oil prices fall by the most since May on pandemic fears; natural gas prices end at another life of contract low; gasoline supplies rise to a record high; natural gas rigs fall to a 38 month low; fracking falls to a 22 month low; the DUC well backlog is 7 months..
oil prices fell each day over past week and hence finished lower for a third straight week as the outbreak of a deadly new virus in China led to the lockdown of a city of 11 million people and the cancellation of Chinese New Year festivities, thereby depressing financial markets worldwide...after falling less than 1% to $58.54 a barrel last week on signs of oil oversupply and weak global demand, the benchmark price of US light sweet crude for February delivery opened more than 1% higher on Tuesday after the holiday after two large oilfields in Libya were shut down by rebel forces loyal to CIA backed General Haftar, but pared those gains in early trading as a new virus in China raised fears of an economic slowdown and sent oil prices back down to close 20 cents lower at $58.34 a barrel in the last day of trading for the February oil contract...thereafter quoting prices for the benchmark March US crude contract, which had finished Tuesday at $58.38, oil fell nearly 3% on Wednesday as the International Energy Agency (IEA) forecast an oil surplus while concerns over a potential epidemic depressed the demand outlook and prices settled $1.64 lower at $56.74 per barrel....oil prices opened lower and tumbled to as low as $54.77 a barrel early Thursday after the API reported large crude and product supply increases, but bounced off the lows after the EIA reported a small crude draw, but still ended $1.15, or 2% lower at $55.59 a barrel, the lowest price since Nov 29, on deepening fears that the coronavirus outbreak in China would have a severe impact on oil demand...U.S. crude prices then fell another 2.5%, or $1.40, on Friday to settle at $54.19, after hitting $53.85, the lowest price since Oct. 31, on concern that the Chinese virus would spread, curbing travel and global oil demand...thus, after fourth straight days of losses, the March oil contract finished 7.4% lower on the week in logging the largest one week decline since May...
natural gas prices also finished lower this week as technical selling and bearish weather forecasts beat down prices....after ending last week 9% lower at a life of contract low of $2.003 per mmBTU on a bearish weather outlook and the EIA's forecasts of lower demand, the price of natural gas for February delivery fell almost another 9% early Tuesday as a pile of $2 stop loss orders had been triggered over the holiday weekend, sending prices cratering, with prices partially recovering late Tuesday to close 10.8 cents lower, still down more than 5%, at $1.895 per mmBTU...gas prices then rebounded a penny on Wednesday and by 2.1 cents on Thursday, getting a boost “from short-term cold weather and snow” in parts of the U.S. as the natural gas storage report showed inventories fell a bit more than was forecast...but that was not enough to hold prices steady even at these depressed levels, as "dramatically bearish weather" continued to beat down natural gas prices on Friday, as they fell 3.3 cents more to close at $1.895 per mmBTU, thus finishing the week 5.5% lower, at yet another life of contract low...
the natural gas storage report on the week ending January 17th from the EIA indicated that the quantity of natural gas held in storage in the US fell by 92 billion cubic feet to 2,947 billion cubic feet by the end of the week, which left our gas supplies 554 billion cubic feet, or 23.2% higher than the 2,393 billion cubic feet that were in storage on January 17th of last year, and 251 billion cubic feet, or 9.3% above the five-year average of 2,696 billion cubic feet of natural gas that has been in storage as of the 17th of January in recent years....the 92 billion cubic feet that were withdrawn from US natural gas storage this week was a bit more than the average forecast for a 88 billion cubic feet withdrawal by analysts surveyed by S&P Global Platts, but it was much less than the 152 billion cubic feet withdrawal reported during the corresponding week of last year, and less than half of the average 194 billion cubic feet of natural gas that have been pulled from natural gas storage during the second full week of January 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 January 17th showed that with little change in the week's supply and demand factors, we again needed to pull oil out of our stored commercial supplies, in this case for the eighth time in the past nineteen weeks....our imports of crude oil fell by an average of 120,000 barrels per day to an average of 6,730,000 barrels per day, after falling by an average of 179,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 67,000 barrels per day to 3,414,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,018,000 barrels of per day during the week ending January 17th, 53,000 fewer 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 was unchanged at 13,000,000 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 16,018,000 barrels per day during this reporting week..
meanwhile, US oil refineries reported they were processing 16,857,000 barrels of crude per day during the week ending January 17th, 116,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that an average of 58,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US....hence, we can see that this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 782,000 barrels per day less than what our oil refineries reported they used during the week...to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+782,000) 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 have just transcribed...however, since the media treats these figures as gospel and since they drive oil pricing and hence decisions to drill for oil, we'll continue to report them, just as they're watched & believed as accurate by most everyone else (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 slipped to an average of 6,516,000 barrels per day last week, now 15.8% less than the 7,739,000 barrel per day average that we were importing over the same four-week period last year....the 58,000 barrel per day net withdrawal from our total crude inventories was all pulled from our commercially available stocks of crude oil, while the quantity of oil stored in our Strategic Petroleum Reserve was unchanged....this week's crude oil production was reported to be unchanged at a record 13,000,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was unchanged at a record 12,500,000 barrels per day, while a 4,000 barrels per day increase to 484,000 barrels per day in oil production from Alaska still added the same rounded 500,000 barrels per day to the rounded national total....last year's US crude oil production for the week ending January 18th was rounded to 11,900,000 barrels per day, so this reporting week's rounded oil production figure was 9.2% above that of a year ago, and 54.2% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...
meanwhile, US oil refineries were operating at 90.5% of their capacity in using 16,857,000 barrels of crude per day during the week ending January 17th, down from 92.2% of capacity the prior week, and a bit below the recent average refinery capacity utilization for the second full week of January...as a result, the 16,857,000 barrels per day of oil that were refined this week were 1.1% below the 17,049,000 barrels of crude that were being processed daily during the week ending January 18th, 2019, when US refineries were operating at 92.9% of capacity....
even with the modest decrease in the amount of oil being refined, gasoline output from our refineries was still higher, increasing by 254,000 barrels per day to 9,535,000 barrels per day during the week ending January 17th, after our refineries' gasoline output had increased by 394,000 barrels per day over the prior week...but even after this week's increase in gasoline output, our gasoline production was still 0.7% lower than the 9,604,000 barrels of gasoline that were being produced daily over the same week of last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 251,000 barrels per day to 4,954,000 barrels per day, after our distillates output had decreased by 105,000 barrels per day over the prior week...after this week's decrease in distillates output, our distillates' production for the week was 9.0% below the 5,444,000 barrels of distillates per day that were being produced during the week ending January 18th, 2018....
with the increase in our gasoline production, our supply of gasoline in storage at the end of the week increased for the eleventh week in a row and for the 17th time in 31 weeks, rising by 1,745,000 barrels to an all time high of 260,032,000 barrels during the week ending January 17th, after our gasoline supplies had increased by 6,678,000 barrels over the prior week....our gasoline supplies increased by less this week because the amount of gasoline supplied to US markets increased by 104,000 barrels per day to 8,662,000 barrels per day, and because our exports of gasoline rose by 201,000 barrels per day to 809,000 barrels per day, while our imports of gasoline rose by 120,000 barrels per day to 563,000 barrels per day....after this week's smaller than seasonal increase, our gasoline supplies were just fractionally higher than last January 18th's record gasoline inventory level of 259,615,000 barrels, and slipped to roughly 4% above the five year average of our gasoline supplies for this time of the year, which historically has been the annual peak...
with the decrease in our distillates production, our supplies of distillate fuels decreased for the 11th time in 17 weeks and for 26th time in the past 42 weeks, falling by 1,185,000 barrels to 146,036,000 barrels during the week ending January 17th, after our distillates supplies had increased by 8,171,000 barrels over the prior week....our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 1,204,000 barrels per day to 4,389,000 barrels per day, while our exports of distillates fell by 1,000 barrels per day to 1,054,000 barrels per day, and while our imports of distillates rose by 118,000 barrels per day to 320,000 barrels per day....even after this week's decrease, our distillate supplies were 2.6% more than the 142,392,000 barrels of distillates that we had stored on January 18th, 2018, but still about 2% below the five year average of distillates stocks for this time of the year...
finally, with refinery oil demand continuing to exceed the supply from imports and production, our commercial supplies of crude oil in storage fell for the seventeenth time in thirty-one weeks and for the twenty-second time in 52 weeks, decreasing by 405,000 barrels, from 428,511,000 barrels on January 10th to 428,106,000 barrels on January 17th...after that decrease, our crude oil inventories fell to 2% below the five-year average of crude oil supplies for this time of year, but were still more than 34.8% higher than the prior 5 year (2009 - 2013) average of crude oil stocks after the second full week of January, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels....even though our crude oil inventories had generally been rising over the past year, except for during the past summer, after generally falling until then through most of the prior year and a half, our oil supplies as of January 17th were 3.8% below the 445,025,000 barrels of oil we had stored on January 18th of 2018, but were 4.0% above the 411,583,000 barrels of oil that we had in storage on January 19th of 2017, while at the same time fell to 12.3% below the 488,296,000 barrels of oil we had in commercial storage on January 20th of 2016...
This Week's Rig Count
the US rig count decreased for the 19th time in the past 23 weeks during the week ending January 24th, and is now down by more than 26.7% from the last rig count of 2018...Baker Hughes reported that the total count of rotary rigs running in the US decreased by 2 rigs to 794 rigs this past week, which was also down by 265 rigs from the 1059 rigs that were in use as of the January 25th report of 2019, and 1,135 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in an attempt to put US shale out of business...
however, the number of rigs drilling for oil increased by 3 rigs to 676 oil rigs this week, which was still 186 fewer oil rigs than were running a year ago, and much less than the recent high of 1609 rigs that were drilling for oil on October 10th, 2014....at the same time, the number of drilling rigs targeting natural gas bearing formations fell by five to 115 natural gas rigs, the fewest natural gas rigs deployed since November 11th 2016, and hence a 38 month low for natural gas drilling, down by 82 gas rigs from the 197 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, 2008...in addition to the 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, compared 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 21 rigs this week, as a new rig began drilling offshore from Louisiana...the 20 rigs now drilling in Louisiana waters plus the one that was drilling offshore from Texas was one more than the Gulf of Mexico rig count of 20 rigs during the same week of a year ago, when 20 rigs were drilling offshore from Louisiana and none were operating in Texas waters...since there are no rigs deployed off other US shores elsewhere at this time, nor were there a year ago, the current Gulf of Mexico rig count as well as that of last year is the same as the national total in both cases..
the count of active horizontal drilling rigs was up by 1 rig to 710 horizontal rigs this week, the highest horizontal rig count since November 8th, but still 222 fewer horizontal rigs than the 932 horizontal rigs that were in use in the US on January 25th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....at the same time, the directional rig count was up by 3 rigs to 47 directional rigs this week, but those were still down by 12 from the 59 directional rigs that were operating during the same week of last year....on the other hand, the vertical rig count was down by 6 rigs to 38 vertical rigs this week, and those were down by 31 from the 68 vertical rigs that were in use on January 25th of 2019...
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 basins...in both tables, the first column shows the active rig count as of January 24th, the second column shows the change in the number of working rigs between last week's count (January 17th) and this week's (January 24th) count, the third column shows last week's January 17th 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 25th of January, 2019...
checking the Texas district details to find where the two rig increase in the Permian basin might have come from, we find that one rig was pulled out of Texas Oil District 8, or the core Permian Delaware this week, while another rig was pulled out of Texas Oil District 7B, an area often shown as east of the Permian but a district which nonetheless has accounted for Permian rig additions in recent weeks...hence, if both of those rigs had been targeting the Permian, then all of the rigs added in New Mexico must have been new Permian rigs, which would be drilling in the far western reaches of the Permian Delaware...elsewhere, the two rig decrease in Wyoming doesn't match any of our basin counts, so it's possible that those were conventional rigs pulled out of one of the productive Wyoming basins, such as the Powder River or Salt Creek ...meanwhile, the drop of 5 natural gas rigs includes two from the Haynesville, one from West Virginia's Marcellus, one from the Eagle Ford, and two from basins not tracked separately by Baker Hughes, while a natural gas rig was added in Ohio's Utica shale at the same time...in the Eagle Ford of south Texas, the gas rig decrease was offset by the addition of one rig targeting oil, leaving the basin with two rigs targeting gas and 67 rigs targeting oil, while the Haynesville decrease could have been the two rigs pulled out of Texas Oil District 6, or one of those plus the rig that was pulled out of northern Louisiana...the Texas Oil District 6 rig count plus the northern Louisiana rig count now adds up to 44 rigs, so all but one of those are targeting the Haynesville shale..
DUC well report for December
Tuesday of this past week saw the release of the EIA's Drilling Productivity Report for January, which includes the EIA's December data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the tenth month in a row, this report showed a decrease in uncompleted wells nationally in December, as both drilling of new wells and completions of drilled wells decreased.....for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 50 wells, falling from a revised 7,623 DUC wells in November to 7,573 DUC wells in December, which now represents 6.0% fewer DUCs than the 8,055 wells that had been drilled but remained uncompleted as of the end of December of a year ago...this month's DUC decrease occurred as 1,036 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during December, down by 33 from the 1,069 wells that were drilled in November and the lowest number of wells drilled since June 2017, while 1,086 wells were completed and brought into production by fracking, a decrease of 115 well completions from the 1,201 completions seen in November and the least completions since February 2018....at the December completion rate, the 7,573 drilled but uncompleted wells left at the end of the month now represents a 7.0 month backlog of wells that have been drilled but are not yet fracked, up from the 6.3 month backlog of a month ago, as the backlog rate is now rising due to falling completions...
both oil producing and natural gas producing regions saw DUC well decreases in December, even as four of the seven major basins saw small DUC increases...the number of DUC wells remaining in the Oklahoma Anadarko decreased by 54, falling from 686 at the end of November to 632 DUC wells at the end of December, as 58 wells were drilled into the Anadarko basin during November while 112 Anadarko wells were being fracked....at the same time, DUC wells in the Eagle Ford of south Texas decreased by 15, from 1,442 DUC wells at the end of November to 1,427 DUCs at the end of December, as 150 wells were drilled in the Eagle Ford during November, while 165 already drilled Eagle Ford wells were completed....on the other hand, DUC wells in the Bakken of North Dakota increased by 18, from 795 DUC wells at the end of November to 813 DUCs at the end of December, as 100 wells were drilled into the Bakken in December, while 82 of the drilled wells in that basin were being fracked...in addition, the Permian basin of west Texas and New Mexico saw its total count of uncompleted wells rise by 14, from 3,598 DUC wells at the end of November to 3,612 DUCs at the end of December, as 452 new wells were drilled into the Permian, while 438 wells in the region were being fracked....meanwhile, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range increased by 2 to 448, as 151 Niobrara wells were drilled in December while 149 Niobrara wells were completed....
among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 21 wells, from 448 DUCs at the end of November to 427 DUCs at the end of December, as 81 wells were drilled into the Marcellus and Utica shales during the month, while 102 of the already drilled wells in the region were fracked....however, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory increase by 6 wells to 214, as 44 wells were drilled into the Haynesville during December, while 38 Haynesville wells were fracked during the same period....thus, for the month of December, DUCs in the five major oil-producing basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a net of 35 wells to 6,932 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 15 wells to 641 wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...
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State works to draft 10-year forestry plan to include climate change, fracking - The Columbus Dispatch --The Ohio Division of Forestry is in the process of putting together a 10-year plan for the state’s forests. Ohioans can expect some changes. The deadline is March 1 to comment. Ten years ago, most southeastern Ohio landowners had no fracking well pads on their property. Most people had heard of climate change, but it wasn’t built into the social consciousness at the level it is now, As Ohio’s forestry officials prepare to draft a 10-year plan for the state’s forests, those are the kinds of topics that will have to be addressed in more detail. “We do have more information now, and (climate change) will certainly be included in the plan,” said Tom Macy, a forest health program administrator for the Ohio Department of Natural Resources. The 10-year plans only date back to 2010, when they were created through the 2008 Farm Bill as a requirement for state funding through the Cooperative Forestry Assistance Act. “We have a mandate from the U.S. Forest Service to involve other stakeholders,” Macy said.Ohio has 7.9 million acres of forestland. Of that, 85% is privately owned, with the remaining 15% owned by local, state and federal government.“We are facing a climate and biodiversity crisis globally. Our state foresters need to put protections and rejuvenation of existing forest habitats at the forefront of their oversight,” said Loraine McCosker, who volunteers with the Sierra Club and plans to attend one of the state meetings in Athens. “We need forests for clean air, clean water, carbon sequestration, biological diversity, (and) human physical and mental health.”Foresters will have to examine how native tree species will survive in a changing climate and what pests could be moving into Ohio.“We need a new, more science-based trajectory for the state,” McCosker said.The state’s oil and gas commission could convene and sign off on fracking on state-owned land. “Obviously, the impacts of the oil and gas industry in Ohio affect forests. ... That’s still a portion of the plan that I want to collect more data on,” Macy said. Ohioans have until March 1 to submit input about the plan, and they have the option of attending upcoming meetings. Macy said a draft of the plan should be completed in time for the first public meeting.
Ohio Valley Residents Respond to Oil And Gas Documentary - -- The Ohio Valley citizens group, Concerned Ohio River Residents, made the educational documentary prerelease screening of “The Story of Plastic” available Saturday afternoon at the Grave Creek Mound Historical Site theater in Moundsville. The group invited dozens of invited local “decision makers” and politicians in an effort to showcase the global plastic pollution crisis that the world now faces, according to Bev Reed, an organizer of the group. She said while the 90-minute film still has still not been released to the public by its creator, Deia Schlosberg, she is hopeful the film will be made available to the public as soon as possible.. “The Story of Plastic” focuses on exposing the truth behind the plastic pollution crisis, according to its creators. In the film, footage shot over three continents illustrates the ongoing catastrophe: fields full of garbage, heaps of trash; rivers and seas clogged with waste; and skies choked with the runoff from plastic production and recycling processes. The film shows interviews with experts and activists, and scenes which reveal the impact of the flood of plastic on ecosystems and communities around the world, and the global movement rising up in response. Reed said the film was meant to highlight the risks such industry would pose to the region, if the proposed Dilles Bottom ethane cracker plant would come to fruition. “This cracker plant would create about 3 billion pounds of plastic feed stock pellets per year — much of what would be used for single use plastics. It’s impacting our human health. It’s impacting animal health. “By 2050 plastic will outweigh fish in the world’s oceans so it’s very worrisome,” she added. Reed said another issue is the proposed cracker plant would be built by companies from overseas and the profits would not stay here.
Company linked to EPA chief of staff OKs $3.7M settlement -- In July 2013, EPA inspectors found an oil and gas well pad on an Ohio Boy Scout camp was leaking air pollution that could worsen climate change and cause lung damage. Nearly 6 ½ years later, the Trump administration has proposed a $3.7 million settlement agreement with well owner Gulfport Energy, a struggling Oklahoma-based firm with ties to EPA Chief of Staff Ryan Jackson. A former EPA enforcement director and a resident who lives near the leaking pads welcomed the tentative deal, but they both argued it took too long for the settlement to be reached. The agreement, filed yesterday with the U.S. District Court for the Southern District of Ohio, would require Gulfport to pay a $1.7 million penalty and spend around $2 million curbing volatile organic compound (VOC) emissions from the Fort Steuben Scout Reservation well pad and 16 other production sites in eastern Ohio. EPA estimates the required investments would cut 313 tons of VOCs per year. The Department of Justice will accept comments for 30 days on the proposal, which also needs to be approved by a federal judge from the Southern District of Ohio. "Gulfport has agreed to improve its operations to address these issues and to reduce air pollution," Kurt Thiede, the EPA regional administrator who oversees the Buckeye State, said in a press release that didn't mention the deal's climate benefits. "EPA is committed to reducing pollution and improving air quality throughout Ohio, helping residents breathe easier," Thiede said. The agreement also revealed that EPA had hit Gulfport with three separate notices of violation regarding air pollution from the so-called Boy Scout well pad: first in December 2013, then in December 2016 and again in March 2019. The latter pair of alleged violations also cited Gulfport for excess VOC emissions at more than a dozen other nearby production sites. The 2013 notice warned that "these violations have caused or can cause excess emissions of the greenhouse gas methane," a planet-warming compound that traps 20 times more heat than carbon dioxide over a century. "The buildup of greenhouse gases can change Earth's climate and result in dangerous effects to human health and welfare and to ecosystems." VOCs, the notice added, can also lead to lung-damaging smog. The subsequent notices — issued when Donald Trump was president-elect and then after he'd assumed office — reiterated concerns about VOCs but didn't list exacerbating climate change as one of the environmental impacts of the alleged violations.
This Problem With Fracked Oil and Gas Wells Is Occurring 'at an Alarming Rate' | DeSmog - On February 15, 2018, a fracked natural gas well owned by ExxonMobil's XTO Energy and located in southeast Ohio experienced a well blowout, causing it to gush the potent greenhouse gas methane for nearly three weeks. The obscure accident ultimately resulted in one of the biggest methane leaks in U.S. history. The New York Times reported in December that new satellite data revealed that this single gas well leaked more methane in 20 days than an entire year's worth of methane released by the oil and gas industries in countries like Norway and France. The cause of this massive leak was a failure of the gas well's casing, or internal lining. Well casing failures represent yet another significant but not widely discussed technical problem for an unprofitable fracking industry. Casing failures occur when the steel or cement that's lining an oil or gas well breaks or cracks, which means the well can't maintain pressure anymore and creates a pathway for anything inside the well — such as fracking fluids — to leak into the surrounding environment. They can take place, as in the example of Exxon's gas well in Ohio, at sites where hydraulic fracturing, or fracking, is happening. The results of these failures can be catastrophic, as a 2017 paper published by the Society of Petroleum Engineers spells out: “Outcomes from casing failures include blowouts, pollution, injuries/fatalities, and loss of the well with associated costs.” Wells used to produce oil and gas via fracking are different from what are known as “conventional,” or traditionally drilled, oil wells. While a fracked well is initially drilled vertically like a conventional well, at a certain point, the well bore turns and drills horizontally for distances up to 20,000 feet (that's nearly four miles). The well's vertical portion is made up of several layers of steel pipe casing and cement that are designed to protect nearby groundwater from the oil, gas, and fracking fluids that pass through the well. According to the Society of Petroleum Engineers paper, casing failures have been linked to the stresses and high pressures required to complete the fracking process and the industry is grappling with this costly and hazardous problem. This paper identified the problem in depth and used strong language (for engineers), noting, “Incidents of casing failures occurring during fracture stimulation operations are increasing at an alarming rate.”
Columbia Gas investing $33 million in Southeast Ohio - Columbia Gas says it will invest approximately $33 million to upgrade more than 36 miles of natural gas main lines and 2,500 customer service lines in Southeast Ohio in 2020. The Lawrence County community of Coal Grove is one of the locations on the list to receive upgrades. This work is part of an ongoing commitment by the company to enhance customer safety with 21 major gas line replacement projects this year, according to a news release from Columbia Gas. “We are proactively investing in our infrastructure to ensure customers will continue to have safe and reliable service now and long into the future,” Columbia Gas President Dan Creekmur said in the release. Since the gas line replacement program started, the number of leaks throughout Ohio has fallen by 40 percent. The Southeast Ohio projects are part of the company’s larger 25-year program to invest more than $2 billion to replace over 4,000 miles of pipeline across the state. Projects are currently in progress with 21 projects scheduled this year. Along with Coal Grove, construction is scheduled in the following areas:
Editorial: Dont chase cracker-plant jobs at cost of health, environment - The Columbus Dispatch - This editorial represents the opinion of the Dispatch editorial board, which includes the publisher, editor, editorial page editor and editorial writers. As Ohio officials do all they can to make a proposed $5 billion petrochemical plant a reality in Belmont County, we hope they are equally determined — and able — to protect the Ohio Valley’s air, water and health. To people concerned about the environment, climate change and public health, the facility proposed by Thailand-based PTT Global Chemical America is a nightmare. To expect the powers that be to oppose the plant, however, is unrealistic. The word “gamechanging” is used to describe the economic effect it could have on an area of the state that has suffered for decades from the decline of coal. If plans come together, the plant would mean thousands of construction jobs and hundreds of permanent jobs at the plant. The so-called “cracker” plant would take the ethane found in natural gas — produced in abundance via fracking wells in the area — and break the molecules into smaller molecules of ethylene, the root chemical for many plastic products.And the jobs and the building wouldn’t stop with the cracker plant. Its demand for ethane would spur more drilling in the area. There would be processing facilities to separate the ethane from the natural gas, and storage for the ethane destined for the cracker plant. A company called Energy Storage Ventures has said it will begin construction this year on a project to store 2 million barrels of ethane, butane and propane in underground salt caverns near Clarington, Ohio. Tying all that together would be miles of pipeline. With an even-bigger cracker plant under construction in western Pennsylvania and another proposed for West Virginia, a 300-mile stretch of the Ohio River could become a hub of petrochemical and plastics manufacturing. No pollution controls can mitigate the enormous impact a cracker plant, not to mention a built-out petrochemical hub, would have on climate change. One estimate holds that the cracker plant being built in Pennsylvania will essentially replace all the carbon reduction the city of Pittsburgh hopes to achieve by 2030.And what would all these emissions produce? Plastic — the very material that is clogging waterways worldwide. All in all, it seems a high price for Ohio to pay for jobs in an industry known for boom-and-bust cycles.
