planned.”  Giving no further details, international reports were rife with speculation over the nature of the rocket, with many saying it was a nuclear-capable ballistic missile. This was enough for Iran's Foreign Minister Mohammad Javad Zarif to go off, saying in a statement posted to Titter: “Israel today tested a nuke-missile, aimed at Iran.” And he further complained that the West looks the other way when it comes to “about the only nuclear arsenal in West Asia,” but that it “has fits of apoplexy over our conventional defensive [rockets].” The mystery Israeli test was significant enough to require the temporary diversion of all inbound flights to Tel Aviv's Ben Gurion Airport. Israeli media publications also considered the possibility that it was a ballistic missile test, likely nuclear warhead capable surface-to-surface Jericho system, an intercontinental ballistic missile which according to foreign reports can support a nuclear payload. It comes at a tense time in the region following Israeli airstrikes on Syria and even Iraq, against what the IDF alleges were 'Iranian targets'. According to the Times of IsraelIsrael does not publicly acknowledge having ballistic missiles in its arsenals, though according to foreign reports, the Jewish state possesses a nuclear-capable variety known as the Jericho that has a multi-stage engine, a 5,000-kilometer range and is capable of carrying a 1,000-kilogram warhead.

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