Beyond Fracking: Oil-and-Gas Industry's Toxic Waste Is Radioactive - Oil-and-gas wells produce nearly a trillion gallons of toxic waste a year. An investigation shows how it could be making workers sick and contaminating communities across America. In a squat rig fitted with a 5,000-gallon tank, Peter crisscrosses the expanse of farms and woods near the Ohio/West Virginia/Pennsylvania border, the heart of a region that produces close to one-third of America’s natural gas. He hauls a salty substance called “brine,” a naturally occurring waste product that gushes out of America’s oil-and-gas wells to the tune of nearly 1 trillion gallons a year, enough to flood Manhattan, almost shin-high, every single day. At most wells, far more brine is produced than oil or gas, as much as 10 times more. It collects in tanks, and like an oil-and-gas garbage man, Peter picks it up and hauls it off to treatment plants or injection wells, where it’s disposed of by being shot back into the earth. One day in 2017, Peter pulled up to an injection well in Cambridge, Ohio. A worker walked around his truck with a hand-held radiation detector, he says, and told him he was carrying one of the “hottest loads” he’d ever seen. It was the first time Peter had heard any mention of the brine being radioactive. Many industry representatives like to say the radioactivity in brine is so insignificant as to be on par with what would be found in a banana or a granite countertop, so when Peter demanded his supervisor tell him what he was being exposed to, his concerns were brushed off; the liquid in his truck was no more radioactive than “any room of your home,” he was told. But Peter wasn’t so sure. “A lot of guys are coming up with cancer, or sores and skin lesions that take months to heal,” he says. Peter experiences regular headaches and nausea, numbness in his fingertips and face, and “joint pain like fire.” “It’s all over your hands, and inside your boots, and on the cuticles of your toes, and any cuts you have — you’re soaked,” he says. […] “It’s ridiculous that these drivers are not being told what’s in their trucks,” says John Stolz, Duquesne’s environmental-center director. “And this stuff is on every corner — it is in neighborhoods. Truckers don’t know they’re being exposed to radioactive waste, nor are they being provided with protective clothing. “Breathing in this stuff and ingesting it are the worst types of exposure,” Stolz continues. “You are irradiating your tissues from the inside out.” The radioactive particles fired off by radium can be blocked by the skin, but radium readily attaches to dust, making it easy to accidentally inhale or ingest. Once inside the body, its insidious effects accumulate with each exposure. It is known as a “bone seeker” because it can be incorporated into the skeleton and cause bone cancers called sarcomas. It also decays into a series of other radioactive elements, called “daughters.” The first one for radium-226 is radon, a radioactive gas and the second-leading cause of lung cancer in the U.S. Radon has also been linked to chronic lymphocytic leukemia. “Every exposure results in an increased risk,” says Ian Fairlie, a British radiation biologist. “Think of it like these guys have been given negative lottery tickets, and somewhere down the line their number will come up and they will die.”
1982 American Petroleum Institute Report Warned Oil Workers Faced 'Significant' Risks from Radioactivity – DeSmog --Back in April last year, the Trump administration’s Environmental Protection Agency decided it was “not necessary” to update the rules for toxic waste from oil and gas wells. Torrents of wastewater flow daily from the nation’s 1.5 million active oil and gas wells and the agency’s own research has warned it may pose risks to the country's drinking water supplies. On Tuesday, a major new investigative report published by Rolling Stone and authored by reporter Justin Nobel delves deep into the risks that the oil and gas industry’s waste — much of it radioactive — poses to the industry’s own workers and to the public. “There is little public awareness of this enormous waste stream,” Nobel, who also reports for DeSmog, wrote, “the disposal of which could present dangers at every step — from being transported along America’s highways in unmarked trucks; handled by workers who are often misinformed and underprotected; leaked into waterways; and stored in dumps that are not equipped to contain the toxicity.” Additional documents obtained by Nobel and shared with DeSmog show that a report prepared for the American Petroleum Institute (API), the nation's largest oil and gas trade group, described the risks posed by the industry's radioactive wastes to workers as “significant” in 1982 — long before the shale drilling rush unleashed new floods of wastewater from the industry — including waste from the Marcellus Shale, which can carry unusually high levels of radioactive contamination. Oil and gas wells pump out nearly a trillion gallons of wastewater a year, Rolling Stone reported. That’s literally a river of waste — enough to replace all the water flowing from the Mississippi River into the Gulf of Mexico for more than two and a half days. Much of that wastewater, often referred to by the industry as “brine,” carries high levels, not of familiar table salt, but of corrosive salts found deep below the Earth’s surface, as well as toxic compounds and carcinogens. That water can also carry serious amounts of radioactive materials. The Rolling Stone report, labeled “sobering” by the Poynter Institute, described levels of radium as high as 28,500 picocuries per liter in brine from the Marcellus Shale, underlying Pennsylvania, Ohio, New York, and West Virginia, levels hundreds of times as much as the Nuclear Regulatory Commission would allow in industrial discharges from other industries.
Radioactive Marcellus, Utica well waste flows through 'loophole' - A federal loophole could mean millions of tons and billions of gallons of radioactive natural gas waste are being disposed of as if they were not radioactive. According to the investigation by Rolling Stone, liquid brine from the average Marcellus well contains more than 9,000 picocuries per liter of radium. A picocurie, abbreviated pCi, is equal to the radioactivity of one gram of radium. A nuclear site is not allowed to discharge wastewater above 60 pCi. Melissa Troutman, research and policy analyst for the nonprofit group Earthworks, said the problem is an exemption included in federal law for oil and gas waste decades ago. "It is exempt from hazardous waste law, and has been since the 1980s," Troutman said. "So for the past 40 years, this waste has been disposed of improperly and has led to water and land contamination as well as public health risks." Brine is used in commercial de-icing products and spread by municipal de-icing trucks, according to the Rolling Stone investigation. Though the Ohio Department of Transportation uses brine to de-ice state roads, it's not from brine wells, a spokesperson told Mahoning Matters Friday — rather, a traditional mixture of salt in water.The oil industry argues that naturally occurring radioactivity doesn't pose a real threat to humans or the environment. And gas drillers' political allies have said increased regulations would stunt growth at a time when the industry is already troubled by low prices.Troutman said the levels and types of radioactivity in the waste are far more dangerous than what people normally would encounter, particularly when it is concentrated in the processes of production and disposal. She adds there are people in Congress who see this as a serious problem. "At the federal level, there are bills that have been introduced to close the hazardous waste loophole," she said. "The unfortunate thing is, the political will is not there to do so."
Marcellus Shale rig counts steady for '20, way down for '10 - Pennsylvania's number of natural gas drilling rigs held steady as it has for the new year, but it's down sharply from production a year ago. There were 25 drilling rigs operating in Pennsylvania for a second week, according to a tally released weekly by oilfield services company Baker Hughes (NYSE: BKHS). But it shows a big decline from this time a year ago, when there were 48 rigs. The year-to-year drop in the count is due to lower prices for natural gas, which has led to a cut in drilling and related services. Ohio and West Virginia also remained steady, with 10 rigs and 16 rigs respectively. It's down seven year-over-year in Ohio but West Virginia is up one from a year ago.
OSHA fines Philadelphia refinery for safety violations -- Monday, January 20, 2020 -- Federal workplace safety authorities fined the Philadelphia Energy Solutions refinery $132,600 for a string of violations related to the fiery explosions that destroyed the plant last summer.
Philly refinery auction said to attract Chicago developer that rehabs industrial properties - The fate of the bankrupt Philadelphia Energy Solutions refinery complex, shut down since a catastrophic fire and explosion last June, hung in the balance on Friday. At least two bidders attended a closed-door auction conducted Friday at a New York City law firm handling the refinery’s bankruptcy. Results of the auction were not immediately disclosed. The bidders included Philadelphia Energy Industries (PEI), a company formed by former refinery chief executive Philip Rinaldi that wants to resume refining petroleum on the 1,300-acre site, the largest refining complex on the East Coast. According to sources, a second bidder, Hilco Redevelopment Partners, a Chicago real estate firm that specializes in developing old industrial sites into new uses, was also in contention. A spokesman for Hilco declined to comment Friday. Hilco is redeveloping the former Sparrows Point steel mill in Baltimore, a 3,100-acre waterfront site with deep-water access, into an industrial site called Tradepoint Atlantic. Hilco is also remediating several sites of shuttered power-generation stations, including the proposed L Street Station mixed-use property in South Boston. Last year Hilco bought two New Jersey closed coal-fired plants, including one near Trenton, and plans to develop them into industrial ventures. The auction may not necessarily result in a sale. If the refinery’s creditors decide the bids are too low, they could “credit bid” up to the amount they are owed and keep the property for themselves. Cortland Capital Market Services LLC is the lead bank on a $699 million term loan.
‘Their timeline is aggressive’: Hilco plans to clean up polluted South Philly refinery site, city says --Hilco Redevelopment Partners, whose $240 million bid won an auction to acquire the bankrupt Philadelphia Energy Solutions refinery site, aims to move quickly to clean up the 1,300-acre South Philadelphia property and redevelop it into a mixed-use industrial facility, according to city officials.“I think their timeline is aggressive, I’ll put it that way,” Brian Abernathy, the city’s managing director, said in an interview Wednesday. “They want to be in the ground quickly.” Abernathy, who headed a four-member city government delegation that attended Friday’s six-hour-long auction, said Hilco had done its homework and came well-prepared for negotiations. The Chicago-based company, which specializes in repurposing industrial properties, did not submit a formal plan for the site, but painted its plans in “broad brushes,” he said. “They’ll probably still keep the tank farm and some of the energy logistics that are on-site, but they don’t intend to operate the refinery,” said Abernathy. He said Hilco is likely to develop the site for multiple users, which he said was “exciting” because the property will be less dependent upon a single industry that is susceptible to boom-and-bust cycles. PES’s plans require the approval of U.S. Bankruptcy Court Judge Kevin Gross, who has scheduled a confirmation hearing for Feb. 6. The deadline for creditors to vote on the plan, and for filing any objections to the plan, is Feb. 3. Hilco was one of two finalists bidding on the refinery, which shut down following a June 21 fire and explosion and declared bankruptcy. The 335,000-barrels-a-day refinery was the largest oil-processing facility on the East Coast and had been in operation for 150 years.
PES creditors fight to reject refinery sale to Hilco - (Reuters) - Creditors of bankrupt Philadelphia Energy Solutions are opposing the sale of its oil refinery to Hilco Redevelopment Partners, saying another developer made a more lucrative bid for the site, according to court documents filed on Thursday. Industrial Realty Group submitted a bid of $265 million during an auction last week to sell the idled refinery site, $25 million more than Hilco’s bid, according to filings by law firm Brown Rudnick LLP in United States Bankruptcy Court for the District of Delaware. PES did not immediately respond to a request for comment. The refiner announced on Wednesday that it agreed to sell its 335,000 barrel-per-day refinery, the largest and oldest on the U.S. East Coast, to Chicago-based real estate developer Hilco, naming Industrial Realty Group as a back-up bidder. PES’s unsecured creditors, which include companies that had supplied contract work to PES, as well as workers’ unions employed by the refinery, have pushed for a buyer that would restart the complex.
Chicago developer Hilco’s $240 million bid wins auction for bankrupt Philadelphia refinery - Bankrupt Philadelphia Energy Solutions has agreed to sell its shuttered South Philly refinery complex to a Chicago development company with experience repurposing old industrial properties for new uses, likely marking an end to the site’s 150-year-old history as a petroleum refinery. Hilco Redevelopment Partners, a Chicago real estate firm that has acquired old power plant sites in Boston and New Jersey, and is building warehouses on a former steel mill site in Baltimore, agreed to pay $240 million to acquire the 1,300-acre refinery site during a closed-door auction Friday, according to a U PES chief executive Mark Smith announced the deal Tuesday in a memo to employees, saying that Hilco’s affiliate, HRP Philadelphia Holdings LLC, would announce its plans for the site at a later date. “We will continue to maintain the refinery complex, remove the hydrocarbon inventory in the facility, protect the facility and prepare for a safe handoff of the facility to HRP Philadelphia Holdings LLC, which is expected to occur within 60-90 days,” Smith said in his memo.
South Philly explosion caused by crack in gas main, officials say - Officials say a crack in a 92-year-old natural gas main led to the explosion that devastated a South Philadelphia block last month, killing two people, destroying five rowhouses, and forcing the evacuation of 60 residents. An investigation by the Pennsylvania Public Utility Commission into the underlying cause of the crack is ongoing, Fire Commissioner Adam Thiel said at a news conference Thursday. By Dec. 23, four days after the explosion, Philadelphia fire marshals had determined a crack in the gas line, causing natural gas to leak, led to the blast, Thiel said. The state commission’s in-depth investigation is now “exploring the cause and circumstances surrounding this incident, along with whether there are any violations of state or federal pipeline safety regulations," according to a statement from the agency. That investigation could take a year or longer, the commission said.
'We're failing to meet many of our goals,' DEP official says as environmental oversight board passes hefty fee hike - A state environmental oversight board agreed to increase the permit fee for natural gas drilling by 150 percent, arguing that the hike was needed to fund the state’s regulatory program. During a meeting Tuesday, the Environmental Quality Board hiked the fee to $12,500 for any well, up from $5,000 for non-vertical wells and $4,200 for vertical wells.Even as permit applications have declined from the peak of the gas boom, inspections have gone up, according to Department of Environmental Protection oil and gas chief Scott Perry.While the agency has adopted new policies and digitized inspections to cut costs and increase efficiency, Perry said there isn’t much more that can be done under the current budget.“We’re failing to meet many of our goals and we have IT projects that are going unmet,” Perry said.According to the 2012 state law governing the natural gas industry, the permit fee should “bear a reasonable relationship to the cost of administering this chapter.” The department estimates an annual budget of $25 million. The state’s impact fee — a tax on each well drilled, not on the gas extracted — provides $6 million each year to the DEP for oil and gas regulation. That is a small fraction of the $198 million the fee brought in last year.
Pennsylvania board votes to raise shale well permit fees 150% | Pittsburgh Post-Gazette — Permit fees for shale gas wells in Pennsylvania will more than double under a rule change approved by a state environmental board on Tuesday.The fee to drill a new Marcellus or Utica shale well will rise from $5,000 to $12,500 — the highest in the U.S. Regulators with the Department of Environmental Protection said said the hike is necessary to maintain the program that permits and inspects the commonwealth’s vast number of new and old wells.Permit fees are the program’s primary source of funding but applications have declined significantly in recent years.At the increased rate, the fee will amount to 0.16% of the $8 million it costs to drill an unconventional well, DEP said.Critics of the increase say it is high enough to discourage companies from drilling new wells and may only compound DEP’s funding problems by driving permit applications even lower.The increase must still be reviewed by the environmental committees in the state House and Senate and Pennsylvania’s Independent Regulatory Review Commission before it can take effect.The department has received far fewer permits than the 2,600 a year it counted on getting the last time it raised fees in 2014. Companies are seeking to drill fewer wells as gas prices have declined and operations have become more efficient. New wells stretch much farther into rock layers underground and extract much more gas from them. Since 2014, DEP’s oil and gas program has shrunk from 226 to 190 employees and its operating costs have been reduced by 38%, Scott Perry, deputy secretary for the Office of Oil and Gas Management, said at an Environmental Quality Board meeting.Mr. Perry said the fee increase is necessary just to maintain the program in its current, reduced state. He said the program has determined it would need 49 additional positions to meet its goals.The new fees are based on the assumption that DEP will receive 2,000 permit applications a year, but the agency hasn’t hit that target since 2015. Since then, DEP has received an average of 1,750 applications each fiscal year. This fiscal year, it is on track to receive fewer than 1,600. Despite that, Mr. Perry said the program “will have the revenue sufficient to maintain the program at current staffing levels for the next three years.”That is in no small part due to a windfall of $25.6 million that the oil and gas program will get from the $30.6 million fine paid by Energy Transfer Corp. for the September 2018 explosion of the Revolution pipeline in Beaver County.
Veto gas bill, limit pollution - Pollution that flows from conventional gas wells in Pennsylvania is just as toxic as that produced by the newer, deep, fracked wells characteristic of the industry across the Marcellus Shale. Yet, in a case of special interest pandering, many legislators want that pollution to be less lightly regulated than Marcellus Shale pollution. Conventional wells are shallow, vertical wells that were typical prior to the advanced deep-drilling technology that has opened the Marcellus and Utica shales to development. Under a bill sponsored by Senate President Pro Tempore Joseph Scarnati of Jefferson County, shallow well drillers would not face the same requirements as deep-well drillers for reporting spills of polluted brine and crude oil. A 2018 Penn State study of drilling-related brine, which flows to the surface during drilling, usually includes significant amounts of the known carcinogen radium, “often many times above drinking water standards.” It also found that the brine can leach metals, salts and radioactive material into surface or groundwater, soil and air. It makes scant difference to someone affected by groundwater pollution whether the polluting agent generated by a shallow or deep well. Making distinctions based on the depth of the well, or the size of the company responsible for it is not effective environmental regulation, because the regulation is supposed to target the pollution rather than the company. Given what is known and worse, unknown, about drilling-related pollution, it is folly to loosen environmental regulations. Unfortunately, the bill already has passed the Senate and a House committee. Fortunately, Gov. Tom Wolf appears inclined to veto it. “This bill still poses an undeniable risk to the health and safety of our citizens, the environment, and our public resources,” gubernatorial spokesman J.J. Abbott wrote in a statement. The House should reject the bill, but Wolf should follow through on the veto if it passes.
Delaware Riverkeeper seeks rehearing of Adelphia pipeline approval - West Rockhill officials also plan to appeal December’s Federal Energy Regulatory Commission approval of the controversial pipeline project.The Delaware Riverkeeper Network wants a new hearing on the federal approval of an 84-mile natural gas pipeline that has West Rockhill residents and officials riled for nearly two years over concerns about its local impact.The Federal Energy Regulatory Commission approved a Certificate of Public Convenience and Necessity for Adelphia Gateway LLC, in December, giving the OK for a project converting 50 miles of an existing pipeline from oil to natural gas.The project includes a 10,000-square-foot, 5,625-horsepower compressor station on a 1.5-acre property on Rich Hill Road in West Rockhill, a facility that township residents and officials are opposing.The rehearing petition filed by the network asserts FERC took “a narrow view” of the pipeline’s necessity and failed to account for adverse climate, health and safety impacts on the communities the pipeline passes through.
Gov. Justice Reiterates Support For W.Va. Natural Gas Drillers As Industry Struggles - West Virginia’s top official says the state is prepared to do “anything” to help the state’s struggling oil and natural gas industry. Speaking at the annual winter meeting of the Independent Oil and Gas Association of West Virginia on Wednesday, Jan. 22, Gov. Jim Justice told the crowd of drillers and producers that his administration believes the industry is vital to the state’s economic health and that he’s in lockstep with the industry in supporting legislative relief. “I can't be any more sympathetic,” Justice said. “I do really believe that we're doing things to make things better.”Justice assured the audience he intended to sign House Bill 4091. The bill, which creates an expedited permitting process for drillers, passed in the House and is under consideration in the Senate. He also expressed support for H.B. 4090, which reduces the severance tax on low-producing wells and siphons some of the proceeds toward plugging orphaned wells. Justice vetoed a version of the bill that passed last session.The governor urged natural gas producers to ride out the current record-low gas prices. “If you can survive for two or three more years, the opportunity to the upside for you, for this is off the chart. It's off the blooming chart,” he said. “Because the stars have aligned. Now, it maybe took me a little while to catch up, but I'm there. I'm all in.” Justice was light on specifics.
Poll: Most New Jersey voters want to choose their own home energy - A poll released today by a powerful labor union on energy issues might frighten legislators who come out in support of Gov. Phil Murphy’s plan to eliminate fossil fuel and move to 100% electrification. More than seven out of ten New Jersey voters, 71%, say they are less likely to vote for legislative candidates who support increasing energy and utility costs by 30%, according to a McLaughlin & Associates poll conducted for the Engineers Labor-Employer Cooperative 825 and the International Union of Operating Engineers Local 825. The state Board of Public Utilities is expected to release a final version of the New Jersey Energy Master Plan next week. According to the poll, 67% of New Jersey voters disapprove of a plan that would ban the use of natural gas for homes, businesses and transportation. Just 25% approve. When asked if they would approve of replacing natural gas with a “more environmentally friendly” electric form of energy, the number went to 41% approve and 55% disapprove. “Our polling shows one clear and undeniable fact – New Jersey residents want clean, affordable, and reliable Natural Gas. If next week’s Energy Master Plan includes a moratorium or complete phase-out of Natural Gas, it will be at complete odds with the voters of New Jersey,” said Greg Lalevee, the Operating Engineers business manager and the ELEC825 chairman. “Through this poll, respondents tell us that they’re willing to vote out anyone who seeks to eliminate their access to Natural Gas through a government mandate since it only will increase the price of energy for families and businesses large and small across New Jersey.”
Baker budget ups fines for gas utility violations - -- The Baker administration is looking to sharply increase the fines it can assess on companies that do work on or near natural gas pipelines and to make utilities establish a timeline for replacing leak-prone pipes. In addition to a $5 million outlay for the Department of Public Utilities’ Pipeline Safety Division to ensure natural gas companies are in compliance with safety regulations, the $44.6 billion spending plan Gov. Charlie Baker filed Wednesday includes seven outside sections dealing with gas pipeline safety requirements and fines. The sections would increase fines for Dig Safe violations, emergency response violations and for violations of the state’s pipeline code. They would also eliminate the exemption municipal water companies have from Dig Safe requirements and add new requirements for gas companies’ gas safety enhancement plans, which were introduced under a 2014 gas leaks law. Baker said Wednesday that the gas safety measures are part of his administration’s attempts to shore up the safety of the state’s natural gas infrastructure after the gas explosions and fires that killed one man, razed several homes and destroyed property across Lawrence, Andover and North Andover in September 2018. “I think from our point of view, there were a series of recommendations that were made in the original report that came out around Columbia [Gas] and I think our view was that making those investments would be an important part of our ability to do the work that we need to do here in Massachusetts to make sure that our grid is safe,” the governor said Wednesday when he unveiled his fiscal 2021 spending plan. A company contracted by the Baker administration to examine the safety of natural gas infrastructure in the wake of the Merrimack Valley disaster, Dynamic Risk Assessment Systems Inc., wrote in its initial report last year that Massachusetts’s gas distribution system is “generally reliable” but is made up of a higher proportion of leak-prone pipes, mains, and services made out of cast iron, wrought iron or unprotected steel. Massachusetts has 21,669 miles of natural gas mains or 1.7 percent of the total main mileage in the United States. But Massachusetts’ 3,049 miles of cast iron mains account for 12.4 percent of the nation’s total. The state’s 1.3 million natural gas service lines represent 1.9 percent of the nationwide total, but Massachusetts has 18 percent of the country’s cast iron services.
America Is Awash With Natural Gas and It’s About to Get Worse - Trump spoke at an industry event of the “astonishing increase” in shale gas production. The Appalachian region has spearheaded a historic expansion, turning the U.S. into the world’s biggest producer while slashing prices for consumers and sounding the death-knell for domestic coal. But the dark side of the boom is increasingly difficult to ignore. Shale drillers are extracting so much gas that it’s overwhelming demand. Prices dipped briefly below $2 per million British thermal units on Friday for the first time since 2016 and traded below the threshold again on Monday. At that level, U.S. producers simply don’t make money. It’s forcing a wave of multibillion-dollar writedowns, layoffs and spending cuts. Still, the industry is powerless to stop a wave of additional gas hitting the market as a byproduct of rising shale oil output in places like the Permian Basin of West Texas and New Mexico. Even exports of liquefied natural gas provide little relief, as the international market is also oversupplied.“The industry is a victim of its own success,” said Devin McDermott, an analyst at Morgan Stanley. “You don’t just have oversupply in the U.S. -- you have oversupply in Europe, oversupply in Asia, and really oversupply across the globe.” Futures for February dropped 4.5% to $1.912/MMBtu on Monday. According to McDermott, U.S. producers need gas to be at least $2.50 in order to generate free cash flow. “In the near-term, we don’t think it’s realistic to see a $2.50 price,” he said.
Warm Weather Allows Prompt Month Natural Gas Prices To Sink Under $2.00 --Warm weather continues to take a heavy toll on the natural gas market, with the long weekend bringing even more changes to the warmer side, enough so that, on a Gas-Weighted Degree Day (GWDD) basis, we are now projecting this January to be the 3rd warmest in our historical dataset, behind only 2006 and 1990. The pattern has a very "El Niño-like" look, which without any high-latitude blocking leads to warmth across most of the U.S. outside of parts of the South. Despite the historically low price environment, it is difficult to avoid moving even lower with a high-level warm pattern in the middle of winter. We hit on these points in our "Pre-Close Update" sent out to clients Friday afternoon, taking a slightly bearish stance into the weekend despite Friday's close being almost dead on $2.00 in mid-January with a market that is already heavily short, citing the likelihood of continued warmth taking us lower. So far, that is exactly what has happened, with prompt month prices currently down in the low $1.90s. All the while, we continue to see production well under the highs from late November, which along with stronger weather-adjusted power burns has helped tighten supply demand balances. In a "normal" scenario, this would be increasingly bullish, but this weather pattern is, as shown above, anything but normal, and will continue to rule price action as long as it stays biased strongly to the warmer side of normal. Can the run of warmth continue well into February, or will we finally see things change enough to stop the natural gas price plunge? We track both weather and fundamentals closely in our daily reports, providing a unique blend of data to present a clearly view of future price action.
Has Natural Gas Hit Rock Bottom? - U.S. natural gas prices fell below $2/MMBtu on Friday for the first time in nearly four years. The gas market is suffering from oversupply, as the shale industry has drilled the market into another bust. The share prices for top gas players were deep into red territory on Friday. Range Resources, for instance, was off by more than 8 percent. The story has been the same for quite a while. Natural gas production has surged more or less for a decade, and much of it was soaked up by new gas-fired power plants, new petrochemical facilities, or otherwise exported via new LNG export terminals. But production continued to climb, and here we are – a mild start to the winter and prices have fallen off a cliff. Part of the problem is the ongoing production increases in the Permian with total disregard to any price signal. Permian drillers are after the oil, leading to continued output increases of associated gas, despite prices often traded at or even below zero. The market has become so depressed that financial pressure in the Marcellus shale is increasing. Chevron took an $11 billion write down in the fourth quarter, much of it the result of its devalued assets in Appalachia. Only days ago, EQT, the largest gas producer in the country, announced a $1.8-billion write down, while Moody’s downgraded the company’s credit rating into junk territory. EQT’s CEO said in December that “a lot of this development doesn’t work as well at $2.50 gas.” Well, if he doesn’t like $2.50 gas, he’s really not going to like sub-$2 gas. Meanwhile, the oversupply issue is not isolated to the United States. The global market for LNG is also increasingly depressed, due to weaker-than-expected demand and the wave of new export capacity that came online in 2019. Spot prices for LNG in Asia – the closely-watched JKM marker – fell below $5/MMBtu, a shockingly low level for winter months. Worse – from the perspective of exporters – prices could fall further still. “JKM is expected to fall close to $3/MMBtu in the months ahead, which would leave the potential for sub-$3/MMBtu assessments on select days this summer,”according to S&P Global Platts Analytics. The problem is that global LNG capacity continues to rise, even as China – who everyone seems to think will gobble up every last cargo – has seen its rate of economic growth slow. Moreover, China is set to see increased volumes of gas imports from the newly started Power of Siberia gas pipeline from Russia. The cycles for the LNG market are slow, which magnifies the boom and busts. The wave of export terminals that came online in 2019 were the result of a wave of investment made earlier in the decade, which itself was an outgrowth of very high prices. LNG supply simply can’t react to short-term swings.
US working natural gas in underground storage decreases by 92 Bcf: EIA | S&P Global Platts — US natural gas working stocks fell by 92 Bcf last week, which was within market expectations, but more than 100 Bcf below the five-year average draw, as Henry Hub winter futures remain below $2/MMBtu. Storage inventories fell to 2.947 Tcf for the week ended January 17, the US Energy Information Administration reported Thursday morning. The pull was more than an S&P Global Platts' survey of analysts calling for an 88 Bcf draw. The withdrawal was well below the 152 Bcf pull reported during the corresponding week in 2019 as well as the five-year average draw of 194 Bcf, according to EIA data. As a result, stocks were 554 Bcf, or 23%, more than the year-ago level of 2.393 Tcf and 251 Bcf, or 9%, more than the five-year average of 2.696 Tcf. Gas prices staged a small rebound Thursday morning after the EIA reported a slightly larger-than-expected storage withdrawal, with February Henry Hub trading 4 cents higher and the balance of the first half of 2020 trading about 2 cents higher. Mild bullishness notwithstanding, gas prices continue to sell off as weather forecasts anticipate continued mild weather in the near term, against the backdrop of a structurally loose supply-demand balance in the longer term. February Henry Hub sank to a low of just $1.89/MMBtu Tuesday, nearly 30 cents lower from a week before. A forecast by S&P Global Platts Analytics' supply and demand model calls for a much larger draw of 193 Bcf for the week ending January 24, which would decrease the surplus to the five-year average by 50 Bcf. The US has finally seen some real gains in demand this week as lower temperatures across the eastern half of the county have helped drive a more-than-18 Bcf/d increase in total demand compared with the week that ended January 17. Total demand is averaging 124.6 Bcf/d. More than half the gains occurred in the Northeast, where consumption has risen almost 11 Bcf/d week on week. Upstream, supplies have grown as well, but to a much lesser degree, rising 1.3 Bcf/d on the week, according to Platts Analytics. Embedded within the change are several large movements among individual aspects of supply. Onshore production has fallen by 1.5 Bcf/d week on week, much of which is coming from a dip in Texas. The decline in domestic supply has been offset, though, by a nearly 2 Bcf/d rise in net Canadian imports. Platts Analytics' currently expects the heating season to finalize on March 31 with 2 Tcf remaining in storage, exactly 300 Bcf more than the five-year average.
SUPREME COURT: Pipeline foes: Congress alone can OK trail crossing -- Friday, January 17, 2020 -- Does a footpath count as "land" under federal law, or does it simply "traverse land"?
Virginia Senate panel OKs offshore drilling, fracking bans (AP) — A Virginia Senate committee on Tuesday advanced measures that would ban offshore drilling as well as hydraulic fracturing in much of eastern Virginia. Similar versions of both measures have been proposed in previous years but died in what was then a Republican-controlled General Assembly. Democrats who took control of both chambers of the legislature in November’s elections have pledged to enact stricter environmental laws. “I think elections have consequences, and one of the consequences is a cleaner environment for Virginia,” Michael Town, executive director of the Virginia League of Conservation Voters, said after the votes. The Senate Committee on Agriculture, Conservation and Natural Resources approved Democratic Sen. Scott Surovell’s measure prohibiting hydraulic fracturing — or fracking — in the Eastern Virginia Groundwater Management Area on a 10-5 vote. Fracking opponents say the chemicals involved threaten water supplies and public health. Surovell said that the bill was necessary to protect the Potomac Aquifer, a drinking water source for millions of Virginians, because a company has signed leases to frack in the Taylorsville Basin. Surovell also said he wants to prevent any other company that might seek to acquire a lease.
Broken boring pipe in Straits bottom longer than Enbridge first said -- A rod-like boring pipe Enbridge left in the Straits of Mackinac bottom after it broke last fall is about five times longer than the Canadian oil transport giant initially told state regulators, according to a Michigan Department of Environment, Great Lakes and Energy official. And whether it poses a hazard — and whether it can be recovered — has not yet been determined, the EGLE official said. Enbridge only last week told EGLE officials that the remaining thin pipe in a collapsed bore-hole on the Straits bottom is about 200 feet long — not the 40 or so feet EGLE says the company told regulators in November. An EGLE official said it was "disconcerting" that Enbridge took two months to tell the state about the incident, and then mischaracterized the pipe piece left in the Straits bottom. "We count on these types of industries to self-report — we don't have staff and equipment to go out and examine with an ROV (remote-operated vehicle) — we don't have an ROV," said Joseph Haas, EGLE's Water Resources Division district supervisor in Gaylord. "It's probably not uncommon that this happens in this type of work — you break equipment. It's the fact that they didn't immediately report it to us that is disconcerting." Critics of Enbridge and its twin, 67-year-old, underwater oil and gas pipelines in the Straits say it's just the latest episode in which the company failed to provide transparency about troubles with its operations to regulators or the public.
Operators continue to find new oil reserves in deepwater Gulf, despite scaled-back drilling campaigns - In this post-downturn era, offshore operators and developers continue to be cautious with their drilling programs in the US Gulf of Mexico. A working rig count in the low-to-mid 20s – a 60% decline since January 2014 – seems to be the new norm. Nevertheless, Gulf operators have pressed forward with their slimmed-down exploration plans. These activities did bring a number of notable discoveries over the past year, most notably in the Miocene and Paleogene plays, in the deepwater Gulf. In April, Shell announced that it had made an oil discovery at the Blacktip prospect in the deepwater Gulf. Located in Alaminos Canyon block 380 in about 6,200 ft (1,890 m) of water, Blacktip is a Wilcox discovery in the Perdido thrust belt, about 30 mi (48 km) from the Perdido platform and Whale discovery. The Blacktip exploration well encountered more than 400 ft (122 m) net oil pay with good reservoir and fluid characteristics. Evaluation is ongoing and appraisal planning is under way to further delineate the discovery and define development options, Shell said. In June, W&T Offshore reported that it had discovered oil at the Gladden Deep prospect in Mississippi Canyon block 800 in the deepwater Gulf. The Gladden Deep well is in about 3,000 ft (914 m) of water and was drilled to a total measured depth of 18,324 ft (5,558 m). It encountered 201 ft (61.3 m) of net oil pay. Based on preliminary analysis of drilling and wireline logging results the recoverable resource is expected to be in line with the pre-drill estimate of 7 MMboe gross, according to partner Kosmos Energy (20% working interest). In August, Talos Energy announced that it had hit oil pay at the Bulleit and Orlov prospects in the deepwater Gulf. At the Bulleit prospect in Green Canyon block 21, the well encountered about 140 ft (43 m) of net true vertical depth (TVD) oil pay in the shallow target, the DTR-10 Sand, and about 110 ft (34 m) of net TVD oil pay in the deeper MP Sand. At the Orlov prospect in Green Canyon block 200, the well initially encountered about 100 ft (30 m) of net true vertical thickness oil pay in the main target Aspen J sand, as well as additional pay sands in shallower zones along the same trap. In October, Hess Corp. announced that it had made an oil discovery at the Esox-1 exploration well on Mississippi Canyon block 726 in the deepwater Gulf. Esox-1 was drilled in 4,609 ft (1,405 m) of water and encountered about 191 net ft (58 m) of high-quality oil-bearing Miocene reservoirs. Esox-1 is about 6 mi (10 km) east of the Tubular Bells production facilities.
U.S. gasoline stocks hit record high - U.S. gasoline stockpiles grew for an 11th consecutive week to an all-time high while crude oil and distillate inventories fell last week, the Energy Information Administration said. U.S. gasoline stocks rose by 1.7 million barrels in the week to a record 260 million barrels, the EIA said, compared with analyst expectations for a 3.1 million-barrel rise. Total motor gasoline inventories were about 4% above the five-year average for this time of year, the EIA said. Distillate stockpiles, which include diesel and heating oil, fell by 1.2 million barrels in the week to 146 million barrels, versus expectations for a 1 million-barrel rise, the data showed. U.S. Gulf Coast distillate inventories rose 71,000 barrels to 46.8 million barrels, their highest since September 2017. Over the past four weeks, gasoline supplied was down by 1.4% from the same period last year, while distillate demand dropped 8.3% year-on-year.
Louisiana greenlights huge pollution-causing plastics facility in 'Cancer Alley' - The state of Louisiana has issued a series of key air quality permits for a gargantuan proposed petrochemical complex that would roughly double toxic emissions in its local area and, according to environmentalists, become one of the largest plastics pollution-causing facilities in the world.The $9.4bn facility, owned by the Taiwanese chemicals firm Formosa Plastics, would consist of 14 separate plastics plants across 2,300 acres of land in St James parish, a largely African American community in the already heavily polluted area in southern Louisiana known as Cancer Alley. Activists say the plant could release 13m tonnes of greenhouse gases a year, the equivalent of three coal-fired power plants, and would emit thousands of tonnes of other dangerous pollutants, including up to 15,400 pounds of the cancer causing chemical ethylene oxide.The facility has been forcefully opposed by environmental groups and certain local campaigners.The 16 permits issued by Louisiana’s state environment agency (LDEQ) essentially allow Formosa to begin construction, said the LDEQ spokesman Greg Langley. A spokeswoman for Formosa, which is operating the project under a subsidiary, FG LA, said the company would start “site preparation activities” in the first quarter of 2020. This first phase, including soil testing, could take up to a year to complete, the spokeswoman said.The permits had not been made available to the public by Tuesday afternoon. Langley said this was because of the volume of documents, numbering more than 1,000 pages, which were still uploading to the department’s public website. The announcement was met with derision by local campaigners. “We are fighting to protect our homes and our families from this monster, Formosa. We are not going to stop because of this bad decision by the state to grant air permits,” said Sharon Lavigne, the president of the campaign group Rise St James, in a written statement.
A Surge of New Plastic Is About to Hit the Planet - Companies like ExxonMobil, Shell, and Saudi Aramco are ramping up output of plastic — which is made from oil and gas, and their byproducts — to hedge against the possibility that a serious global response to climate change might reduce demand for their fuels, analysts say. Petrochemicals, the category that includes plastic, now account for 14 percent of oil use, and are expected to drive half of oil demand growth between now and 2050, the International Energy Agency (IEA) says. The World Economic Forum predicts plastic production will double in the next 20 years. “In the context of a world trying to shift off of fossil fuels as an energy source, this is where [oil and gas companies] see the growth,” said Steven Feit, a staff attorney at the Center for International Environmental Law, an advocacy group. And because the American fracking boom is unearthing, along with natural gas, large amounts of the plastic feedstock ethane, the United States is a big growth area for plastic production. With natural gas prices low, many fracking operations are losing money, so producers have been eager to find a use for the ethane they get as a byproduct of drilling. “They’re looking for a way to monetize it,“ Feit said. “You can think of plastic as a kind of subsidy for fracking.” America’s petrochemical hub has historically been the Gulf Coast of Texas and Louisiana, with a stretch along the lower Mississippi River dubbed “Cancer Alley” because of the impact of toxic emissions . Producers are expanding their footprint there with a slew of new projects, and proposals for more. They are also seeking to create a new plastics corridor in Ohio, Pennsylvania, and West Virginia, where fracking wells are rich in ethane. Shell is building a $6 billion ethane cracking plant — a facility that turns ethane into ethylene, a building block for many kinds of plastic — in Monaca, Pennsylvania, 25 miles northwest of Pittsburgh. It is expected to produce up 1.6 million tons of plastic annually after it opens in the early 2020s. It’s just the highest profile piece of what the industry hails as a “renaissance in U.S. plastics manufacturing,” whose output goes not only into packaging and single-use items such as cutlery, bottles, and bags, but also longer-lasting uses like construction materials and parts for cars and airplanes.
Formosa Plant May Still Be Releasing Plastic Pollution in Texas After $50M Settlement, Activists Find - After activist Diane Wilson and the San Antonio Estuary Waterkeeper successfully sued Formosa, the company agreed to no longer release even one of the tiny plastic pellets known as nurdles into the region's waterways. Their suit against Formosa Plastics Corp. USA resulted in a $50-million-dollar settlement and a range of conditions in an agreement known as a consent decree. Key among the conditions was the company's promise to halt releasing the nurdles it manufactures into local waterways leading to the Texas Gulf Coast by Jan. 15. The deal, signed by Judge Hoyt in December, represents the U.S.'s largest settlement in a Clean Water Act lawsuit brought by private individuals against an industrial polluter. The settlement mandates that both Formosa and the plaintiffs agree to a monitor, remediation consultant, engineer, and trustee for ongoing monitoring of the plant. Wilson gave an update on how requirements of the consent decree were progressing. The volunteer team of nurdle monitors, who have been collecting nurdles discharged by the plant for the last four years, listened eagerly. Wilson said that Formosa had missed the Jan. 15 deadline to deliver the waivers they needed to sign, which would grant them permission to monitor on the company's property along the fence line. Instead, they headed for the banks of Cox Creek, where Wilson set off in a kayak to check on one of the plant's outfalls. Within 10 minutes she collected an estimated 300 of the little plastic pellets. Wilson says she will save them as evidence, along with any additional material the group collects, to present to the official — and yet-to-be-selected — monitor. When Wilson returned from her kayak, she showcased her find: The nurdles she had just collected from the Formosa outfall were bright white, making them easy to distinguish from the older ones littering the bank where she had launched her kayak. She plans to turn them over as evidence of newly discharged nurdles to the official monitor once one is selected in accordance to the consent decree. On that same afternoon, Wilson learned that conservation and community groups in Louisiana had sued the Trump administration, challenging federal environmental permits for Formosa's planned $9.4 billion plastics complex in St. James Parish. The lawsuit was filed in federal court against the Army Corps of Engineers, accusing the Corps of failing to disclose environmental damage and public health risks and failing to adequately consider environmental damage from the proposed plastics plant. Wilson had met some of the Louisiana-based activists last year when a group of them had traveled to Point Comfort and protested with her outside Formosa's plastics plant that had begun operations in 1983. Among them was Sharon Lavigne, founder of the community group Rise St. James, who lives just over a mile and a half from the proposed plastics complex in Louisiana.
Oversupply, low prices may turn LNG boom into a bust in 2020 --Liquefied natural gas prices are poised to test record lows this year thanks to an onslaught of new supply and warmer winter temperatures curbing consumption.The startup of new export projects from Australia to the U.S. has flooded the market, while brimming stockpiles in Europe and an expected slowdown in Chinese demand have dumped cold water on consumption prospects. LNG for spot delivery to North Asia is on track to hit an all-time low this summer, while gas prices in Europe and the U.S. are trading at the weakest seasonal levels since 1999.“The global oversupply of LNG has been building and building and building,” said Ron Ozer, founder of gas-focused hedge fund Statar Capital LLC in New York. “The gas market can’t stomach the oversupply and warm weather, and it’s getting both.”U.S. gas exports have surged amid the nation’s shale boom, but plummeting prices may now throttle back shipments or encourage sustained maintenance while firms weather the storm. Producers and companies with off-take agreements may decide not to load cargoes because prices are too low to earn a profit after accounting for shipping costs.With cargoes from the Gulf of Mexico currently priced around $2.65 per million Btu, cash margins are positive only because of weak U.S. benchmark prices, according to Robert Sims, an analyst at Wood Mackenzie Ltd. There’s a chance that production could be reduced if the spread between benchmark Henry Hub and U.S. Gulf LNG narrows 25 cents, he said. After four years of belt-tightening, the amount of investments last year in new production capacity set a record. Companies including Qatar Petroleum, Novatek PJSC and Venture Global LNG Inc. sanctioned new plants from the U.S. to Russia. But the current wave of additional supply and persistent weak global prices is challenging new projects seeking final investment decisions, according to Morgan Stanley. The bank reduced its outlook for the number of projects reaching FID and revised lower its new supply outlook for the middle of the decade. The low price environment will also likely force Qatar to stagger or postpone its planned 64% capacity expansion, currently scheduled by 2027, according to FGE.
US gas exporters fight to survive supply glut - Multibillion dollar gas export projects that are central to the Trump administration’s push for “energy dominance” are locked in a battle for survival as prices fall and the market faces a supply glut. Liquefied natural gas is a critical outlet for the US’s surfeit of cheap natural gas and the country is on track to pull ahead of Australia and become the world’s biggest exporter by 2024, the International Energy Agency has said. Companies ranging from Royal Dutch Shell and Total to utilities and smaller independent groups are racing into the LNG export market, but planned capacity exceeds what is likely to be needed. The consultancy McKinsey predicts that only one in 10 proposed export terminals will ever be built. Last year, global importers received 346m tonnes of LNG — gas condensed to a liquid so it can be loaded on to tankers — according to S&P Global Platts. The volume will rise by 100m tonnes to 446m by 2025, it estimates. Yet in the US alone, 14 unbuilt export terminals with government approval would add 160m tonnes a year of capacity, according to the Federal Energy Regulatory Commission. Another 90m tonnes’ worth of projects are still awaiting approval. Last year, three US projects totalling 30m tonnes in annual capacity received final investment approval from their sponsors. Plunging natural gas prices are also complicating the outlook for companies developing LNG export terminals, as the US benchmark price fell to its lowest level in four years on Monday. Cheaper US gas helps in the intensifying battle for market share, but also makes developers’ projects look less financially viable. Companies are already cutting processing fees, burning cash and letting construction deadlines slip. The global LNG glut has also pushed down prices outside the US as customers use their negotiating power with exporters. The Japan-Korea Marker, a regional benchmark, has been trading at about $5 per million British thermal units, well below the level when most US export projects were conceived. “There’s no question that the marketplace has become increasingly competitive,” said Jeff Martin, chief executive of Sempra Energy, a US company developing LNG terminals. US projects face growing foreign competition from countries including Qatar, the largest and cheapest exporter, which recently confirmed plans to increase output from 77m tonnes to 126m by 2027. Mozambique is entering the market with a 13m tonnes per annum project and Nigeria said in late December that it would raise output from 22.5m tonnes to more than 30m by 2024.
LNG plant explosion raises concerns about federal oversight -- Tuesday, January 21, 2020 -- Kinder Morgan Inc. is facing a $55,000 fine in connection with a confined explosion in 2018 at its liquefied natural gas export plant near Savannah, Ga., raising safety questions about the facilities as gas exports begin to accelerate.
Trade Deal Impacts the Energy Sector: LNG to Gain the Most? - The Sino-U.S. trade dispute, which threatened the global economy for around two years, has come to an end with the much-anticipated Phase-One trade deal on Jan 15. The signing of the deal was the first tangible indication of de-escalation of the trade brawl between the United States and China, the two largest trading countries. While the Asian giant has agreed to purchase more goods and services from America, Washington has pledged to cut some tariff on Chinese imports. Notably, the U.S. energy sector is poised to gain heavily from this agreement as an export revival is expected. Of the additional $200-billion purchase of U.S. goods over the next two years (keeping 2017 imports as the base level), $52.4 billion will likely come from the energy sector. Per the deal, China will purchase $18.5 billion worth of energy products this year, followed by $33.9 billion imports in 2021. The energy sector stands second only to the manufacturing sector, which will likely witness $77.7 billion of exports. Among the energy products such as liquefied natural gas (LNG), crude oil, natural gas, petroleum products, LNG is expected to gain the most from the deal. Following the U.S. shale revolution, abundance of natural gas in the domestic market and growing demand for cleaner energy sources globally have led to the development of several LNG terminal projects in the past few years. As such, the Washington-Beijing deal can open up a huge market for the U.S. LNG industry. While China is set to become the biggest LNG importer by the end of the decade, the United States is likely to be the largest exporter by 2025, ahead of Qatar and Australia. This makes the two countries a perfect fit even though the whole vision is largely dependent on the fate of the existing 25% Chinese LNG tariff. This was levied during the trade war and its future is still uncertain.
Exclusive: Sinopec to review potential $16 billion U.S. gas deal with Cheniere - sources - (Reuters) - China’s Sinopec, expected to be the next major Chinese buyer of U.S. liquefied natural gas (LNG), is planning to review terms of a potential $16 billion supply deal with Cheniere Energy Inc after a sharp drop in LNG prices, industry officials said. That could delay sign-off on a deal that would help Beijing meet ambitious targets it set for U.S. energy purchases in a Phase 1 trade agreement it signed with the United States on Wednesday. Sinopec, officially named China Petroleum & Chemical Corp, and Houston-based Cheniere had been expected to sign the 20-year deal once a trade truce was reached between Beijing and Washington. However, the LNG market has shifted since news of Sinopec and Cheniere’s negotiations became public early last year. In the intervening period, the U.S.-China trade war sapped Chinese purchases of U.S. LNG, and several other gas suppliers, including Qatar, the lowest-cost producer, decided to build new export plants. That coming supply would add to an existing glut that has caused gas prices to collapse to their lowest levels in years and could keep them suppressed - giving Sinopec additional leverage with Cheniere. Both companies declined to comment. A source familiar with the talks said many items needed to be reviewed as U.S. gas prices have more than halved since 2018. “Sinopec is talking to several other U.S. suppliers,” said a second source. “It’s really not clear at this stage what will come out.” ADVERTISEMENT
Mission Impossible: China can't meet its commitments on U.S. crude, LNG, coal - Russell - (Reuters) - The more you delve into the details of China’s commitment to buy an additional $52.4 billion in U.S. energy over the next two years, the more it becomes apparent the goal is unachievable, even with the best will in the world. As part of the “Phase 1” trade truce between Beijing and Washington, China undertook to buy energy over and above a $9.1 billion baseline of U.S. imports in 2017, with a split of an extra $18.5 billion in 2020 and $33.9 billion in 2021. In practical terms this means China’s imports from the United States this year would have to be more than double past record monthly imports of U.S.-sourced crude oil, liquefied natural gas (LNG) and coal. If that already seems difficult, it would take a tripling of the best-ever months to meet the 2021 target. As part of the earlier tit-for-tat tariffs, China imposed a 5% import tax on U.S. crude, 25% on LNG and 25% on coal. These tariffs alone make any imports of U.S. energy uncompetitive, and therefore unlikely unless Beijing is prepared to use its muscle to force state-owned oil refineries, natural gas utilities and steelmakers to pay higher than market rates for U.S. cargoes. There is so far no sign that Beijing is about to remove the tariffs, or issue waivers, and without this the expected ramp-up in purchases of U.S. energy is a non-starter. If China boosted imports of U.S. crude to more than 1 million barrels per day (bpd) - worth around $21.4 billion at the current price of West Texas Intermediate futures - it would present a challenge in physically moving that amount of oil from the U.S. Gulf coast to China. Given that a very large crude carrier (VLCC) holds about 2 million barrels, it would mean 15 of these vessels making the trip every month. While U.S. export terminals may be able to handle this volume, there remain questions over the availability of these vessels and the potential costs of sailing them back empty to the United States to pick up more cargoes. VLCCs are also too big to transit the Panama Canal, likely meaning a longer sea voyage around the bottom of Africa, adding to costs. The economics of shipping crude on smaller vessels that can transit the Panama Canal are also challenging, given such ships can hold only around 600,000 barrels and would have to pay the relatively high canal fees. Then there is the question of whether China’s refineries can use the volumes of U.S. crude that would be required to meet the terms of the deal. Many Chinese refineries are optimized to process heavy, sour grades of crude, such as those from the Middle East, rather than the lighter, sweet oil typically exported by the United States.China does import light crude, taking some 270,000 bpd from the United Kingdom last year, 235,000 bpd from Malaysia, 152,000 bpd from Libya and 44,000 bpd from Nigeria, according to Refinitiv data. If China were to buy more than 1 million bpd of U.S. crude, it would have to stop buying most of the light crude it now gets from other countries. Not only would this disrupt global trade flows and relationships, it also raises the question as to whether Chinese refiners, and U.S. crude exporters, would want to become so reliant on each other, rather than having a diverse range of trading partners.
McDermott Hits Freeport LNG Milestone - The second liquefaction train at Freeport LNG Development, L.P.’s Freeport LNG project on the Texas Gulf Coast has begun commercial operations, McDermott International, Inc. reported Friday. McDermott and Chiyoda International Corp. are members of a Zachry Group-led engineering and construction joint venture developing various phases of Freeport LNG. “We continue to advance the Freeport LNG Project with another significant accomplishment, the commercial operation of Train 2,” Mark Coscio, McDermott’s senior vice president for North, Central and South America, commented in a written statement emailed to Rigzone. “Congratulations to the joint venture project team who has maintained a commitment to safety and quality. Now we turn our full attention to delivery of the final train.” Previously, Zachry and McDermott conducted pre-front-end engineering and design (FEED) and FEED work to support the early development of trains 1 and 2 at Freeport LNG, McDermott stated. It added that Chiyoda later became a co-venturer for the Train 3 project. According to McDermott, the project scope includes:
- Three pre-treatment trains
- A liquefaction facility with three trains
- A second loading berth
- A 165,000-cubic-meter full-containment LNG storage tank.
McDermott noted that Freeport LNG Train 3 is slated to begin producing LNG in the first quarter of this year. Last month it reported that Train 1 had begun commercial operations.
LNG will be much cheaper in 2020. Here's why and how it affects Texas - Liquified natural gas is forecast to trade for much less in 2020. The U.S. Energy Information Agency said in a report Wednesday it expects lower natural gas prices this year as production is projected to outpace demand. In its January 2020 Short-Term Energy Outlook, the Energy Information Administration predicted average U.S. natural gas prices will be 9% lower in 2020 than in 2019. That'll be because of continued production growth, the agency says. So, what will that mean for energy-rich South Texas, home to some of the nation's largest LNG exporters? Increased production of natural gas should meet the growing domestic and global demand for clean natural gas, said Todd Staples, president of the Texas Oil and Gas Association. LNG exports are an important part of the industry’s impact on the state, creating jobs and bolstering local and state economies, while also strengthening the global energy market and helping enhance America’s national security interests, Staples said. "As more pipelines come online connecting the prolific Permian Basin with the Gulf Coast, our capacity to move this high-demand, abundant and affordable resource overseas grows, allowing clean natural gas from the U.S. to replace older, less desirable forms of energy across the globe in places like China and India," Staples said. Cheniere Energy may be an example of some of that production growth. The Houston company is the largest U.S. producer and exporter of LNG. It has a permit for three production units at its Gregory facility off State Highway 35 and is waiting for a permit to construct seven mid-scale production units, or trains. Together, they will be able to produce 9.5 million metric tons of LNG per year. Last week, Cheniere announced it had been cleared by federal regulators to return one of the two storage tanks at its Sabine Pass LNG export facility back into service. The tank, near Lake Charles, Louisiana, had been offline since a leak there nearly two years ago.
Newly formed Houston pipeline company lands $400 million in financing -- A newly formed Houston pipeline company has landed $400 million in financing from San Antonio private equity firm EnCap Flatrock Midstream. Launched just before Thanksgiving and headquartered off Post Oak Boulevard in Houston's Galleria district, Edgewater Midstream is seeking to build crude oil, refined products and other bulk liquid pipelines.The company plans to use the $400 million to buy, build and operate pipelines and storage terminals in petroleum trading hubs and demand centers in North America where development in the shale basins in Texas and elsewhere has allowed the United States to grow production and exports.“Changing dynamics in the North American petroleum market present attractive opportunities for Edgewater,” the company's CEO Stephen Smith said in a statement.Joining Smith at Edgewater are former Motiva Enterprises executive oil trader Brian Thomason and Mike Truby, a former senior vice president with the San Antonio pipeline company NuStar Energy.“When forming Edgewater, we recognized that societal, technological and policy trends are reshaping the arena in which traditional oil and gas midstream businesses operate," Smith said. "Our team embraces new technologies and environmentally sustainable practices.” Headquartered in San Antonio with offices in Oklahoma City and Houston, EnCap Flatrock Midstream manages $9 billion for a broad group of institutional investors.The private equity firm is currently making commitments to new management teams from EFM Fund IV, a $3.25 billion fund.
Schlumberger Posts $10B Loss in 2019 - Schlumberger Ltd. posted a $10.1 billion loss in 2019, despite relatively flat year-on-year revenues, according to the oilfield services giant’s year-end earnings released Friday. Schlumberger CEO Olivier Le Peuch noted 2019 revenues totaled $32.9 billion and called the company’s overall performance positive, namely in the international markets. The company’s revenues for drilling and reservoir characterization benefited from their international market exposure, posting 5 percent and 2 percent year-over-year increases, respectively. But North American revenues fell 10 percent year-over-year to $10.8 billion, driven largely by land market weaknesses. The company began a strategic review of its North American land market in Oct. 2019 after a weak third quarter earnings. “During the year, we recognized material pretax charges driven by market conditions, particularly in North America. As these charges were largely noncash and primarily related to goodwill, intangible assets and fixed assets, they did not impede our ability to generate strong cash flow as we demonstrated in the second half of the year,” Le Peuch said. For fourth quarter of 2019, Schlumberger saw revenues of $8.2 billion, a 4 percent drop from 3Q. International revenue of $5.7 billion grew 2 percent sequentially and 8 percent year-over-year. However, North America revenue was $2.5 billion, a 14 percent sequential decline due to customer budget exhaustion and cash flow constraints. In its North America land market, Schlumberger implemented what it refers to as the “scale-to-fit” strategy, which includes reducing capacity and restructuring the company’s operations.“In North America, we are continuing to scale-to-fit our organization and portfolio by repurposing or exiting underperforming business units, focusing on asset-light operations and expanding our technology access business models,” Schlumberger said it expects the OPEC+ production cuts agreed upon in December to limit investment and activity, namely in Russia and the Middle East, during the first half of 2020. And the slowing growth of North American production is likely to cause tightness in the market and further stimulate international operators to step up their investments in the second half of 2020 and beyond.
Schlumberger lays off 1,400 amid surgical cuts to restore profitability in U.S. shale - The troubled U.S. shale industry is not out of the woods — signaling potential trouble ahead for Houston’s economy. Schlumberger, the largest oil field services company, said Friday it lost $10.1 billion in 2019, laid off 1,400 workers in the fourth quarter, closed facilities, pulled hydraulic fracturing fleets from the field and plans to sell assets. Experts say Schlumberger’s showing sets low expectations for other energy companies preparing to report year-end results and signals that they haven’t adapted to oil prices in the range of $50 to $60 a barrel — too low for many to break even. For the Houston region, which is home to the Paris company’s principal offices, further industry layoffs and spending cuts could put a damper on the local economy. The energy industry’s struggles have already led the Federal Reserve Bank of Dallas to dramatically revise the region’s job growth in the second quarter of 2019 from a robust 4 percent to just a half-percent. More downward revisions are likely. For Schlumberger, the ongoing shale slump resulted in a 10 percent decline in North American revenue in 2019, even as the company saw 8 percent growth internationally. “These macro-conditions will continue,” Schlumberger CEO Olivier Le Peuch said during a Friday morning call with investors. Schlumberger is not alone in feeling the pain as the slowdown in the U.S. shale fields continues. Other oil field service companies are responding by idling equipment and laying off employees. Its Houston competitors Halliburton, National Oilwell Varco and Pumpco Energy Services and the Houston oil field equipment-maker Stewart and Stevenson laid off more than 1,000 employees in November and December. Leaked emails in early January revealed that Houston oil company Occidental Petroleum plans to implement “broad layoffs” in response to its $38 billion acquisition of Anadarko Petroleum. Days later, Houston oil company Apache Corp., oil field services company Enterprise Offshore Drilling and oil equipment-maker Valerus Field Solutions reported that they were cutting a combined 600 jobs. Schlumberger’s 2019 loss follows a $2.2 billion profit in 2018. In the fourth quarter alone, the company’s profit dipped 33 percent, falling to $333 million from $498 million in the previous year while revenue remained steady at $8.2 billion.
IEEFA update: The terrible, horrible, no good, very bad year for oil and gas - Was 2019 the year the music died? 2019 was an especially difficult year for the oil and gas industry. The energy sector (which does not include renewable energy) finished dead last in the S&P 500, the second year in a row it has held that distinction. In a year of improving oil prices, the energy sector still finished firmly in last place, with a 7 percent gain compared to a 29 percent gain overall for the S&P 500. The next worst-performing sector was health care, which posted a 19 percent gain. The industry continued to collapse in value, relative to the broader stock market. The oil and gas sector now comprises 4.3% of the S&P 500 index, compared to 28% in the 1980s. Throughout the year, oil and gas markets remained over-supplied. Oil prices began the year at $55 per barrel and ended the year 24 percent higher, at $68 per barrel. Natural gas prices remained below $3 mmbtu all year long. The oil price increases were not enough to lift investor interest and persistent low prices for natural gas continued as rising supply outpaced rising demand. (detailed chronology follows)
The Great American Shale Oil & Gas Bust: Fracking Gushes Bankruptcies, Defaulted Debt, and Worthless Shares - Following the sharp re-drop in oil and natural gas prices in late 2018, bankruptcy filings in the US by already weakened exploration and production companies , oilfield services companies, and “midstream” companies (they gather, transport, process, or store oil and natural gas) jumped by 51% in 2019, to 65 filings, according to data compiled by law firm Haynes and Boone. This brought the total of the Great American Shale Oil & Gas Bust since 2015 in these three sectors to 402 bankruptcy filings. The debt involved in these bankruptcies in 2019 doubled from 2018 to $35 billion. This pushed the total debt listed in these bankruptcy filings since 2015 to $207 billion. The chart below shows the cumulative total debt involved in these bankruptcies since 2015. But this does not include the much larger losses suffered by shareholders that get mostly wiped out in the years before the bankruptcy as the shares descend into worthlessness, and that then may get finished off in bankruptcy court.The banks, which generally had the best collateral, took the smallest losses; bondholders took bigger losses, with unsecured bondholders taking the biggest losses. Some of them lost most of their investment; others got high-and-tight haircuts; others held debt that was converted to equity in the restructured companies, some of which soon became worthless again when the company filed for bankruptcy a second time. The old shareholders took the biggest losses. The Great American Fracking Bust started in mid-2014, when the price of WTI dropped from over $100 a barrel to below $30 a barrel by early 2016. Then the price began to recover, going over $70 a barrel in September and October 2018. But then it began to re-plunge. By the end of 2018, WTI had dropped to $47 a barrel. Two major geopolitical events in the Middle East – the attack on Saudi Aramco’s oil facilities last September and the US assassination of Iranian Major General Qasem Soleimani – that would have shaken up oil markets before, only caused brief ripples, quickly squashed by the onslaught of surging US production. At the moment, WTI trades at $56.08 per barrel, which is still below where the shale oil industry can survive long-term: And 2020 is starting out terrible for natural gas producers. The price of natural gas has plunged to $1.90 per million Btu at the moment, a dreadfully low price where no one can make any money. Producers in shale fields that produce mostly gas, such as the Marcellus, are in deeper trouble still, because oil, even at these prices, would be a lot better than just natural gas. Producing areas with constrained takeaway capacity (it takes a lot longer to build pipelines than to ramp up production) are subject to local prices, which can be lower still. In some areas, such as the Permian in Texas and New Mexico, the most prolific oil field in the US, where natural gas is a byproduct of oil production, limited takeaway capacity has caused local prices to collapse, and flaring to surge. The chart shows the spot price for delivery at the Henry Hub:
The “Twin Threats” Facing Big Oil -- The global oil and gas industry is facing the “twin threats” of the loss of profitability and the loss of social acceptability as the climate crisis continues to worsen. The industry is not adequately responding to either of those threats, according to a new report from the International Energy Agency (IEA). “Oil and gas companies have been proficient at delivering the fuels that form the bedrock of today’s energy system; the question that they now face is whether they can help deliver climate solutions,” the IEA said.The report, whose publication was timed to coincide with the World Economic Forum in Davos, critiques the oil industry for not doing enough to plan for the transition. The IEA said that companies are spending only about 1 percent of their capex on anything outside of their core oil and gas strategy. Even the companies doing the most are only spending about 5 percent of their budgets on non-oil and gas investments.There are some investments here and there into solar, or electric vehicle recharging infrastructure, but by and large the oil majors are doing very little to overhaul their businesses. The top companies only spent about $2 billion on solar, wind, biofuels and carbon capture last year.Before even getting to the transition risk due to climate change, the oil industry was already facing questions about profitability. Over the past decade the free cash flow from operations at the five largest oil majors trailed the total sent to shareholders by about $200 billion. In other words, they cannot afford to finance their operations and also keep up obligations to shareholders. Something will have to change. But, of course, as climate policy begins to tighten, oil demand growth will slow and level off. Most analysts say that it won’t require a big hit to demand in order for the financial havoc to really begin to devastate the balance sheets of the majors. Demand only needs to stop growing. The IEA said there are things the industry can do right now – and should have done a long time ago. Roughly 15 percent of the energy sector’s total greenhouse gas emissions comes from upstream production. “Reducing methane leaks to the atmosphere is the single most important and cost-effective way for the industry to bring down these emissions,” the IEA said. But, the Permian is flaring more gas than ever, and methane leaks at every stage of the extraction and distribution process. Drillers have promises improvements, but the industry’s track record to date is not good. Meanwhile, the IEA also noted that while attention is often focused on the oil majors, national oil companies (NOCs) account for more than half of global oil production. The majors only account for about 15 percent.
Oil and gas firms must invest in clean energy solutions to survive: IEA - Oil and gas companies put their own survival at risk if they fail to adapt to providing clean-energy solutions to the world, the International Energy Agency said in a report Monday. The Paris-based IEA said the largest oil and gas companies spend less than 1 percent of their total capital dollars on renewable energy and clean-energy projects. That trend must change quickly, the agency said in its new report on energy transitions. "No energy company will be unaffected by clean energy transitions," said Fatih Birol, IEA executive director. "Every part of the industry needs to consider how to respond. Doing nothing is simply not an option." The biggest and easiest adjustment that oil and gas firms can make is cut down on their methane emissions, which is a big problem in areas such as West Texas' booming Permian Basin. Methane, the primary component of natural gas, is a potent greenhouse gas that's often released into the atmosphere - intentionally or not - while producing the more valuable crude oil from wells."Around 15 percent of global energy-related greenhouse gas emissions come from the process of getting oil and gas out of the ground and to consumers," Birol said. "A large part of these emissions can be brought down relatively quickly and easily." Reducing methane leaks is the single most important and cost-efficient way for energy companies to reduce emissions, the report said. The oil and gas industry also has the technical know-how to advance renewable energy worldwide, especially when it comes to areas like offshore wind where energy firms have to most experience operating in deeper waters. Norway-based Equinor, a major oil and gas firm, for instance has become a leader in offshore wind development.
Proposed 626-mile pipeline would transit much of the Concho Valley -Landowners along a 626-mile swath of Texas and Louisiana began receiving letters last month from Houston-based Tellurian Inc. relating to the proposed Permian Global Access Pipeline. The project is being engineered with an eye on transmitting 2-billion cubic-feet of natural gas per day from West Texas to the Lake Charles area by late 2023 or early 2024. According to Joi Lecznar, Tellurian’s vice president for public affairs and communication, the concept was proposed in 2017 as part of the company’s wider strategy to form a $7 billion pipeline network along with the proposed Driftwood Liquified Natural Gas Terminal in Louisiana. The pipeline proposals are expected to create about 15,000 jobs during the construction phases, according to Tellurian. If everything goes according to plan, the pipeline should be a modern marvel of engineering, and Lecznar said planners have carefully selected a path that will have minimal impact on forests, wetlands and developments along the shortest possible route. Along the entire length, the preferred route would cut through 257-miles of open land, 137-miles of agricultural land, 80-miles of developed land, 151-miles of forest and 1 mile of open water with 80 water crossings. According to initial regulatory filings, the proposed route would require 253-miles of new right-of-way while using 373-miles of adjacent existing right-of-way corridors. This path begins at the Waha Gas Hub in northern Pecos County and traverses Crane, Upton, Reagan, Irion, Tom Green, Concho, McCulloch, San Saba, Mills, Lampassas, Coryell, McClennan, Falls, Limestone, Robertson, Leon, Houston, Trinity, Polk, Tyler, Jasper and Newton counties before entering Louisiana. Along the entire length, the proposed route would cut through 257-miles of open land, 137-miles of agricultural land, 80-miles of developed land, 151-miles of forest and 1-mile of open water. This includes, 80 perennial waterbody crossings, 19 of which are major crossings of 100-feet or more. The path includes three designated natural and scenic river crossings, and 24 ponds. The proposed Permian Global Access Pipeline would cross Spring Creek in Irion County just east of US Highway 67 and south of Farm-to-Market Road 72. (The Dove Creek label on the map is a mistake acknowledged by the company.)
Water district joins in fight against natural gas pipeline -A small but determined group of opponents to Kinder Morgan’s Permian Highway Pipeline gathered in downtown Kyle for the first of two protests last week. Carrying signs that said “Safe pipelines don’t exist” and “Clean energy now,” they encouraged passing motorists to honk their support, and many did as they passed the corner of Center and Burleson. At issue is the routing of the 42-inch, natural gas pipeline through some of the most environmentally-sensitive areas of the Texas Hill Country, putting in jeopardy the Edwards and Trinity aquifers, all the springs they produce and species they support. The latest salvo in the ongoing war between the company, landowners, environmental groups and governmental entities came Jan. 16, when the Barton Springs Edwards Aquifer Conservation District (BSEACD) voted to join a lawsuit against Kinder Morgan, the U.S. Fish & Wildlife Service (USFWS) and the U.S. Army Corps of Engineers (USACE) that alleges violations of the Endangered Species Act. Specifically, the legal action argues there “is not a reasonable assurance that the aquifers will be protected during the construction and operation of the pipeline.” The project has met with stiff opposition ever since the energy giant began approaching Central Texas landowners in late 2018. Because they are considered infrastructure, pipelines companies have the power of eminent domain. Because it is completely within the state of Texas, the project does not require approval from any state agency except the Railroad Commission. Plaintiffs in the suit say the actions of Kinder Morgan – which has already begun construction at the west end of the pipeline – is “attempting to avoid” steps including obtaining a biological opinion from USFWS, the preparation of an incidental take permit and the creation of a habitat conservation plan, “both of which are called for when any action – direct or indirect – presents a signifiant threat to a species or its habitat in wetlands under the USACE’s jurisdiction as well as in uplands on private lands.”
Barton Springs group to join legal battle against Kinder Morgan pipeline - The Barton Springs Edwards Aquifer Conservation District has voted to join an endangered species lawsuit that will be filed to halt the construction of a $2 billion natural gas pipeline through portions of the Texas Hill Country. The district is the latest to support the legal action against the U.S. Fish and Wildlife Service, U.S. Army Corps of Engineers and Houston pipeline company Kinder Morgan. With Kinder Morgan's planned Permian Highway Pipeline routed through part of the district's territory in Hays County, opponents fear that the project will harm the Edwards Aquifer and endangered and threatened species that depend on its waters such as the Texas blind salamander, Barton Springs salamander, Austin Blind salamander, San Marcos salamander, fountain darter, Comal Springs dryopid beetle and the Comal Springs riffle beetle.Designed to move 2.1 billion cubic feet of natural gas per day from the Permian Basin of West Texas to the Katy Hub near Houston, the proposed route takes the 42-inch pipeline through the picturesque Texas Hill Country, where the project faces stiff opposition. Kinder Morgan declined to comment but has maintained that the pipeline route was carefully chosen to affect the fewest number of landowners. The company said it held several public meetings before moving forward with the project. Under Texas state law, pipelines require an easement that must be kept clear. Kinder Morgan designed the proposed pipeline route to include a 600-foot-wide corridor that allows for some flexibility and adjustments. The company contends the pipeline would generate nearly $1 billion annually to state and county governments and unlock production bottlenecks in the Permian Basin — allowing leaseholders to earn more than $2 billion in annual royalties for landowners, school districts and counties.
Integrity tests done on Arkansas oil pipeline that ruptured (AP) — A company tested the integrity of a segment of pipeline that has been idle since it ruptured in 2013, spilling 5,000 barrels of crude oil in a Arkansas neighborhood and causing more than $57 million in damage. The tests conducted on the Permian Express pipeline from Wednesday through Friday suggest pipeline operator Energy Transfer Partners LLC is considering reopening it for the first time since the spill in the Mayflower. But company officials declined to tell the Hot Springs Sentinel-Record when or if it planned to do so. "We are performing integrity tests to ascertain the status of the pipeline as it has been inactive since 2013," company spokeswoman Amanda Gorgueiro said in an email. "As with all of our pipelines, these tests are performed per PHMSA (Pipeline and Hazard Materials Safety Administration) regulations." The Dallas-based company, which acquired the pipeline in 2016 through a joint venture with Exxon Mobil, notified Central Arkansas Water of the inspection, utility CEO Tad Bohannon said Thursday. Energy Transfer is not legally obligated to tell the water utility or the public if it tests or reopens the pipeline, but Bohannon said he has been in constant contact with the company and hopes the process will remain transparent. Faulkner County Judge Jim Baker said the spill greatly affected the Mayflower community, but he believed the pipeline would be regulated enough to ensure safety. "You always have that concern," Baker said. "I don't think it would open without it being serviceable and sound." The pipeline, formerly known as the Pegasus Pipeline, stretches from south Texas to Illinois. It runs through 13 miles of the Lake Maumelle watershed, which is the largest drinking water reservoir in Arkansas and provides drinking water to about half a million people. It also runs through 20 smaller watersheds in communities across Arkansas.
Whole Neighborhoods Destroyed In Houston Plant Explosion- Multiple Fatalities, 1 Still Missing - Houston was rocked by a large explosion in the early dark hours of Friday morning, which could be felt for miles across the city, when a manufacturing facility in the northwest erupted in a massive fireball. Houston police have confirmed that at least two people died in the blast, with one plant employee still missing, and a criminal investigation is underway as to the cause — though there's no evidence thus far to suggest an intentional act or terrorism was involved. Damage to homes was reported up to a half-mile away after it occurred at about 4:15am, some 18-miles away from the downtown area, though people reported being jolted from their sleep for miles across the city. Later in the morning Friday multiple people were reported hospitalized, and others may still be missing. "We have no evidence at this point ... that an intentional act is involved. Having said that, part of our protocol is always to (start) a criminal investigation" Houston police chief Art Acevedo said, who also ruled out terrorism. "It's going to take days, if not weeks or months, to get a final determination of what's going on here." Early reports suggest propylene tanks ignited, which is a common but extremely flammable gas used at manufacturing plants. The explosion occurred at Watson Grinding and Manufacturing where emergency crews are still trying to contain a possible gas leak. Local videos showed a large fireball rising from the site of the plant in the blast's immediate aftermath. Officials say the blast was so big it appeared on weather radar.
2 people killed in an explosion at a Houston manufacturer that shook the city and damaged homes - Two people were killed in Friday morning's explosion at a northwest Houston manufacturing business, police said -- a blast shook much of the city, damaged buildings up to a half mile away and left some residents at least temporarily displaced. The explosion rocked Watson Grinding and Manufacturing around 4:15 a.m. CT (5:15 a.m. ET), tearing apart several structures while sending debris and shock waves much farther, pushing some nearby homes off their foundations, officials said. "This is, in essence, a disaster area right now," Houston Police Chief Art Acevedo said of the area roughly an 18-mile drive northwest of downtown.The two men who died in the blast were Frank Flores and Gerardo Castorena, both employees of the company, Houston Fire Chief Samuel Pena said.Pena said Friday evening that 214 homes were damaged in some way and, according to an initial rough estimate, about 50 were destroyed.Responding to reports that the explosion was caused by the gas propylene, a fire department spokeswoman told CNN Friday afternoon: "We don't know that propylene caused the explosion, only that propylene tanks are on site and were involved in the explosion and fire." The debris field is so widespread -- officials estimated between a quarter-mile to a mile away -- police have asked residents for help with a potentially grim task: looking for human remains and other debris in their yards and on roofs.
Two years after five killed Oklahoma well explosion, few changes in safety rules - Two years ago, an oil well near a small Oklahoma town exploded into a fireball that swept through a drilling rig, killing five in an accident deemed a needless catastrophe by federal investigators and casting a short-lived spotlight on a lack of regulation and oversight across the oil and gas industry.The accident involving a Houston drilling company was the industry’s deadliest since the Deepwater Horizon tragedy 10 years ago, but the response to the Oklahoma explosion has been far less urgent. While the Gulf of Mexico explosion, which killed 11, spurred a drilling moratorium and a wave of new regulations, the Oklahoma disaster entered the national headlines for a brief spell and was quickly forgotten — even after the U.S. Chemical Safety and Hazard Investigation Board found widespread failures and a woeful lack lack of safety standards and rules in the onshore drilling sector.What has happened since then? Not much. “There’s not really a whole lot of rules and regulations for safety on the state and federal levels, and that’s what we’re trying to correct.” The safety board’s report was scathing. It found that the companies planned poorly and cut corners, resulting in myriad contributing factors to the five deaths, including a failed blowout preventer, a muted alarm system, lapses in well monitoring, inadequate employee training, and not enough emergency exits in the driller’s cabin, called the doghouse, where the workers were trapped.The Chemical Safety Board also found that state and federal safety laws governing drilling are inadequate, as are the standards adopted by the American Petroleum Institute, the industry’s trade group. Federal and state regulators and API are beginning to consider the safety board’s recommendations, which range from better well control rules to tougher equipment standards to improved employee training, but bureaucracy moves slowly, said Grim. More substantial changes could still be a couple years away or so. “It’s really hard to say how it will turn out until we see all the responses and the end results.”
The Fracking Industry's Methane Problem Is a Climate Problem - While carbon dioxide — deservedly — gets a bad rap when it comes to climate change, about 40 percent of global warming actually can be attributed to the powerful greenhouse gas methane, according to the 2013 IPCC report. This makes addressing methane emissions critical to stopping additional warming, especially in the near future. Methane is shorter-lived in the atmosphere but 85 times more potent than carbon dioxide over a 20 year period. Atmospheric levels of methane stopped increasing around the year 2000 and at the time were expected to decrease in the future. However, they began increasing again in the last 10 years, spurring researchers to explore why. Robert Howarth, a biogeochemist at Cornell University, recently presented his latest research linking the increase in methane to fossil fuel production, with fracking for natural gas, which is mostly methane, likely a major source. Howarth argued that 3.4 percent of all natural gas produced from shale in the U.S. is leaked throughout the production cycle. Howarth’s research links the increase in methane to the U.S. production of shale gas via fracking. The beginning of the U.S.fracking boom coincides with the beginning of the rise in methane in the past decade, and a 2018 NASA study linked the industry to this methane spike. One thing that is becoming increasingly clear about the U.S. fracked oil and gas industry is that it leaks methane — a lot of methane. About 60 percent more methane than previous Environmental Protection Agency estimates, which relied heavily on industry self-reporting, according to a 2018 study published in the journal Science. While the oil and gas industry makes claims about wanting to reduce methane leaks, it has been aided by two simple facts that help hide the scale of the problem: Methane is odorless and invisible to the naked eye. Difficult to detect, methane leaks in the oil and gas production system weren’t obvious until people like Sharon Wilson at Earthworks began bringing specialized infrared cameras to production facilities and helped make those leaks visible. But it isn't just unintentional leaks. Much of the methane released is intentionally “vented” to the atmosphere in areas without the processing plants, pipelines, and other expensive infrastructure to make use of it.
IEA warns oil companies doing nothing on emissions is not an option - - In a report with the World Economic Forum presented in Davos, the IEA said oil and gas companies face a critical challenge as the world increasingly adopts clean energy transitions to curb global warming. Around 15% of global energy-related emissions come from the process of getting oil and gas out of the ground and to consumers, the IEA said. Energy-related green house gas emissions rose to a record high in 2018. The Paris-based agency, which advises industrialized nations on energy issues, said oil and gas companies are facing increasing demands to explain how they intend to reduce emissions in line with the 2015 Paris climate agreement. “Every part of the industry needs to consider how to respond. Doing nothing is simply not an option,” IEA’s Executive Director Fatih Birol, said in a statement. The companies are under pressure to cut emissions from their operations and from their products as used by customers, as well as to increase investments in cleaner energies. Targets by oil firms to cut their emissions and switch to cleaner energies vary widely. “The first immediate task for all parts of the industry is reducing the carbon footprint of their own operations,” Birol said, adding that a large part of the emissions from the sector can be brought down relatively quickly and easily, such as reducing methane leaks. The IEA said another key move by the sector would be to boost investments in the cleaner fuels – such as hydrogen, biomethane and advanced biofuels. “Within 10 years, these low-carbon fuels would need to account for around 15% of overall investment in fuel supply if the world is to get on course to tackle climate change,” it said. So far, average investment by oil and gas companies in non-core areas such as renewables, is still limited to around 1% of total capital spending, mostly on solar and wind projects.
Big Oil wants to dump more wastewater into rivers. What could go wrong? --The industry generates mind-boggling quantities of this waste, which is called “produced water” in industry parlance. Oklahoma, Texas, and New Mexico producers alone generated about 270 billion gallons of it in 2017. That’s enough water to fill the New York Giants stadium more than 550 times over. As oil and gas producers face increasing regulation of underground wastewater disposal — in part to limit earthquakes that result from the pressure injection puts on rocks — they’re looking for new ways to get rid of the fluid left behind after fracking and drilling. That pinch is being felt particularly acutely in Oklahoma, Texas, and New Mexico, which have experienced a fracking boom in the last few years and have limited ways to dispose of the substance.Much to the alarm of environmentalists and public health experts, those three states are now exploring expanding avenues for produced water disposal — including discarding the wastewater in streams and rivers.. East of the 98th meridian — an imaginary line that runs down the middle of Kansas, Oklahoma, and Texas — oil and gas operators are allowed to release treated wastewater into rivers, but only if it’s first routed through treatment facilities capable of removing the chemicals contained in the waste. West of the meridian, which includes half of Texas and Oklahoma as well as all of New Mexico, oil and gas companies can discard produced water into rivers without that hurdle, so long as they secure government permits.. Producers say they are time-consuming and cumbersome to obtain. As a result, last year Texas and Oklahoma took steps to take over permitting from the EPA. New Mexico is considering following suit. The EPA has also been considering easing regulations — including the 98th meridian rule — which could further expand the industry’s wastewater disposal options. The agency is set to publish a final report with its findings in the next few months.
How One Utah Community Fought the Fracking Industry — and Won - A sign at the north end of Kanab, Utah, proclaims the town of 4,300 to be "The Greatest Earth on Show." It's a rare case of truth in advertising. Kanab sits just seven miles north of the Arizona state line, at the crossroads of some of the Southwest's most beautiful places. In every direction a geologic wonderland awaits. To the north is Zion National Park with its breathtaking valley of 2,000-foot-tall rust and white sandstone cliffs. The sweeping expanse of Grand Staircase-Escalante National Monument stretches to the east of town, and just to the south you'll find the Grand Canyon's North Rim. There, a company called Southern Red Sands LLC had announced plans to build a facility to mine and process massive amounts of sand for use by oil and gas companies conducting hydraulic fracturing. The sand is a lesser-known but substantial aspect of the fracking process. Round grains of silica sand serve as a "proppant" to keep underground fissures in the shale open as oil and gas are pumped out. Fracking a single well can require thousands of tons of sand. "I really wanted to keep an open mind, but the more I learned about the project, the more concerned I got," Hand told The Revelator when I visited Kanab in September. She had reason to be worried. The first decade of the fracking boom relied heavily on so-called "frac sand" sourced mostly from Midwest states like Minnesota and Wisconsin, where mining reduced verdant green hills to piles of dust. But mining in the Midwest has its limits. Sand is expensive to ship across the country, so as fracking has taken off in Utah, Texas and New Mexico, companies have looked to find more local sources to trim costs. Southern Red Sands, a two-person start-up backed by Utah real-estate developer Kem Gardner, hoped to establish the region's next frac sand mine in a scenic area of state-owned lands outside Kanab called Red Knoll. Despite public pushback and some legal challenges, though, the frac sand mine seemed to be cruising toward approval as recently as October. It still needed an environmental impact assessment from the Bureau of Land Management, and the two water transfers needed approval from the state engineer. The project definitely wasn't a done deal, but in industry-friendly Utah, it had a good shot. So it may have come as a surprise to a number of residents when Southern Red Sands announced at the beginning of January that it was abandoning the proposed project. What happened? And are there any lessons that other communities fighting extraction threats can learn? "Speak out, pull together like-minded neighbors, organize and don't give up," Hand told me after hearing the news. "But also, try to be nice."
Iowa wants expert review of Dakota Access Pipeline expansion (AP) — Iowa regulators want owners of the Dakota Access Pipeline to provide expert analysis to back up the company’s claim that doubling the line’s capacity won’t increase the likelihood of a spill, a requirement their counterparts in North Dakota haven’t imposed. Texas-based Energy Transfer wants to double the capacity of the pipeline to as much as 1.1 million barrels daily to meet growing demand for oil shipments from North Dakota, and is seeking permission for additional pump stations in the Dakotas, Iowa and Illinois to do it. Commissioners in a South Dakota county last year approved a conditional use permit for a pumping station needed for the expansion. Permits in the other states are pending. The Iowa Utilities Board last week ordered the company to “provide expert explanation of whether the increased flow will increase the amount of oil that will be released if a spill occurs.” The nonpartisan panel, whose three members all were appointed by a Republican governor, also wants information on pipeline pressure levels currently and if the expansion occurs. The company also must provide “expert explanation” on the effect any additives to the oil would have on the longevity of the pipeline. The $3.8 billion pipeline has been moving oil from the Dakotas through Iowa to Illinois for more than two years. It was subject to prolonged protests and hundreds of arrests during its construction in North Dakota in late 2016 and early 2017 because it crosses beneath the Missouri River, just north of the Standing Rock Sioux Reservation. The tribe draws its water from the river and fears pollution. Energy Transfer insists the pipeline and its expansion are safe. Tribal members are asking the North Dakota Public Service Commission to deny the expansion of the pipeline, saying it would “increase both the likelihood and severity of spill incidents.” The company said in court filings that its $40 million pump station built on a 23-acre site would produce only “minimal adverse effects on the environment and the citizens of North Dakota.” The North Dakota PSC in November held a hearing on the proposed expansion that was overseen by an administrative law judge. The 17-hour-long hearing was held in Linton, a town of 1,000 along the pipeline’s path and near where a pump station would be placed to increase the line’s capacity from 600,000 barrels per day to as much as 1.1 million barrels. A barrel is 42 gallons.
Dakota Access seeks to push more oil through pipeline -Iowa regulators want owners of the Dakota Access Pipeline to provide expert analysis to back up the company’s claim that doubling the line’s capacity won’t increase the likelihood of a spill, a requirement their counterparts in North Dakota haven’t imposed.Texas-based Energy Transfer wants to double the capacity of the pipeline to as much as 1.1 million barrels daily to meet growing demand for oil shipments from North Dakota and is seeking permission for additional pump stations in the Dakotas, Iowa and Illinois to do it. Commissioners in a South Dakota county last year approved a conditional use permit for a pumping station needed for the expansion. Permits in the other states are pending.The Iowa Utilities Board last week ordered the company to “provide expert explanation of whether the increased flow will increase the amount of oil that will be released if a spill occurs.”The nonpartisan panel, whose three members all were appointed by a Republican governor, also wants information on pipeline pressure levels currently and if the expansion occurs. The company also must provide “expert explanation” on the effect any additives to the oil would have on the longevity of the pipeline.The $3.8 billion pipeline has been moving oil from the Dakotas through Iowa to Illinois for more than two years. It was subject to prolonged protests and hundreds of arrests during its construction in North Dakota in late 2016 and early 2017 because it crosses beneath the Missouri River, just north of the Standing Rock Sioux Reservation. The tribe draws its water from the river and fears pollution. Energy Transfer insists the pipeline and its expansion are safe. Tribal members are asking the North Dakota Public Service Commission to deny the expansion of the pipeline, saying it would “increase both the likelihood and severity of spill incidents.” The company said in court filings that its $40 million pump station built on a 23-acre site would produce only “minimal adverse effects on the environment and the citizens of North Dakota.” The North Dakota PSC in November held a hearing on the proposed expansion that was overseen by an administrative law judge. The 17-hour-long hearing was held in Linton, a town of 1,000 along the pipeline’s path and near where a pump station would be placed to increase the line’s capacity from 600,000 barrels per day to as much as 1.1 million barrels.
North Dakota signals no new conditions on pipeline expansion (AP) — North Dakota regulators signaled Thursday that the state would not impose conditions beyond those required by the federal government on a proposal to double the capacity of the Dakota Access Pipeline. Zachary Pelham, an attorney for the three-member, all-Republican North Dakota Public Service Commission told the panel that requiring additional measures could be considered “outside our lane” and “potentially problematic,” drawing a legal challenge from Texas-based Energy Transfer, the pipeline’s owner. The company wants to double the capacity of the pipeline to as much as 1.1 million barrels daily to meet growing demand for oil from North Dakota. It’s seeking permission for additional pump stations in the Dakotas, Iowa and Illinois. Commissioners in a South Dakota county last year approved a conditional use permit for a pumping station. Permits in the other states are pending. Iowa regulators last week said the company must provide expert analysis to back up its claim that doubling the line’s capacity won’t increase the likelihood of a spill. On Tuesday, opponents of the expansion said the Illinois Commerce Commission voted to require the company to provide justification that the additional capacity is needed, including identifying shippers and contracts. The commission did not return telephone calls Thursday to confirm the action. The $3.8 billion pipeline was subject to prolonged protests and hundreds of arrests during its construction in North Dakota in late 2016 and early 2017 because it crosses beneath the Missouri River, just north of the Standing Rock Sioux Reservation. The tribe draws its water from the river and fears pollution. Tribal members are asking North Dakota regulators to deny the expansion, saying it would “increase both the likelihood and severity of spill incidents.” The tribe wants North Dakota regulators to seek a similar analysis to that sought by regulators in Iowa and Illinois.
For North Dakota oil production, it's 'steady as she goes' - North Dakota’s oil production in November was down a tad from a record October, though natural gas output continued to climb. North Dakota, the nation’s second-largest oil-producing state after Texas, pumped out 1.52 million barrels per day in November, down 0.2% from the previous month. “It was pretty much ‘steady as she goes,’ ” Lynn Helms, director of the North Dakota Department of Mineral Resources, said in a webcast with reporters. With winter setting in, Helms said he doesn’t see significant oil and gas production changes ahead. “I’m really expecting these numbers to stay flat the next two or three months.” North Dakota produced 3.13 million MCF per day of natural gas in November, up 2% from a record October. (An MCF is 1,000 cubic feet of natural gas.) Also, North Dakota’s natural gas “capture” rate improved a bit in November, though it’s still below the state’s goals. Oil and gas operators captured 83% of gas production, up from 82% in October. The remainder was burned off in an economically wasteful and carbon-emitting practice called flaring. North Dakota operators are supposed to be capturing 88% of their gas production and flaring only 12%. Helms said gas capture will improve with the December completion of a new gas pipeline and should continue getting better as new gas processing capacity comes online this year. On the negative side, gas and petroleum production this spring could be hurt by extended road restrictions in North Dakota’s oil patch. A wet fall combined with an early cold snap has produced a “very deep frost,” Helms said. “Roads will be soft going into spring.” Heavy-equipment restrictions on county and township roads that normally end around Mother’s Day may not expire until Father’s Day, Helms said.
Keystone XL Inches Forward - TC Energy Corp. plans to begin pre-construction work on the Keystone XL oil pipeline next month, moving the long-delayed project forward even as opponents continue to fight it in court. Heavy construction equipment will be moved to worker campsites and pipeline storage sites in Montana, South Dakota and Nebraska in February, the Calgary-based company said in a filing with the U.S. District Court in Montana on Tuesday. TC then plans to start building the part of the conduit that crosses the U.S.-Canada border in April. The filing shows that TC Energy is pushing the $8 billion project forward despite continued opposition from environmental activists and some landowners. The pipeline is still tied up in a legal battle in Montana, and the company noted that it needs additional authorizations and permits to build the border-crossing segment. The 1,200-mile (1,900-kilometer) pipeline would help carry 830,000 more barrels of crude a day from Alberta’s oil sands to U.S. Gulf Coast refineries, easing a pipeline shortage that has hurt Canada’s oil industry. Environmentalists have opposed the project, arguing that it would contribute to catastrophic climate change by allowing more oil production.
South Dakota board approves Keystone XL water permits — The South Dakota Water Management Board on Tuesday approved five water permit applications for Keystone XL pipeline construction. The hearing was so contentious that it stretched into a dozen days over the course of four months as American Indian tribes and environmental groups argued against their approval. After holding a brief period for public comment in Fort Pierre Tuesday, the board met in a closed executive session before voting to approve the permits, with added requirements for real-time monitoring and weekly check-ins with the state. Opponents can appeal the board’s decision. They didn’t immediately respond to messages from The Associated Press seeking comment. TC Energy, the Canadian company building the pipeline, applied for permits to tap the Cheyenne, White and Bad rivers in South Dakota during construction. The water will be used for drilling to install pipe, build pump stations and control dust during construction. Two ranchers also applied for water permits to supply backup water to worker camps. The board allowed three minutes for each person who wanted to comment before the executive session. Two Native American youths — Tatanka Itancan, age 17, and his sister Zora Lone Eagle, age 13 — with painted handprints on their faces used their three minutes to silently stare at the board in protest. They said they had been refused permission to cross-examine experts during the hearing because they are minors and not represented by an attorney. Itancan said they live within a couple miles of where the pipeline would cross the Cheyenne River.
Trump administration approves Keystone pipeline on US land (AP) — The Trump administration on Wednesday approved a right-of-way allowing the Keystone XL oil sands pipeline to be built across U.S. land, pushing the controversial $8 billion project closer to construction though court challenges still loom. The approval signed by Interior Secretary David Bernhardt and obtained by The Associated Press covers 46 miles (74 kilometers) of the pipeline’s route across land in Montana that’s controlled by the Bureau of Land Management and the U.S. Army Corps of Engineers, said Casey Hammond, assistant secretary of the Interior Department. Those segments of federal land are a small fraction of the pipeline’s 1,200-mile (1,930-kilometer) route, but the right-of-way was crucial for a project that’s obtained all the needed permits at the state and local levels. The pipeline would transport up to 830,000 barrels (35 million gallons) of crude oil daily from western Canada to terminals on the U.S. Gulf Coast. Project sponsor TC Energy said in a court filing that it wants to begin construction on the U.S.-Canada border crossing in Montana in April. Opponents promised to challenge those plans in court. First proposed in 2008, the pipeline has become emblematic of the tensions between economic development and curbing the fossil fuel emissions that are causing climate change. The Obama administration rejected it, but President Donald Trump revived it and has been a strong supporter. The stretch approved Wednesday includes all federal land crossed by the line, Hammond said. Much of the rest of the route is across private land, for which TC Energy has been acquiring permissions to build on. Environmentalists and Native American tribes along the pipeline route say burning the tar sands oil will make climate change worse, and that the pipeline could break and spill oil into waterways like Montana’s Missouri River. They have filed numerous lawsuits.
Natural Gas Industry’s $1 Million PR Campaign Sets up Fight Over Northwest’s Energy Future - Washington and Oregon natural-gas companies, rattled by local proposals that could shift more buildings to electricity, will spend $1 million on a public-relations campaign to promote their fuel as part of the region’s clean-energy future. The gas companies are forming a coalition of unions, businesses and consumer groups to tout the benefits of natural gas and to help “prevent or defeat” initiatives that inhibit its use, according to internal industry documents obtained by The Seattle Times. They’re calling the coalition “Partners for Energy Progress,” and a public launch is scheduled next year. The planning documents provide a window into the industry’s broader effort to ensure that natural gas continues to be piped into American homes and other buildings, even as municipal and state governments grapple with how to combat climate change. “This will play out on a national scale much sooner than a lot of us have expected,” said Seattle City Councilmember Mike O’Brien, who in September proposed banning gas from new construction. In Seattle, Bellingham and other Northwest cities, gas companies and their allies already have begun fighting policy proposals, like O’Brien’s, that would place new restrictions on natural gas use in buildings as a way to reduce climate emissions. Puget Sound Energy (PSE) joined other opponents to halt the Seattle proposal, and Cascade Natural Gas has attacked recommendations by a Bellingham task force that include phasing gas out of all buildings. Dan Kirschner, executive director of the Northwest Gas Association, confirmed the $1 million push, which he said would be launched with funding from association members, including Bellevue-based PSE. Natural gas, when combusted, releases roughly 50% fewer carbon emissions than coal. But that doesn’t tell the whole story. Natural gas vents and leaks release unburnt methane, a potent greenhouse gas, into the atmosphere, and anxieties about that phenomenon are growing. Unburnt methane can warm the planet 84 times more in the first 20 years than the same amount of carbon dioxide.
California is going to court to stop Trump fracking plans - — California took legal action Friday to block the Trump administration’s plans to open federal lands in California to oil and gas drilling, including the controversial practice of hydraulic fracturing. The federal lawsuit announced by state Atty. Gen. Xavier Becerra comes after President Trump’s administration announced details of its plan to open more than a million acres of public and private land in California to fracking, ending a five-year moratorium on leasing federal land in California to oil and gas developers. “We are suing the Trump administration, once again, for acting as if they are above the law,” Becerra said during a news conference at his Sacramento office Friday morning. “Much of the federal oil and gas activity in the state happens near some of our most vulnerable communities, communities [that] are already disproportionately exposed to pollution and its health effects. Adding more fracking to the equation would only make things worse.” The lawsuit alleges that the federal Bureau of Land Management’s final environmental impact statement, approved in December, violates the National Environmental Policy Act and the Administrative Procedure Act because it fails to consider the danger posed to people who might live near the oil and gas wells and underestimated the number of fracking wells that could become active on the federal land. “They shortchanged the people, they shortchanged the law, they shortchanged the science, when it came to their analysis,” Becerra said. Along with the attorney general, the plaintiffs in the lawsuit against the Trump administration include Gov. Gavin Newsom, the California Air Resources Board, the California Department of Fish and Wildlife and the California Department of Water Resources. Environmental groups filed a similar lawsuit in a Los Angeles federal court earlier this week, citing the threat to public health and potential damage to recreational areas caused by fracking. Catherine Reheis-Boyd, president of the Western States Petroleum Assn., said the BLM’s review process followed federal law and the scientific studies involved took place under the Obama and Trump administrations. Reheis-Boyd said. House Minority Leader Kevin McCarthy, whose Bakersfield district is in the heart of California oil country, called the lawsuit a “stunt” that will adversely affect people with well-paying oilfield jobs in the Central Valley and across the state..
Cleanup of orphaned oil wells could cost California $500 million - California is staring at a massive bill to clean up the deserted oil and gas wells left behind by businesses that have gone defunct as the industry has diminished, according to a new report released Thursday by a state research agency.The California Council on Science and Technology estimated that the state already is liable for more than $500 million in cleanup costs for more than 5,500 orphaned wells up and down the state.The potential liability far outpaces the funds the state has on hand to combat the issue. The companies holding wells identified as orphaned in the 67-page report made just $26 million available to the state for their cleanup.The state’s responsibility could quickly grow, the report says: Another 69,000 wells have little to no production and little hope of restarting, or are held by financially weak businesses. Judson Boomhower, an energy expert and assistant professor of economics at UC San Diego who was lead author of the report, said in a statement that the state has recently taken steps to require a greater financial commitment from oil and gas companies to avoid being saddled with the responsibility of cleanup in the future. “However, our initial analysis implies that the potential cost to the state still substantially exceeds the value of these assurances,” Boomhower said. The report says orphaned wells are concentrated in Los Angeles and Long Beach, where costs associated with cleanup are “systematically high.” Two orphaned wells that started emitting odors in Echo Park in 2016 cost the state more than $1 million to seal. Mothballed wells off California’s coast, such as Platform Holly, have attracted the attention of state regulators for their potential to spill into the ocean and the large costs associated with their decommissioning. But, the report points out, issues with sealing wells are not limited to offshore wells, which represent just 2% of the state total. “The vast majority of orphan wells in the state are located onshore,” the report states. “These wells represent potentially large liabilities for the state.”
Trans Mountain Oil Pipeline Wins Legal Battle- Prime Minister Justin Trudeau’s bid to complete the Trans Mountain oil pipeline won a major victory Thursday as the nation’s top court rejected an appeal brought by British Columbia aimed at challenging the controversial project. The Supreme Court of Canada has dismissed the case, the court said in a statement. The decision was unanimous. B.C. Premier John Horgan’s government had sought to amend its Environmental Management Act so that the Pacific Coast province could control the transit of heavy oils like diluted bitumen from neighboring Alberta. In May, B.C.’s top appeals court ruled the province doesn’t have the jurisdiction to do that, saying the proposed amendments appear to “cross the line” between general environmental laws and the regulation of federal undertakings. The province had then taken it to the Supreme Court. The Trans Mountain expansion project seeks to almost triple the capacity of an existing pipeline that runs from oil-rich Alberta to a terminal in Vancouver’s port and would mean a seven-fold increase in tanker traffic to roughly 34 Aframax-sized ships a month. The federal government and the oil industry see the expansion as critical to reducing Canada’s dependence on the U.S., which takes almost all the nation’s oil exports. But the project faces staunch opposition in B.C., the birthplace of Greenpeace. Horgan’s government was elected in 2017 pledging to use “every tool” to try to block the project. The proposed legislation doesn’t specifically name Trans Mountain, but would restrict the increase of diluted bitumen shipments through the province until the behavior of spilled bitumen can be better understood. Kinder Morgan Inc., Trans Mountain’s original backer, abandoned the project in 2018 due to protests and legal challenges in B.C. Trudeau’s government stepped in to buy it for about C$4.2 billion ($3.2 billion). The expansion, which would boost daily shipping capacity by 590,000 barrels to a total of 890,000 barrels, would be a boon for Canadian oil drillers that have suffered from a lack of pipeline space, a bottleneck that has weighed on local crude prices. The expansion would be especially helpful to companies focused on production -- like Cenovus Energy Inc., MEG Energy Corp., and Athabasca Oil Corp. -- and have little to no refining capacity to cushion the blow from lower prices.
Heavy Crude Freezing Solid in Western Canada -- An arctic blast sweeping across Western Canada is weighing on the price of heavy crude. Temperatures of -30 degrees Celsius (-22 Fahrenheit) and lower have descended on Alberta and Saskatchewan -- cold enough to render the region’s viscous oil rock solid. To transport it, producers must blend in more of a lighter crude called condensate, thereby reducing the volume that can be shipped by pipeline and increasing transportation costs, according to Kevin Birn, IHS Markit’s director of North American crude oil markets. At the same time, trains that are shipping crude out of the pipeline-bottlenecked region must move slower in the chillier weather. Local demand for the oil is also threatened. On Tuesday, operations at Imperial Oil Ltd.’s refinery near Edmonton were disrupted due to the cold weather, the company said. Natural gas supplies to parts of the oil sands-producing region, where the fuel is used to make steam for loosening bitumen so it can be extracted, were also disrupted on the NOVA Gas Transmission system as “extreme cold weather that has resulted in reduced receipts, high Intra demand and unplanned outages,” according to a notice from TC Energy Corp. “The cold weather across the province is resulting in the inability for some customers to produce gas onto the NGTL system, while the system is experiencing peak demand,” TC Energy said in an email. “As a result, some central and northeast Alberta industrial customers are affected by lower-than-usual gas pressures.” Shortfalls of gas supplies have also affected some power generators in the province, said Tara de Weerd, spokeswoman for Alberta Electric System Operator, which manages and operates the Alberta power grid. Oil sands benchmark Western Canadian Select’s discount to West Texas Intermediate futures was at $24.50 a barrel on Wednesday, the widest in more than a year. Edmonton Mixed Sweet crude’s discount is also at the weakest in more than a year as is light synthetic crude that’s produced from oil sands bitumen processed in an upgrader.
The investigation into the Sportsplex Pond oil spill is now closed - The investigation into the hydrocarbon spill at the Crosslink County Sportsplex Pond has wrapped up, with no culprit found.On May 23, 2019, members of the public reported to the County of Grande Prairie that an oily residue with a rainbow sheen was on the surface of the Sportsplex Pond. An investigation into the incident found the residue was industrial oil, that is believed to had been intentionally released in a storm water drain. The oil had then made its way into the pond, which acts as a storm water overflow, as well as a wildlife habitat and a stocked fishing pond for public use. An investigation by the County of Grande Prairie and Alberta Environment and Parks (AEP) found the volume of pollutants in the pond was estimated at five cubic metres of hydrocarbon, and contamination and remediation efforts were put into place. After nearly two months of remediation and clean-up efforts, the pond and trails were re-opened.
U.S. imposes sanctions on petrochemical companies (Reuters) - The United States on Thursday said it blacklisted two companies based in Hong Kong, one in Shanghai and one in Dubai for helping Iran's state-owned National Iranian Oil Company (NIOC) export millions of dollars of goods in violation of U.S. sanctions. The U.S. Treasury Department said it imposed sanctions on the Hong Kong-based Triliance Petrochemical Co. Ltd and Sage Energy HK Limited, China-based Peakview Industry Co Ltd and United Arab Emirates-based Beneathco DMCC. The sanctions would freeze all assets held by the companies that fall under U.S. jurisdiction, generally bar U.S. companies and individuals from dealing with them, and potentially subject non-U.S. financial institutions that knowingly facilitate "significant transactions" for them to U.S. sanctions. In addition, the U.S. government-imposed sanctions on two other companies, Jiaxiang Industry Hong Kong Limited and Shandong Oiwangwa Petrochemical Co Ltd, and two individuals, Ali Bayandrian, who is linked to Triliance Petroleum, and Zhiqing Wang, a Chinese national linked to Shandong Oiwangwa. The announcements are the latest step in the U.S. "maximum pressure" campaign designed to squeeze the Iranian economy to try to force Iran to accept greater constraints on its nuclear program, regional activities and pursuit of ballistic missiles.
Trump administration grants Chevron license to keep drilling in Venezuela - The Department of Treasury is allowing Chevron, along with four other U.S. service suppliers, to continue operating in Venezuela despite U.S. sanctions. The Associated Press reported Saturday that the American companies were granted special licenses that extend the time they’ll be allowed to operate in Venezuela until April 22. Last year, the U.S. issued sanctions on Venezuela’s oil industry to pressure President Nicolás Maduro to abandon socialist policies, which they credit as the source of the country’s widespread economic decline. Amid the country's economic crisis, a disputed election has split country's diplomatic ties between Maduro and opposition leader Juan Guaidó, who is backed by the U.S. Maduro has accused the Trump administration of orchestrating a coup to take over Venezuelan oil reserves. Chevron, which has four joint ventures with Venezuela’s state-run oil company, produces about a fourth of the country’s oil production, with critics questioning whether the United States' efforts to oust Maduro through sanctions will prevail over American business interests. The Treasury Department did not immediately respond to an inquiry from The Hill.
Snake Oil Goes Mainstream-- An obscure part of the global marine-fuel market, once viewed as having little value for most shippers, is about to have its day. Producers of additives -- anything that makes fuels more viscous, lubricating or stable -- are cashing in as new shipping regulations require vessel owners to switch to cleaner fuels. At least some new low-sulfur fuels contain ingredients that can separate over time, potentially making them liable to clog equipment. “It would be very irresponsible not to use an additive,” said Melbourne Pinks, senior vice president at U.S. chemical shipping company Chembulk Tankers LLC. “They are now essential.” That wasn’t a common view before the new International Maritime Organization rules -- known as IMO 2020 -- came into effect this month, requiring the vast majority of shipowners to ditch high-sulfur fuels. Some of the new, cleaner versions may contain asphaltenes, which can form a sludge, especially when different fuels are mixed together. That’s prompted shippers to turn to the additives they once passed over as unnecessary, including compounds to improve a fuel’s lubricity and others to keep it stable and prevent it from breaking down.
Angola's Oil Drilling Ramps Up -- Angola’s ailing oil industry got a shot in the arm this week, with Eni SpA and Total SA both showing their commitment to the OPEC producer. Eni started production at the Agogo-1 deepwater field and won exploration rights to Block 28 in the Namibe Basin, while Total, active in Angola for more than 60 years, was awarded Block 29. New discoveries are vital if the southwest African country is going to revive faltering output, according to consultants Rystad Energy AS. “Adding significant resource through new discovery seems to be the only way out,” Rystad said in a report. Without fresh finds, volumes could drop below 1 million barrels a day by 2025, it said. Oil production in Angola has slumped by a third in the past decade to less than 1.4 million barrels a day, reflecting years of underinvestment in new projects. The government, which relies on oil exports for most of its revenue, has introduced reforms such as tax relief and a standalone regulator as part of efforts to lure investment and reverse the decline. The number of rigs in Angolan waters has increased in recent months, with Total positioning itself to be the country’s top foreign operator. The French major plans to drill the world’s deepest offshore well in a campaign that begins in the next few weeks. Italy’s Eni and its partners have started pumping 10,000 barrels a day at Agogo-1, and expect to double that volume in the coming months, Angola’s oil-industry regulator said Thursday. Production from Angolan projects that started in the last five years will peak in 2022 at about 549,000 barrels a day, according to Rystad.
Is This The Start Of A New Offshore Oil & Gas Boom? In retrospect, 2019 was another strong year for offshore exploration and production companies. Free cash flow remained strong and telltale signs have emerged that we are entering a new offshore investment cycle. This trend was perhaps illustrated most profoundly by the rising swell of offshore project approval activity by operators in 2019. Globally, the amount of oil and gas resources approved for development last year surpassed 20 billion barrels of oil equivalent (boe), the highest level seen since 2011. A quick look at free cash flow (FCF) levels in recent years confirms that 2019 was a strong year for the offshore sector. Figure 1 shows the total offshore FCF from all public E&P companies globally. This shows that 2019 was the third best year on record, with FCF reaching nearly $90 billion. This represented a slight reduction compared to 2018, but compares very favorably with the previous investment cycle from 2010 to 2014. This shows that the cash flow situation for offshore players is very robust, underlining the point that E&Ps have enough cash in hand to invest in new projects after several years of restrained capital expenditure. Figure 2 provides an overview of total approved offshore resources each year over the past decade, split by liquids and gas. Last year saw the approval of 12.3 billion barrels of liquids projects, along with 8.3 billion boe of new gas projects, thus bringing total approved resources to 20.6 billion boe. Given that the total amount of offshore production in 2019 was 10.1 billion barrels of liquids and 7.0 billion boe of gas, this implies a replacement ratio of 1.2 for both oil and gas. . Figure 3 shows approved offshore greenfield investments (designated for the development of new projects) by year of sanctioning. Once again, a strong increase in activity is seen in 2019. Total greenfield investments approved last year increased by 50% versus 2018. This significant rise in approved resources and investments was driven by several very large developments that were approved last year, such as the massive Marjan and Berri expansion projects in Saudi Arabia. Figure 4 shows the 15 largest offshore projects approved last year, measured by total greenfield capex. The expansion phase of Saudi Aramco’s Marjan field in Saudi Arabia was by far the largest project approved last year, with close to $12 billion in investments. The project aims to add 24 new offshore platforms to handle initial oil and gas processing and water injection. These platforms will tie into the onshore expansion of the Tanajib oil facilities, as well as other newly built onshore gas facilities. The second largest project on the list is the first phase of Total’s Area 1 development in Mozambique. This gas project will be developed as a subsea tieback to an onshore LNG plant.
My Neighbourhood Is On Fire!!! - Pipeline Explodes In Nigeria -- According to Nigerian newspaper Vanguard News, a massive fire is raging at one of Nigeria National Petroleum Corporation's (NNPSC) pipelines in Abule Egba, a neighborhood in Lagos, Nigeria, although the state-owned oil corporation, NNPSC, has yet to report on the incident or if there was a disruption to its crude transportation. Besides Vanguard News, alleged video of the devastation surfaced on social media.One Twitter handle said: "Fire service, please tell us what to do. Tell us what you've done. People are disturbed!!! My neighbourhood is on fire!!! Nigeria help !!!! Ekoro, Abule Egba, Pipeline. SOS SOS SOS !!!” Fire service, please tell us what to do. Tell us what you've done. People are disturbed!!! My neighbourhood is on fire!!! Nigeria help !!!! Ekoro, Abule Egba, Pipeline.SOS SOS SOS !!!@segalink @ChifeDr @BOGbadamosi @DrJoeAbah @MBuhari @PoliceNG @NigeriainfoFM pic.twitter.com/Evl5UhuFeR— Emeka Akpa (@emekaakpa_) January 19, 2020Another user captured a massive fireball in the sky. NNPC pipelines passing through Awori, Lagos Nigeria catches fireWatch vedio here https://t.co/yvceLZFQZH pic.twitter.com/If7MuOEq7O — Hydar Aleey (@iAleey) January 19, 2020Handle @IAMGFLOW2 tweets a picture of charred cars and possible structure fires, saying, "Several properties were said to have been consumed."There is a raging fire at one of the Nigeria National Petroleum Corporation, NNPC, pipelines at Ekoro, Abule -Egba area of Lagos State.Several properties were said to have been consumed. #AbuleEgbaonFire#whatsappdown pic.twitter.com/87eE9Rxn7A — Gflow_designer (@IAMGFLOW2) January 19, 2020 Besides the various media reports, there is no incident report yet on any NNPSC's pipelines:
Two captains on trial for polluting UAE beaches with oil spill - Two captains have appeared at the Fujairah Misdemeanours Court on charges of polluting the beaches of Fujairah and Kalba city. The foreign captains have allegedly caused a massive oil pollution in these beaches that need up to Dh14 million to be cleaned up. Court records show that the two ships, back in October last year, collided in Fujairah waters following which huge amounts of diesel spilled into the sea and extended to the beaches of Fujairah and Kalba, covering a total area of 3km along the coasts. The leak has also led to a foul odour and affected the fishing activities in these places. The two ships have been seized, while the captains were referred to court for legal action. The defence lawyer requested the court to release the ship of her client as the forensic report has already been submitted. "The seizure order has caused a big loss to my client," she told the court, which rejected her request and upheld the custody ruling. The court ordered adjournment of the case to a later timing for more hearing sessions.
OPEC oil production cuts likely to continue for the ‘whole of 2020’: Wood Mackenzie - OPEC is likely to continue with its oil supply cuts for the rest of 2020, a research director said Monday. “One thing which we are seeing in our numbers is that the market is still not ready to absorb the production cuts back, even for (the) whole of this year,” Sushant Gupta, who heads Wood Mackenzie’s refining and oils market team in Asia, told CNBC’s “Capital Connection.” “We expect OPEC to continue cutting production for 2020,” he said. OPEC and its allies agreed in December 2019 to cut supply by an additional 500,000 barrels per day until its next meeting in March 2020, bringing the total reduction to 1.7 million barrels a day. However, the duration of the deal remains uncertain. The energy alliance usually gathers every six months, so the announcement of a meeting in March caused some analysts to believe that tighter policy would only last for the first quarter of 2020. Gupta argued that the additional cuts indicate OPEC is aware of oversupply in the oil market for at least the first half of this year. “They will have to manage that oversupply somehow, by either higher compliance or even deeper cuts for (a) longer time,” he said. He added that Wood Mackenzie expects oil supply to outpace demand for “the whole of 2020.” Part of that supply will come from non-OPEC, non-U.S. producers such as Brazil, Canada and Norway, he said. “It’s more pronounced in the first half 2020 than the second half ... but we expect (OPEC) to rollover production cuts for the whole of 2020,” he said. Oil price forecast Gupta also weighed in on oil prices in a “fundamentally oversupplied” market. “We expect prices to stabilize at around $65 per barrel for the first half of this year and around $64 per barrel for the whole year 2020.” When asked about black swan events — rare and unpredictable occurrences with severe consequences — for the market, he pointed to geopolitical tensions in the Middle East and the ongoing U.S.-China trade war. Still, oil prices will “come back again” to the fundamentals, he said. “Geopolitical events will continue to play a key part in 2020,” he said. “But ... from the demand side of things, the U.S.-China trade dispute and overall health of the global economy will play an equally important part in keeping the prices in balance.”
Higher Non-OPEC Output Will Keep Oil Prices Honest in 2020 - For all intents and purposes, oil trading data recorded over past sessions only offers a glimpse of what has gone by and is perhaps not an absolute harbinger of what might follow. Yet, what it does is offer reasonable conclusions on crude trading patterns in sync with supply and demand permutations. By that logic, 2019 saw one of the most range-bound price variations for global proxy benchmark Brent, as well as the West Texas Intermediate, the preferred North American benchmark (See Figure 1), and that will continue in 2020. While price volatility remained a feature, Brent futures rarely escaped the $60-70 per barrel range and averaged just north of $64 for 2019. WTI mirrored that range, albeit with a top and bottom end discount of ~$5 per barrel, unable to escape the $55-65 bracket and averaged just below ~$58. While my prediction for the WTI average was higher by $2, Brent, more reflective of global permutations, stayed within the 2019 range I’d put forward on Rigzone last year. The market fundamentals taken into account in making that call haven’t materially altered in 2020. In fact, the logic of there being too much oil out there has been lent further credence by 2.1 million barrels per day (bpd) to 2.3 million bpd of possible additional non-OPEC crude coming to the market. Much of this would be in the shape of light sweet crude being exported by U.S. producers. According to the Energy Information Administration (EIA), American production is expected to rise by 1.06 million bpd in 2020 to a record of 13.30 million bpd. Brazil, Canada, Guyana and Norway will also be among the producing nations adding to the global supply pool. Switching tack to the demand-side of the pricing equation, survey forecasts range from demand growth levels of 800,000 to 1.4 million bpd, keeping total global consumption around 101-102 million bpd. My prediction is for demand growth to be somewhere in the middle of that range, i.e. 1.1 to 1.2 million bpd. That’s because an easing of demand worries has still not materialized. A resolution of the U.S.-China trade standoff has still not been meaningfully found; the U.K. and European Union are in for an intense round of Brexit negotiations going all the way up to December; and demand patterns of the big five crude consumers – i.e. the U.S., China, India, Japan and South Korea – continue to give cause for concern.
Oil rises as Libyan oilfields shut down -- Oil prices rose to their highest in more than week on Monday after two large crude production bases in Libya began shutting down amid a military blockade, risking reducing crude flows from the OPEC member to a trickle. Brent crude was up 37 cents, or 0.6%, at $65.22 by 0952 GMT, having earlier touched $66 a barrel, the highest since Jan. 9. The West Texas Intermediate contract was 24 cents, or 0.4%, higher at $58.78 a barrel, after rising to $59.73, the highest since Jan. 10. Two major oilfields in southwest Libya began shutting down on Sunday after forces loyal to Khalifa Haftar closed a pipeline, potentially cutting national output to a fraction of its normal level, the National Oil Corporation (NOC) said. The closure, which follows a blockade of major eastern oil ports, risked taking almost all the country’s oil output offline However, the earlier rise in oil prices eased after some analysts and traders said supply disruptions in Libya could be offset by other producers, limiting the impact on global markets. “The oil market remains well supplied with ample stocks and a healthy spare capacity cushion. In other words, the bullish price impact may prove to be fleeting,” said Stephen Brennock of oil broker PVM. Takashi Tsukioka, president of the Petroleum Association of Japan (PAJ), also told a news conference that oil prices may fluctuate due to the latest incidents, but “we don’t have to worry too much about demand and supply balance as OPEC can cover shortfalls.” If Libyan exports are halted for any sustained period, storage tanks will fill within days and production will slow to 72,000 barrels per day (bpd), an NOC spokesman said. Libya has been producing around 1.2 million bpd recently. “A prolonged disruption from Libya would be enough to swing the global oil market from surplus to deficit in 1Q20,”
Oil markets look to potential disruption with halt in Libyan production - Oil prices could see prices going up in the short term with a disruption in supply after oil production in Libya was down by 800,000 barrels on Friday, analysts said. Oil markets on Friday saw Brent trading on $64.85 and West Texas Intermediate (WTI) at $58.54, both down on the week with continued oversupply concerns and weak economic data coming out from China. Geopolitical tensions, however, may take centre stage again this week after oil exports were blocked from ports in Libya along with oil field closures. International peace talks are set to take place in Berlin, Germany, on Sunday in an attempt to reach a settlement between conflicting Libyan factions. “While the Gulf region has dominated geopolitics to start the year, North Africa will set the tone this week. Reportedly half of Libya’s oil production has been shut in as political rivals seek to exert influence over pending negotiations to end hostilities,” said Edward Bell, commodity analyst at Emirates NBD. “The country continues to endure political unrest that threatens the stability of supplies and exports. Hence, we assign a relatively low probability to Libya maintaining recent high production levels for most of 2020,” he added. “Unlike the circumstances in the Gulf, the tensions in Libya are actually affecting physical markets thus allowing a price rally to have more solid footing,” he said. Market surplus On a more long-term look, Bell said that market oversupply remained a pressing challenge for markets even with geopolitical tensions, with monthly reports last week by Opec and the International Energy Agency (IEA) forecasting a surplus of oil.
Oil rises as Libya declares force majeure in oilfields (Reuters) - Oil prices rose to their highest in more than a week on Monday after two large crude production bases in Libya began shutting down amid a military blockade, risking reducing crude flows from the OPEC member to a trickle.Brent crude settled up 35 cents, or 0.5%, at $65.20, having earlier touched $66 a barrel, its highest since Jan. 9.West Texas Intermediate last traded 12 cents, or 0.2% higher, at $58.66 a barrel, after rising to $59.73, the highest since Jan. 10.Two major oilfields in southwest Libya began shutting down on Sunday after forces loyal to Khalifa Haftar closed a pipeline, potentially cutting national output to a fraction of its normal level, the National Oil Corporation (NOC) said.NOC declared force majeure on crude loadings from the Sharara and El Feel oilfields, according to a document seen by Reuters.The closure, which follows a blockade of major eastern oil ports, risked taking almost all the country's oil output offline.However, the earlier rise in oil prices eased after some analysts and traders said supply disruptions in Libya will be short-lived and could be offset by other producers, limiting the impact on global markets."The oil market remains well supplied with ample stocks and a healthy spare capacity cushion. In other words, the bullish price impact may prove to be fleeting," said Stephen Brennock of oil broker PVM.Amrita Sen, chief oil analyst at Energy Aspects, added: "We expect the current scale of outages to be fairly short-lived... as there is limited upside for Haftar to slow the country's oil revenues to a trickle.""The current closures are clearly a power play aimed at boosting Haftars leverage amid international efforts to broker peace in the country."Foreign powers agreed at a summit in Berlin on Sunday to shore up a shaky truce in Libya, which has been in turmoil since the fall of Muammar Gaddafi in 2011.If Libyan exports are halted for any sustained period, storage tanks will fill within days and production will slow to 72,000 barrels per day (bpd), an NOC spokesman said. Libya has been producing around 1.2 million bpd recently.
Oil prices ease as supply risk concerns fade -Oil prices eased on Tuesday as investors appeared to shrug off earlier supply concerns following a force majeure declared by Libya on two major oilfields amid a military blockade.Brent crude was trading down 30 cents, or 0.5%, at $64.90 per barrel by 0318 GMT, after rising to their highest in more than a week on Monday. U.S. West Texas Intermediate crude futures were down 14 cents, or 0.2%, at $58.40 a barrel."Every time we get a big geopolitical event, the market spikes up but everybody looks at that as a chance of a selling opportunity," said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.Two major oilfields in southwest Libya began shutting down on Sunday after a pipeline was closed off, potentially reducing national output to a fraction of its normal level, the country's National Oil Corp (NOC) said.A document sent to oil traders and seen by Reuters on Monday said the NOC had declared force majeure - a waiver on contractual obligations - on crude loadings from El Sharara and El Feel oilfields in Libya's southwest.If Libyan exports are halted for any sustained period, storage tanks will fill within days and production will slow to 72,000 barrels per day (bpd), an NOC spokesman said. Libya has been producing around 1.2 million bpd recently.Anti-government unrest in Iraq, another major oil producer, also had initially supported oil prices, but officials later said production in southern oilfields has not been affected by the unrest.Any supply disruptions could be offset by increased output from the Organization of the Petroleum Exporting Countries (OPEC), which could limit the impact on global oil markets, the head of Japan's petroleum industry body said."We are caught in this ($65 per barrel) trading range,"
Oil Falls Despite Major Outage In Libya - Oil prices pared gains in early trading on Tuesday, as a new virus in China raised fears of an economic slowdown. Even substantial oil supply disruptions in Libya couldn’t keep prices up. Libya’s oil operations were disrupted at the El Feel and Sharara fields as well as the Zawiya export terminal. Other ports also declared force majeure, including Brega, Ras Lanuf, Hariga, Zueitina and Sidra. Together, the outages may total as much as 800,000 bpd. Libya’s civil war has raged since last April, but the oil outages open up a dangerous new phase. Oil prices originally moved higher on the news but fears of the coronavirus slowing down economic growth have countered that at least temporarily. The U.S. government extended a waiver forChevron for another three months, allowing the company to continue to operate in Venezuela despite sweeping American sanctions on the country. Venezuela’s oil production has stabilized at lower levels – at a little over 700,000 bpd – despite the ongoing sanctions. Nymex natural gas prices have plunged below $2/MMBtu, a level not seen in years. Prices continued to decline in early trading on Tuesday. Shale gas stocks were deep in the red as a result. For instance, Range Resources was off by more than 7 percent on Tuesday, Antero Resources was down by more than 5 percent. The gas-focused drillers in the Marcellus shale are under particular pressure because they don’t have crude oil to offset the losses. The gas plunge is also squeezing coal-fired power plants. The oil industry is not investing enough in clean energy, and companies are at risk as the world moves on from fossil fuels, the IEA warned in a new report. But large oil and gas companies could play a constructive role in accelerating the deployment of clean energy, the agency said. A new IEEFA report finds that the shareholder payouts from the five largest oil majors are unsustainable. The payouts to shareholders exceeded free cash flow by $207 billion over the past decade. The majors took on debt and sold assets to bridge the gap, raising questions about the sustainability of such a strategy.
WTI Extends Losses To 7-Week Lows After Large Crude, Product Builds Oil traded down notably today, plumbing 7-week lows on concerns that the deadly coronavirus that’s spreading from China will crimp energy demand in a market already awash with supplies. The oil-price decline “is a manifestation of worries about global oil demand,” And tonight's inventory data could well exacerbate that concern. API
- Crude +1.57mm (-1.0mm exp)
- Cushing -429k
- Gasoline +4.5mm (+3.3mm exp)
- Distillates +3.5mm (+1.6mm exp)
Despite last week's huge product builds, analysts continue to expect more increases in inventories and they did. Crude stocks rose 1.57mm barrels against the 1mm draw expected... The 3% drop today is somewhat ironic since it perfectly matches Goldman's estimate overnight at the impact the virus would have on price... Goldman estimate that global oil demand may slip by 260,000 barrels a day this year as a result of the respiratory virus. If the 2003 SARS epidemic is any guide, this new outbreak could shave almost $3 from the price of a barrel of crude, the bank said. “We could see weaker Chinese oil demand over the next several weeks or even longer,” said Leo Mariani, energy analyst at KeyBanc Capital Markets Inc.“Going into the Chinese New Year, we tend to see outside travel throughout China and there’s big concerns about a demand shock.” WTI hovered around $56.60 (lows of the day) ahead of the API data and extended losses as the print hit...
Oil falls nearly 3% as over-supply concerns weigh - Oil prices fell more than 2% on Wednesday as a market surplus forecast by the International Energy Agency (IEA) and demand worries outweighed concern over disruptions to Libya's crude output.Brent crude was down $1.39, or 2.2%, at $63.20 per barrel. U.S. West Texas Intermediate crude fell 2.8%, or $1.64, to settle at $56.74 per barrel.The head of the IEA, Fatih Birol, said he expects the market to be in surplus by 1 million barrels per day (bpd) in the first half of this year."Oil prices remain heavy on oversupply concerns and after the Saudi Energy Minister Price Abdulaziz did not offer any hints of optimism that the OPEC+ production cuts would be extended beyond March," said Edward Moya, senior market analyst at OANDA in New York."China's coronavirus will likely see travel restrictions that could end up hurting demand for crude during a peak travel time in China."Markets are also focusing on the emergence from China of a new coronavirus just ahead of the Lunar New Year holidays this weekend and the possible impact a pandemic might have on global economic growth.Should the virus develop dramatically and hit travel and growth, demand for oil could fall by 260,000 bpd, Goldman Sachs said in a note."Demand concerns over a potential epidemic will counter concerns around supply disruptions in Libya, Iran and Iraq, driving spot price volatility in coming weeks," Goldman said, though the "impact on oil fundamentals remains limited so far".Oil prices have been marginally supported after Libya's National Oil Corp on Monday declared force majeure on the loading of oil from two major oilfields after the latest development in a long-running military conflict.Unless oil facilities return to operation quickly, OPEC member Libya's crude output will be reduced to about 72,000 bpd from about 1.2 million bpd."The Libyan pipeline blockade continued to have a muted impact on sentiment ... There is a consensus that the disruption will prove short-lived," .Supply is likely to continue to rise, with U.S. crude production in large shale deposits expected to rise to record highs in February, though the pace of increase is likely to be the lowest in about year, the U.S. Energy Information Administration (EIA) said on Tuesday.U.S. crude inventories were likely to have fallen for a second week last week, a Reuters poll showed, but gasoline stocks are expected to have risen for an 11th week in a row. Weekly U.S. energy reports have been delayed a day in observance of the Martin Luther King Jr. Day holiday on Monday. .
Oil prices at 7-week low on forecast for surplus in crude supplies - Oil futures fell on Wednesday to mark their lowest settlement in about seven weeks as fears of an oversupply of crude, and potential hit to demand on the back of the coronavirus outbreak in China, outweighed a disruption to Libyan production. West Texas Intermediate crude for March delivery CLH20, -1.59% fell $1.64, or 2.8%, to settle at $56.74 a barrel on the New York Mercantile Exchange. That was the lowest settlement for a front-month contract since Dec. 3, according to Dow Jones Market Data. March Brent crude BRNH20, -1.33% lost $1.38, or 2.1%, to finish at $63.21 a barrel on ICE Futures Europe—the lowest since Dec. 4. “The fact that potentially around 1 million [barrels a day] of supply is offline whilst outright oil prices move lower signals a broader concern over continued oversupply potential,” wrote analysts at JBC Energy, a Vienna-based consulting firm, in a note. Oil had rallied early Tuesday after Libya’s largest oil field shut down production after a pipeline was cut off, but ended the day lower. The topic of supplies was underlined by remarks Tuesday by International Energy Agency Executive Director Fatih Birol on the sidelines of the World Economic Forum annual meeting in Davos, Switzerland. Birol said he sees “an abundance of energy supply in terms of oil and gas. It’s the reason that recent incidents we have seen — with the Iranian general, Qassem Soleimani, killed, Libya unrest — didn’t boost international oil prices,” Reuters reported. In its annual World Energy Outlook report Wednesday, the IEA said increasing U.S. shale output will continue to blunt the influence of other energy producers, including members of the Organization of the Petroleum Exporting Countries.
Oil slump deepens as China virus casts cloud over fuel demand, economy - Oil prices fell to their lowest in seven weeks on Thursday, sliding more than 1% on concern that the spread of a respiratory virus from China may lower fuel demand if it stunts economic growth in an echo of the SARS epidemic nearly 20 years ago. Brent crude futures fell $1.82, or 2.9%, to $61.37 per barrel. U.S. West Texas Intermediate futures fell $1.83, or 3.2%, to $54.91 a barrel. The contract declined 2.7% on Wednesday. The so-called novel coronavirus has killed 17 people through respiratory illness since it emerged late last year in Wuhan, a city of 11 million people in central China. Nearly 600 cases have been confirmed and city authorities have shut transport networks, urging residents not to leave to prevent the contagion spreading. The potential for a pandemic has stirred memories of the Sudden Acute Respiratory Syndrome epidemic in 2002-2003, which also started in China, and dented economic growth and led to a slump in travel. “Downside demand risks due to the Wuhan virus appear to be a growing concern for the market, and understandably so, with any clampdown on travel likely to weigh on fuel demand,” ING Research said. Overseas airlines, along with rail operators from Hong Kong and elsewhere have also started shutting down connections to Wuhan, essentially now in lockdown. “We estimate a price shock of up to $5 (a barrel) if the crisis develops into a SARS-style epidemic based on historical oil price movements,” JPM Commodities Research said in a note. The U.S. bank maintained its forecasts for Brent to average $67 a barrel in the first quarter and $64.50 a barrel throughout 2020.
WTI Bounces Off $55 After Small Crude Draw - Oil prices have extended their losses after last night's surprise crude build reported by API, not helped by the increasing concerns over demand reductions due to the spread of the Wuhan Coronavirus across the world’s biggest oil importer.“Sentiment has turned negative,” as the coronavirus is set to affect demand, said Andrew Lebow, senior partner at New York consultant Commodity Research Group. The virus fears have overshadowed concern over the halt of exports from Libya. DOE:
- Crude -405k (-1.0mm exp)
- Cushing -961k
- Gasoline +1.745mm (+3.3mm exp)
- Distillates -1.185mm (+1.6mm exp)
Ongoing major builds in products continued with the 11th weekly gasoline inventory rise but crude and distillates surprised with small draws... US Crude production held at a new record high in the last week and we note that the rig count has somewhat stabilized from its almost constant down-trend. Oil is bearing the brunt of the anxiety due to the potential hit to travel, especially as it’s happening just before the Lunar New Year holidays, the biggest human migration in the world. Goldman Sachs predicts the virus may crimp global demand by 260,000 barrels a day this year - with jet fuel accounting for around two-thirds of the loss - if the SARS epidemic in 2003 is any guide.WTI traded at a $54 handle ahead of the DOE print - its weakest since November...
Oil hits 11-week low as China slowdown fears weigh - Oil prices fell 2% on Thursday on concern that the spread of a virus from China could lower fuel demand if it stunts economic growth, but losses were limited by a drawdown in U.S. crude inventories.Brent crude futures lost $1.20, or 1.9%, to trade at $62.00 per barrel, after having touched $61.25 a barrel, the lowest since early December.U.S. West Texas Intermediate crude futures fell $1.15, or 2%, to settle at $55.59 a barrel. The contract earlier fell to $54.77 a barrel, the lowest since Nov. 1.Two Chinese cities were put in lockdown on Thursday as health authorities around the world scrambled to prevent a global pandemic. The coronavirus outbreak has killed 17 people and infected nearly 600.The potential for a pandemic has stirred memories of the Sudden Acute Respiratory Syndrome (SARS) outbreak in 2002-03, which also started in China and caused a slump in travel."Such health issues represent significant impediments to normal travel and as a result, have forced the oil market to discount some significant weakening in jet and diesel fuel demand that is extremely difficult to measure until the spread of the health virus is contained," said Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates.With coronavirus cases detected as far as away as the United States, global stock markets also felt the effects of fears that the virus could spread further as millions of Chinese prepare to travel for the Lunar New Year this weekend." We estimate a price shock of up to $5 (a barrel) if the crisis develops into a SARS-style epidemic," JPM Commodities Research said in a note.The U.S. bank maintained its forecast for Brent to average $67 in the first quarter and $64.50 throughout 2020.Amid recent heightened tension between the United States and Iran, the United States on Thursday imposed Iran-related sanctions on two individuals and six companies, including four firms tied to the National Iranian Oil Company.Tempering losses, U.S. crude inventories fell 405,000 barrels last week, although gasoline stockpiles rose to their highest on record after 11 weeks of consecutive builds, the Energy Information Administration reported.
Oil drops more than 1%, heads for weekly loss on China virus concerns - Oil slipped below $62 a barrel on Friday and was heading for a weekly decline as concern that a virus in China may spread, curbing travel and oil demand, overshadowed supply cuts. The virus has prompted the suspension of public transport in 10 Chinese cities. Health authorities fear the infection rate could accelerate over the Lunar New Year holiday this weekend, when millions of Chinese travel to their homes and abroad. Global benchmark Brent fell 69 cents, or 1%, to $61.35. Brent was down about 4% this week, its third consecutive weekly drop. U.S. West Texas Intermediate crude fell 69 cents, or 1.2%, to $54.90 per barrel. “One should be prepared for negative surprises when it comes to Chinese demand,” said Eugen Weinberg, analyst at Commerzbank. “The impact of this is all the greater because the restrictions are being imposed during the busiest travel season for the Chinese.” China is the world’s second-largest oil consumer so any slowdown in travel would show up on demand forecasts. Offering some support for prices was the U.S. Energy Information Administration’s latest weekly supply report, which on Thursday showed that crude inventories fell 405,000 barrels in the week to Jan. 17. Nonetheless, the upside for prices was limited. Oil inventories in the wider industrialized world are above the five-year average according to OPEC figures, which analysts say is limiting the impact on prices of supply losses. “Such is the bearish pressure that a raft of ongoing crude supply outages are not gaining much traction,” said analysts at JBC Energy in a report.
Oil drops the most since July on fears coronavirus will hit growth - Oil posted its worst week since July as the coronavirus outbreak continues to pressure prices. A slowdown in China’s economy would impact demand because China is the world’s largest crude oil importer, after importing a record 10.12 million barrels per day in 2019, according to data from the General Administration of Customs. China is also the second-largest oil consumer, behind the United States. On Friday, U.S. West Texas Intermediate crude futures fell 2.5%, or $1.40, to settle at $54.19. At the session low WTI hit $53.85, its lowest level since Oct. 31. This was the fourth straight day of losses, and the contract declined 7.4% for a third straight week of declines. International benchmark Brent crude dropped 2.2% to settle at $60.69, bringing its weekly loss to roughly 6.4%, which was also the third straight week of declines. The flu-like coronavirus, first identified on Dec. 31 in the Chinese city of Wuhan, has already killed at least 26 people and infected more than 900 worldwide. The virus has spread to South Korea, Japan, Thailand, Vietnam and the United States, among other places. On Friday, the CDC confirmed the second case in the U.S. More than 33 million people are now under travel restrictions in China, which could impact jet fuel demand. The timing is especially important because Chinese New Year, which starts tomorrow, is the world’s largest annual human migration. “When cities are placed under quarantine, and public transit is shut down, by definition that reduces economic activity and has a negative impact on energy demand, oil included,” Raymond James analyst John Freeman said in a note to clients Friday. “Once there is evidence that the outbreak is contained and thus economic disruption subsiding, sentiment on oil should improve, bringing prices back up.”
Why The Coronavirus Is A Real Threat To Oil Markets- It impairs your breathing, causes extreme fatigue and fevers. It kills. And beyond that, it’s keeping oil prices low by threatening to stifle oil demand in one of the world’s largest oil markets. It’s SARS CoV, better known as the SARS Coronavirus, and it’s shaping up to be the oil market’s biggest nemesis this year. And there’s no cure.SARS, which stands for severe acute respiratory syndrome, is not only deadly, but highly contagious—more contagious than originally thought, and this coronavirus-inspired fear has now decisively spilled over into the oil market. With highly contagious and deadly viruses like the SARS CoV, fear rules the day. Whether it’s a personal fear that one might catch the virus, or whether one actually catches the virus, the result is that people will stop traveling to some extent. Even the fear that people may stop traveling is enough to result in an economic slump. Whether one catches the virus or not is irrelevant economically speaking—the mere perception that it’s a possibility creates ripples in the world economy as people change traveling, purchasing, and trading patterns. The oil markets are obsessed with China—specifically China’s demand for oil. Oil demand was at the forefront of all the pricing moves throughout 2019. The thought of dampened demand from the world’s second largest oil consumer outweighs even significant geopolitical risk, as well as tangible oil production outages such as the attacks on Saudi Aramco oil facilities in September and Libya's current nearly complete outage of over 1 million barrels per day. One may look at China’s oil consumption, at 13.5 million bpd in 2018, as being far below that of the United States, which consumed 20.5 million bpd that same year. So, why all the China fuss? Surely U.S. demand would move markets more than China? But it’s the oil demand growth that moves prices, and China’s oil demand growth (and India’s too) is far greater than that of the United States. In fact, China’s oil demand has been growing at an annual rate of 5.5%, while the United States’ oil demand has been growing by 0.5%.And most of what China uses, it imports, adding another layer of market-sway into the mix.This is what moves markets.Not even OPEC and its jawbone to herald its oil production-cut prowess can outshine negative news about what is already China's slowing demand growth. And of all the threats to the oil industry that people were expecting in 2020, no one saw this coming: the virus ripping through China at unprecedented rates is eating into China's oil demand more than anyone could have ever expected.
Jeff Bezos hack: Amazon boss's phone 'hacked by Saudi crown prince' --The Amazon billionaire Jeff Bezos had his mobile phone “hacked” in 2018 after receiving a WhatsApp message that had apparently been sent from the personal account of the crown prince of Saudi Arabia, sources have told the Guardian.The encrypted message from the number used by Mohammed bin Salman is believed to have included a malicious file that infiltrated the phone of the world’s richest man, according to the results of a digital forensic analysis. This analysis found it “highly probable” that the intrusion into the phone was triggered by an infected video file sent from the account of the Saudi heir to Bezos, the owner of the Washington Post.The two men had been having a seemingly friendly WhatsApp exchange when, on 1 May of that year, the unsolicited file was sent, according to sources who spoke to the Guardian on the condition of anonymity.Large amounts of data were exfiltrated from Bezos’s phone within hours, according to a person familiar with the matter. The Guardian has no knowledge of what was taken from the phone or how it was used.The extraordinary revelation that the future king of Saudi Arabia may have had a personal involvement in the targeting of the American founder of Amazonwill send shockwaves from Wall Street to Silicon Valley.It could also undermine efforts by “MBS” – as the crown prince is known – to lure more western investors to Saudi Arabia, where he has vowed to economically transform the kingdom even as he has overseen a crackdown on his critics and rivals.The disclosure is likely to raise difficult questions for the kingdom about the circumstances around how US tabloid the National Enquirer came to publish intimate details about Bezos’s private life – including text messages – nine months later. It may also lead to renewed scrutiny about what the crown prince and his inner circle were doing in the months prior to the murder of Jamal Khashoggi, the Washington Post journalist who was killed in October 2018 – five months after the alleged “hack” of the newspaper’s owner.
Saudi Crown Prince Likely Used Israeli Spyware to Hack Bezos’ Phone: UN Experts — An examination of Jeff Bezos’ mobile revealed “an anomalous and extreme change in phone behaviour” after the Amazon CEO received a file from a WhatsApp account associated with the Saudi crown prince, two UN special rapporteurs said on Wednesday. There is “reasonable belief” that the behaviour on Bezos’ phone was the result of Pegasus spyware sold to the Saudis by the Israeli NSO Group, the rapporteurs said in a statement summarising the findings of an “in-depth, forensic level examination.” Their comments come a day after reports citing forensic experts alleged that Crown Prince Mohammed bin Salman’s WhatsApp account was used to hack Bezos’ phone in May 2018.
Bezos hack: UN to address alleged Saudi hacking of Amazon boss’s phone - UN investigators are poised to release a statement about the alleged hacking of Jeff Bezos’s mobile phone after the Guardian revealed details of a forensic analysis that has implicated a WhatsApp account purportedly owned by the crown prince of Saudi Arabia. The astonishing disclosure prompted a Democratic lawmaker in the US to urgently demand more information about the malware that was allegedly used to infiltrate Bezos’s phone in the 2018 hack of the Amazon founder.Ron Wyden, a Democratic senator from Oregon, said in a letter to Bezos that the alleged breach of the billionaire’s phone “appears to be part of a growing trend”, citing reports that Saudi Arabia had acquired cyber-hacking capabilities from Hacking Team, based in Italy, and Israel’s NSO Group.Wyden reacted following a Guardian story that cites sources who said the alleged “hack” occurred after Bezos apparently received a video file sent to him by Mohammed bin Salman’s WhatsApp account. Large amounts of data were allegedly exfiltrated from Bezos’s phone within hours of him receiving the video file. David Kaye, a UN special rapporteur on freedom of opinion and expression, said in a tweet that he and Agnès Callamard, the special rapporteur on extrajudicial murders, would announce further information about the alleged Bezos hack on Wednesday morning.Bezos – the owner of the Washington Post – is the most high-profile alleged victim of Saudi Arabia’s cyber-surveillance efforts, but independent experts have concluded that a number of dissidents and activists living outside Saudi Arabia have also been targeted by the kingdom. They include close associates of Jamal Khashoggi, the Washington Post journalist who was murdered in the Saudi consulate in Istanbul in October 2018. Saudi press officials did not return a request for comment, but the Saudi embassy in Washington said in a tweet in response to the Guardian’s story: “Recent media reports that suggest the kingdom is behind a hacking of Mr Jeff Bezos’s phone are absurd. We call for an investigation on these claims so that we can have all the facts out.”
Iraqi Oil Field Halts as Reform-Driven Protests Escalate - Iraq temporarily stopped work on an oil field on Sunday and supply from a second production site is at risk as widespread unrest escalates in one of OPEC’s biggest producers. Protesters also shut down border crossings with Iran, according to local media. Oil prices jumped about 1.8% in Asian hours on Monday as the stoppage coincided with disruptions from Libya, reigniting fears over security of supply. Security guards seeking permanent employment contracts have blocked access to the Al Ahdab field, prompting a halt in production, according to an official who couldn’t be identified. The Badra field is at risk of closure from Monday. Around 600 people have died and thousands of others have been wounded in clashes between security forces and protesters since Oct. 1. Iraqis, mostly from the Shiite majority population, are protesting against government corruption, poor services, and are calling for an overhaul of the ruling class. The protests led to a brief halt of the Nasiriya field and refinery in December. Al Ahdab, which was developed by China’s CNPC, produces about 70,000 barrels of oil a day. Badra, whose shareholders include Russia’s Gazprom Neft, has output of about 50,000 barrels a day. Iraq pumped about 4.65 million barrels a day of crude in December, putting it second behind Saudi Arabia among members of the Organization of Petroleum Exporting Countries. Separately, protesters closed the Badrat Mehran and al-Sheib border crossings with Iran as part of the intensifying demonstrations against the Iraqi government and Iranian influence in the country, the Saudi Al Arabiya television network reported. At least 30 protesters were wounded Sunday, some critically, as police used tear gas grenades in Baghdad, said Iraq’s al-Sumaria News, citing security officials.
Oil Companies Face Serious Decisions on Iraq - Many oil and gas companies face serious decisions regarding their short and mid-term plans in Iraq, where tensions remain high. That’s according to Rystad Energy, which made the statement in a comment posted on its website on Thursday. In the statement, Rystad highlighted that Iraqi oil production averaged more than 4.8 million barrels per day (bpd) in 2019. The company outlined that around 1.8 million bpd stemmed from the country’s domestic and state-owned players and around three million bpd came from international oil firms. Companies headquartered in China collectively produced more than one million bpd, E&Ps from the UK produced beyond 630,000 bpd and Russian players had combined average output of around 330,000 bpd, according to Rystad. PetroChina and BP had the largest working interest production for overseas companies, at 880,000 and 606,000 bpd, respectively, Rystad noted. Rystad said U.S.-based companies collectively produced about 180,000 bpd on average last year. According to Rystad, before the recent flaring of tensions, BP had been expected to allocate about four percent of its annual $25.6 billion global oil and gas spending budget towards projects in Iraq. “The company has managed an ambitious water injection program that is helping to boost its output and make BP the third largest producer in Iraq, but the fate of this program is now uncertain,” Rystad said in the statement. Earlier this month, a U.S. Department of Defense statement confirmed that the U.S. military had killed Iranian general Qasem Soleimani at the direction of President Trump. The move was made “to protect U.S. personnel abroad” according to the statement. Following the killing, the President of the Islamic Republic of Iran, Hassan Rouhani, stated his country “will take revenge”. Fitch Solutions has since stated that it believes full scale war is the least desirable outcome for both the United States and Iran.
Troop Injuries "Emerged Days After": Pentagon's Shifting Iran Attack Casualty Narrative Gets More Absurd -- A mere days ago the American public was still being told there were no American casualties as a result of Iran's Jan.8 ballistic missile attack on an Iraqi base hosting US forces. And over a week ago, days following the attack, Secretary of Defense Mark Esper said there was only damage to property at Al-Asad air base, going so far as to underscore: "Most importantly, no casualties, no friendly casualties, whether they are US, coalition, contractor, etc.," according to an official statement at the time. But after on Friday it was revealed that eleven US soldiers were injured in the attack — some of them significantly given they were flown out of Iraq to be treated for head injuries — belatedly confirmed by US officials, the Pentagon is now pretending there was never a discrepancy in its clearly shifting accounts. Eight were actually flown all the way to medical facilities in Germany for advanced treatment, with three flown to Kuwait. "The Pentagon said on Friday there had been no effort to play down or delay the release of information on concussive injuries from Iran's Jan. 8 attack on a base hosting U.S. forces in Iraq, saying the public learned just hours after the defense secretary," Reuters reports. And then of course the gratuitous implication that anyone claiming otherwise has a conspiracy theory agenda: "This idea that there was an effort to de-emphasize injuries for some sort of amorphous political agenda doesn't hold water," Pentagon spokesman Jonathan Hoffman said.
The US operation in Iraq could come to an embarrassing end. Iran's power will only grow - Donald Trump hasn't pulled his troops out of Iraq, despite his pledge to end America's grinding wars. It turns out he may not have to. The US is facing the possibility of being kicked out,and that would be a big win for Iran. Officials in Iraq's parliament, where powerful blocs have unbreakable ties to Tehran, started a process to end the presence of foreign troops in the country, in a clear riposte to the US after it killed top Iranian commander Qasem Soleimani in a drone strike in Baghdad two weeks ago.In the wake of the strike, joint US-Iraqi operations against ISIS were put on hold, and Iraq's caretaker prime minister said a US troop withdrawal was the only way to "protect all those on Iraqi soil," though this week he said that decision would be up to the next government.But a US withdrawal could bring even more trouble, experts say. ISIS continues its attacks in the country, and without US and other foreign troops, the group would have more room to resurge. At the same time, Iran will be able to expand its already far-reaching powers in Baghdad. Tehran and Washington have competed for influence in Iraq since the US 2003 invasion, and in that battle, Iran is already winning. Its consistent and coherent strategy, which the US lacks, has allowed Tehran to gradually weave itself into the fabric of everyday life in Iraq.It has capitalized on years of war and occupation to form militia groups that have become official factions of the Iraqi military, while economically, it provides an enormous amount of exports that Iraqis have come to rely on. It has made surrogates out of senior Iraqi government officials and members of parliament.Because of those links, the Iraqi parliament's decision to side with Iran after the attack on Soleimani is not surprising. The strike appears to have backfired, to the benefit of Iran's long-term goal: getting the US out of the region. "Iran is the most influential state in Iraq now," said Fawaz Gerges, a professor of international relations at the London School of Economics and Political Science. "That power is only going to grow if the US leaves."
Morbidly Obese Jabba The Jihadi ISIS Leader Caught In Iraq -- A long 'most wanted' ISIS mufti responsible for ordering gruesome killings, kidnappings, rapes, as well as the destruction of the northern Iraqi city of Mosul's ancient heritage has been captured by an elite Iraqi SWAT team raid. The massively obese terror leader named Shifa al-Nima, known within the Islamic State as Abu Abdul Bari, has been dubbed “Jabba the Jihadi” and photos posted online showed that after his capture police had to load him onto the back of a flatbed truck to accommodate his some 560-pounds. Considered one of the biggest captures in recent months due to his heading up still active but underground "ISIS gangs" in the region, he was nabbed at his hideout in Mosul earlier this week. Lately he was known to issue sermons and messages to his followers to target Iraqi police. And according to an Iraqi police statement, “He is considered one of the foremost leaders of ISIS and was responsible for issuing fatwas that led to the murder of scholars and clerics.” The fat mufti was also well-known for issuing a fatwa in 2014 to bomb one of Mosul's most revered pilgrimage sites — a mosque believed to be site of the tomb of the Prophet Jonah — which attracted Muslims and Christians alike. The Islamic State's strict Wahhabi interpretation of Islam forbids such veneration of tombs or religious places, and therefore sought to demolish any historical site it considered 'unIslamic'.
Iraq doesn't want to be a 'long-term battleground' between US and Iran, says energy CEO -- Iraq doesn't want to be caught in a "tug of war" between the U.S. and Iran,according to the chief executive officer of a UAE-based oil and gas company."It's perhaps a bit late, but (Iraq is) trying to avoid becoming — long term — a battleground between the two sides," Majid Jafar, CEO of Crescent Petroleum, told CNBC's "Squawk Box Europe" on Monday.Tensions between Washington and Tehran escalated earlier this month after a U.S. airstrike in Baghdad killed Iran's top military commander Qasem Soleimani. Iran responded by firing missiles at American targets in Iraq, but both countries now appear to have stepped back from further military actions.Iraqis want to see "good relations" both on the economic and political fronts, but don't want "negative foreign interference" in their own domestic affairs, Jafar said. "They don't want to be used ... in a tug of war between two sides."Iraqi protesters erect barricades amid clashes with riot police following a demonstration at Baghdad's Tayaran Square, east of Tahrir Square, on January 20, 2020. Three Iraqi protesters were killed in the capital as thousands of anti-government demonstrators sought to shut streets across the country today, their deadline for authorities to implement long-awaited reforms.AHMAD AL-RUBAYE | AFP | Getty ImagesInstead, the country wants to achieve a "balance," he said.While Iraqi Prime Minister Adel Abdul-Mahdi asked the U.S. to start working on a plan to withdraw armed forces from the country, Jafar said Baghdad wasn't "setting a deadline or kicking out" American troops immediately.On the other hand, Iran is a neighbor and "played a key role" when Iraq was threatened by terrorist group ISIS."Iraq didn't need this U.S.-Iran conflict, and is very hopeful that things have calmed down now," he said.Jafar also weighed in on the unrest in Iraq."They've called for new government, new system of government that is non-sectarian, that is not corrupt, that actually delivers," he said."They are mostly young, male, almost all unemployed, with very little to lose, and patience is wearing thin," he added. "There is real pressure now to move forward with a new government, new elections."
Hundreds of thousands gather in Baghdad demanding US forces leave - Massive crowds filled the streets of Baghdad on Friday, protesting the presence of American troops in the country. The protest was organized by anti-American Shiite cleric Moqtada al-Sadr and was given legitimacy by Iraqi armed forces that have close ties to Iran, The New York Times reports. Al-Sadr called for a "million man march." The protests come three weeks after President Trump authorized an airstrike in the country that killed top Iranian Gen. Qassem Soleimani. Iran retaliated against the U.S. a few days later, launching a missile strike at two military bases in Iraq that house U.S. troops. The breach of Iraqi sovereignty and the subsequent heightened tensions between the U.S. and Iran led Iraq's Parliament to pass a resolution calling for American troops to leave, though a specific timeline was not set. According to the Times, people from across the country were being bused in for the protests. There was a heavy security presence surrounding the march's path and the Green Zone that houses the U.S. Embassy, according to a report by CNN.
The US and Iran’s perpetual almost-war is unsustainable – and will end badly - Today Iran’s supreme leader Ali Khamenei gave his first Friday sermon in Tehran for eight years to an audience of thousands, as he tried to calm down the furious public reaction to the Revolutionary Guards mistakenly shooting down a Ukrainian plane carrying 176 passengers, then proceeding to lie about their responsibility for three days. Khameinei spoke of the “cowardly” killing of General Qassem Soleimaniby the US, of President Trump using the destruction of the plane to “push a poison dagger” into the backs of the Iranian people. Rhetorical flourishes like this are not going do him a lot of good with critics who see the shootdown as epitomising the incompetence, duplicity and division of his government. But the nature of the crisis differs markedly from the way it is being portrayed abroad. For more has gone wrong than a series of blunders. Obscured amid the plaudits and denunciations directed at Soleimani and Khamenei is the fact that both men’s policies in the Middle East had become counterproductive. Over the last four years, Iran has had great success in spreading its influence in countries with large Shia populations. But it has failed to consolidate the status quo it played such a large role in creating. “The Iranians are good at gathering cards, but not at playing them,” is an old saying in the region. Despite Iranian successes in Iraq, Syria and Lebanon, the power structure in all three countries is rickety and prone to crises. Over the last four months, Iraq, Lebanon and Iran have been rocked by mass protest, while Syria is in the final throes of civil war. Much depends on how the Iranian leadership responds in the next few months to the assassination of Soleimani, formerly their high-profile viceroy overseeing the Iranian zone of influence. They could continue to head towards a full scale US-Iran conflict or, just possibly, veer towards some sort of compromise deal. Neither side wants a war, as demonstrated by America’s belated revelation that 11 of its soldiers were injured by the Iranian ballistic missile strike on two of its bases in Iraq on 8 January. At the time, Trump had reassured the world that there were no American casualties. and therefore no need for him to retaliate. Meanwhile, Iranian paramilitaries in Iraq have been instructed not to attack US facilities in order to de-escalate the crisis.
Iran has been changed forever by admitting its great mistake – yet the west ignores its own deceits - After its anti-aircraft missile destroyed Ukrainian Airways flight 752 this month, Iran’s initial lie – that its loss was due to engine problems – was uttered not to “attend” the truth but to protect the Iranian regime from being blamed in case its people discovered the truth. Which, of course, they quickly did. There was a time when you could get away with this sort of giant fib. In a pre-technology age, almost any catastrophe could be glossed – we still talk about a disaster “shrouded in mystery” – but phone cameras, missile-tracking, long-range radar and satellites quickly expose a lie. The loss of Malaysian Airlines flight MH370 almost six years ago is the only exception I can think of. True, Mubarak actually surrounded Cairo’s television headquarters with tanks in 2011 in an antediluvian attempt to stop a revolution powered by mobile phone messages. But the Iranian Revolutionary Guards and the Iranian military are so computer-savvy that they could hardly have misunderstood what they had done to the Ukrainian aircraft. The idea, still touted by the regime, that there were “communications” problems (for more than three days, for heavens’ sake) is preposterous. What really happened, I suspect, is that both President Hassan Rouhani and Ayatollah Ali Khamenei both knew within an hour what had happened, but were so appalled that a nation whose very name bears the title of “Islamic”, and whose supposedly revered if corrupted Revolutionary Guards had been promoted as both God-fearing and flawless, that they simply did not know how to respond. They were faced with The Truth. So they told a lie. Thus the very image of spotless theology which was supposed to sustain Iran’s image was shattered by error – and then by dishonesty. No wonder Iranians returned to the streets. Iran made a mistake, but to compound a tragic mistake with a blatant – and then admitted — falsehood was close to Original Sin. The people are not about to overthrow the regime, as Trump’s acolytes and the usual US “experts” suggest. But Iran has been changed forever. No longer can its religious leaders claim papal infallibility. If they can lie about killing innocents on a Ukrainian airliner – most of them Iranian — then surely their jurisprudence might prove equally flawed. Those who demand obedience from their loyal followers cannot expect their audience to accept their future pronouncements – on Trump or God – with the same sacred trust. For quite a while, the Revolutionary Guards who hitherto presented themselves as potential martyrs for Islam are going to be known as The Guys Who Fired the Missile. Now let’s remember that we in the West have grown so used to our own dishonesty – and being caught out – that we scarcely flinch at the word “lie”. Let me ask a frank question: save for the flies around Trump, is there anyone who actually believes the “intelligence” information about Qassem Suleimani’s plans to attack or blow up four US embassies (or five, or six, or whatever)?
Iran Now Banned From Hosting International Soccer Matches - As if Iran's already near total isolation from the so-called international community amid crippling US sanctions wasn't enough, the country has now been banned from hosting foreign teams for soccer matches on its soil. It appears yet more fallout to the accidental shoot down of the Ukraine International Airlines Flight 752 on Jan. 8, which tragically killed all 176 people on board. Iran says it was informed Friday by the Asian Football Confederation that it's essentially being sanctioned by the league: Iran’s soccer federation said Friday it has been told it will not be hosting any international matches on Iranian soil.The federation said it received a letter from the Asian Football Confederation saying that all matches involving Iranian teams will be held in a third country. Iran says it plans to protest the decision, pointing to recent past successes in hosting major events, such as the 2018 AFC Champions League tournament held in Iran.It's also unclear if perhaps US sanctions threats or pressures were brought to bear on the Asian Football Confederation, which includes 47 member countries across Asia and Australia, and includes Gulf nations, as well as China, India and Pakistan.
Masked Gunmen Assassinate Iranian Commander in Front of His Own Home - Earlier today, masked gunmen assassinated a local commander of the Basij paramilitary security forces in Iran’s southwestern Khuzestan province in front of his house. Abdolhosein Mojaddami was shot dead by two unknown persons who were riding a motorcycle according to the official IRNA news agency. Mojaddami, who headed the local Basij force in the town of Darkhoein, was said to be an associate of the recently slain top general Qassem Soleimani. The Basij is a volunteer organisation operating under the Islamic Revolutionary Guards Corp (IRGC) and is used for internal security and other tasks such as clamping down against dissent. According to Iranian media, no one has yet claimed responsibility for the assassination nor has a motive been established. There is however speculation that terrorist organisations such as the Arab Struggle Movement for the Liberation of Ahvaz (ASMLA), which has conducted terrorist attacks in the past such as the 2018 attack on a military parade in the same region and whom the Iranian government accuses of receiving foreign support, may be behind the attack. Separately on Sunday, an IRGC base in the capital Tehran, the Mohammad Rasoulollah base was attacked by “defiant youth”, according to the website associated with the terrorist group the People’s Mujahedin of Iran (MEK), the following day, a police building in Mashhad in the country’s north-east was also targeted with footage emerging online of explosions at the site. It is not clear if there were any casualties or if the MEK was directly responsible.
Soleimani's Replacement Faces Same Fate If He Attacks Americans- US Top Iran Envoy - A top White House and State Department special envoy for Iran has warned Soleimani's successor that he'll face the same fate as the slain IRGC Quds Force commander if he begins ordering attacks on Americans. US Special Representative for Iran Brian Hook told the the Arabic-language daily Asharq al-Awsat: “If (Esmail) Ghaani follows the same path of killing Americans then he will meet the same fate,” according to Reuters. For over two decades Esmail Ghaani served as Soleimani's deputy chief before being named to chief of the Islamic Revolutionary Guard Corps (IRGC) foreign arm which oversees all covert operations and military action abroad. Hook gave the interview on the sidelines of the World Economic Summit in Davos while accompanying Trump. He said of the president that he has long had a clear policy “that any attack on Americans or American interests would be met with a decisive response.”“This isn’t a new threat. The president has always said that he will always respond decisively to protect American interests,” Hook said. “I think the Iranian regime understands now that they cannot attack America and get away with it.”Ghaani, meanwhile recently vowed he would “continue in this luminous path” taken by Soleimani following threats by leaders in Tehran that “severe” vengeance will continue, which by many indicators has not concluded after the Jan.8 ballistic missile 'response' strike on US positions in Iraq.
Europe dispatches naval flotilla to threaten Iran, Syria - Yesterday the aircraft carrier Charles de Gaulle left the French port of Toulon after President Emmanuel Macron announced in a January 16 speech to the armed forces that it would participate in Operation Chammal, the US-led bombing of Islamic State (IS) targets, for three months. This comes less than three weeks after Washington assassinated the Iranian regime’s second-highest official, General Qassem Suleimani, in Iraq. Thus, France and the European powers are intensifying their military intervention in the Middle East and the Mediterranean. Paris also announced a European naval surveillance mission in the strategic straits of Hormuz, off the Iranian coast, also involving German, Belgian, Dutch, Spanish, Portuguese and Greek ships. The French Foreign Ministry published a communiqué declaring that Paris is deploying the carrier and its Rafale jets, armed with thermonuclear bombs, amid an explosive risk of war in the region.It declared: “Recent events in the Middle East are a matter of real concern, as they stoke tensions and increase the risk of a potential large-scale war. Fully respecting international law, especially the UN Convention on the Laws of the Sea, the mission will concretely furnish knowledge and surveillance of the naval situation by deploying supplementary naval surveillance assets in the Persian Gulf and the Arabian Sea.” On Europe, French Defence Minister Florence Parly denied that such missions put “pressure on Iran. … France has made clear it wants to contribute to de-escalation in a region hit by very sharp tensions.” She claimed, “We have arrived at a point where there is no more escalation or, in any case, where escalation seems to have stopped.” Parly claimed that France’s deployment of a carrier constitutes a “counterweight to the US strategy of putting maximum pressure on Iran.” Whatever Parly claims, this patrol testifies to Europe’s growing involvement, following in Washington’s wake, in the spiral of military escalation and war in the Middle East. The NATO imperialist powers are each bidding to increase their share of the profits from plundering the region. Washington in particular sees Iran as an obstacle to its military domination of the region, notably because Tehran is developing ties with Russia and China after 30 years of imperialist war launched by NATO’s war on Iraq in 1991.
US Forces In Tense Showdown With Russian Convoy On Blocked Syrian Highway - An extremely dangerous and rare incident played out in northeast Syria between the conflict's two most powerful rival forces on Saturday when opposing American and Russian military convoys encountered each other on a highway. The incident was filmed and published online by a - nti-Assad opposition group Syrian Observatory for Human Rights (SOHR), which described a major traffic jam outside the city of Al-Malikiyah, an oil-producing area of the country which has been occupied by American troops.SOHR said the busy highway was halted "after US forces prevented a Russian patrol from continuing its way to countryside of Al-Malikiyah city." Though not precisely clear which convoy was the aggressor side from the video — or which caused the blockage — needless to say it was a tense and potentially explosive encounter given Moscow sees US presence in Syria as illegal and as an act of military aggression, while Washington in turn sees Russian troops as enemies bolstering Assad and Iran in the Middle East. Other regional outlets, for example in Turkish media, also blamed the US side for maneuvering to block the Russian troops' advance. Anadolu reports the Russian patrol was blocked from going near a key oil field in the area: According to information Anadolu Agency obtained from reliable local sources, U.S. soldiers blocked a Russian military patrol en route to the oil field. Tension occurred between the two groups, when U.S. soldiers asked Russian soldiers to return to the Amuda district in the northwest of Hasakah. Russian soldiers had to return to where they came from as their way to Rumeylan, where the U.S. airbase is located, was blocked.
US Troops Seen Blocking Russians From Syrian Oilfields In Series Of Dangerous Standoffs - Yet another dangerous incident has played out between American and Russian forces operating in Syria in what appears a series of standoffs near key oil installations since Saturday. “This is the third incident that occurred within a week,” one local reporter told VOA in an alarming report. Days ago we reported on the first incident involving a US convoy blocking a Russian convoy on a highway near the town of Rmelan, after the Americans were apparently concerned the Russians were going to enter an oil field, which the US administration says it has "secured". But now Voice of America reports three total incidents, with the most recent ones happening Tuesday and Wednesday in al-Hasakah province, as newly detailed by the opposition outlet Syrian Observatory for Human Rights.All of the incidents involved US forces blocking Russian military vehicles and forcing them to turn around as they neared sensitive oil installations held by the US-backed Kurdish SDF and American special forces in Syria's northeast.
Netanyahu Rival Benny Gantz Calls For Annexation Of Jordan Valley Ahead Of Election - Candidates are trying to woo the Israeli right ahead of the country's upcoming March 2 legislative elctions for the 23rd Knesset — the third round in less than a year — after in prior April and September 2019 elections parties continually failed to form the next government. Toward that end Blue and White coalition chairman Benny Gantz evoked controversy Tuesday with a shock declaration that he'll annex the Jordan Valley if he becomes prime minister in the next election. The centrist lawmaker did this while on tour of the region which lies at the eastern edge of the occupied West Bank and which makes up some 20% of the Palestinian territory. Gantz called it “an inseparable part of the State of Israel” and the Jewish state's “eastern defensive wall in any future scenario.” But right wing politicians, especially his top rival Prime Minister Benjamin Netanyahu scoffed, saying everyone sees through what is essentially a desperate "bluff" to peel off more support from across the aisle in what's coalesced on each side into a stalemated standoff. Gantz vowed: “After the elections, we will work to apply [Israeli] sovereignty on the Jordan Valley, [and] we will do this in a nationally agreed upon manner and in coordination with the international community.”And on the left and within the political alliance of the main Arab-majority parties, the declaration was slammed as irresponsible and destructive to democracy. The Arab unity group, Joint List, called it “a pathetic attempt to gather a few votes on the right,” and noted that any attempt of Israel to annex the Jordan Valley would “destroy any chance democracy and peace.” Netanyahu pounced in an effort to either call the bluff or pressure his rival to move immediately on the controversial initiative, urging Gantz to right away implement the annexation through the Knesset.
Dramatic Video Shows Turkish Coast Guard Deliberately Smashing Into Migrant Boat - After a week which tragically witnessed a sudden uptick in refugee and migrant incidents and drowning deaths in the Mediterranean, a dramatic video has been published online showing the Turkish Coast Guard resorting to extreme measures while intercepting migrant boats. The video, which first appeared via a Middle East Telegram or other social media channel, shows a small crowded motor boat full of Syrian refugees being rammed by a much larger Turkish patrol boat. Turkish coastguard deliberately ramming a boat carrying Syrian refugees #Syria #Turkey pic.twitter.com/Hv0sCRmsKb— CNW (@ConflictsW) January 19, 2020The video appeared online and went viral on Sunday; however, it's uncertain the precise date or location, but it likely took place in the Aegean Sea. Women and children can be heard screaming in the video while trying to get away from the fast-approaching Turkish vessel, after which the larger coast guard boat rams into the migrants at high speed. It's unclear the extent of injuries suffered by those in the packed boat, and no one appears armed or to have been acting aggressively. Turkey's coast guard has long been accused of taking harsh measures to prevent an estimated 60,000 to new refugees attempting to traverse the Mediterranean. It's hardly the first time migrant and refugee boats have been rammed during the dangerous trip; however, past incidents have involved human-trafficking boats or piracy-related groups and not state actors like in this case.
Leaked EU Letter Sparks Row Over Turkey Aid Cuts Linked To Gas Drilling Off Cyprus -The European Union is eyeing long promised punitive measures against Turkey for its illegal military incursion into northern Syria, as well as its unauthorized natural gas drilling off Cyprus' coast. Germany's Deutsche Welle reported on Saturday the EU has moved to cut pre-accession aid to Turkey by 75%, citing a letter sent to the European Parliament by the EU foreign affairs commissioner. The Instrument for 'Pre-Accession Assistance' (IPA) is offered in support of reforms in countries in the process of joining the EU, despite previously planned 'fast-tracked' talks for Turkey to join the European bloc stalling significantly after 2016. However, the EU quickly distanced itself the report, which appears to have originated with a leaked draft EU letter: An EU spokesman on Sunday denied media reports from the previous day that claimed the bloc had agreed to massive new cuts to pre-accession aid to Turkey.Germany's Funke Media Group had said it saw a letter from the bloc's top diplomat, Josep Borrell, announcing a 75% cut to the funds Ankara receives as a prospective EU member via the "Instrument for Pre-Accession Assistance (IPA)." — DW It appears the letter was leaked to or seen by the media prematurely, and now EU officials are scrambling to deny it.Europe has also of late been concerned over President Recep Tayyip Erdogan's growing authoritarianism and control over various branches and institutions of Turkey's government, especially since putting down the 2016 Turkish coup d'état attempt which resulted in him and his supporters emerging stronger than ever. "Turkey will now only receive €168 million ($186 million), of which €150 million will be spent on strengthening democracy and rule of law," the original disputed Deutsche Welle report said of potential measures, threatening an aid package which is supposed to be over twice the size. EU foreign affairs commissioner Borrell's apparently leaked letter indicated the potential slash in funds are directly related to Turkey's Syria operations against the Kurds and incursions into Cyprus' Exclusive Economic Zone. This follows the European Commission announcing sanctions in November to target "individuals or entities responsible for, or involved in, unauthorized drilling activities of hydrocarbons in the Eastern Mediterranean."
Syrian Rebels Caught on Film Getting Transferred to Libya on Commercial Plane --Turkish President Recep Tayyip Erdogan has continued warning that terrorist groups as well as a ‘flood of refugees’ will show up on Europe’s shores if the Tripoli government were to fall to renegade General Khalifa Haftar, amid his continued offensive to control the Libyan capital. Erdogan’s statement came a day before he heads to Berlin for a major peace conference which will attempt to halt the fighting. A video has emerged showing dozens of what appear to be Syrian rebels on an Afriqiyah Airways plane headed to Libya where they will allegedly fight alongside the country’s Government of National Accord (GNA), Libyan newspaper Al-Shahid has claimed. In the video, the men — three of whom were seen wearing military uniforms — are on their way to Libya where they will reportedly fight as mercenaries for the GNA’s militias. The shocking video of what is supposed to be a “covert” Turkey-sponsored mission to bolster the Tripoli GNA government with both Syrian jihadist FSA mercenaries (and separately Turkish national troops) confirms new reporting in The Guardian this week. According to the bombshell Guardian report: Two thousand Syrian fighters have traveled from Turkey or will arrive imminently to fight on the battlefields of Libya, Syrian sources in all three countries have said, in an unprecedented development that threatens to further complicate the north African state’s intractable civil war. The deployment came after Turkey agreed last month to come to the aid of the Libyan prime minister, Fayez al-Sarraj, who is backed by the UN, in the face of a months-long campaign by his rival, the warlord Khalifa Haftar. This perhaps makes Erdogan’s latest ‘warning’ appear something more like a ‘threat’ in which he’s the one actually holding the trigger. “Europe will encounter a fresh set of problems and threats if Libya’s legitimate government were to fall,” Erdogan said. “Terrorist organisations such as ISIS [ISIL or Daesh] and al-Qaeda, which suffered a military defeat in Syria and Iraq, will find a fertile ground to get back on their feet,” he continued. “Keeping in mind that Europe is less interested in providing military support to Libya, the obvious choice is to work with Turkey, which has already promised military assistance,” Erdogan added. Erdogan has long claimed Turkey’s intervention in Libya is to “combat terrorism” — which for Ankara means defeating pro-Haftar forces.
Who will monitor a Libya cease-fire? - The EU's top diplomat has hailed the Berlin talks on Libya as a major success for German foreign policy. Next up is the tough task of enacting a permanent cease-fire, to be monitored by the bloc. Key international actors involved in the Libyan conflict met in Berlin to pave the way toward a cease-fire agreement and peace talks. The Libyan conflict has morphed into a proxy war over regional dominance and control over oil. And as the conflict will not be resolved militarily, the warring factions are now willing to seek a political solution. At the EU foreign minister's summit in Brussels on Monday, German Foreign Minister Heiko Maas insisted that one should "focus on turning Libya's fragile truce into a permanent cease-fire" before thinking about which role the European Union could now play in the North African country. Despite the success of Germany's diplomatic efforts in hosting the Libya conference, Maas remains cautious. He hopes the planned talks in Geneva, under UN auspices, will go ahead this week. At Sunday's Berlin summit, the various parties had appointed negotiators to that end, but Maas said achieving peace in Libya would take time and that now the first step would be to create the appropriate conditions on the ground. In Brussels, EU foreign policy chief Josep Borrell praised the outcome of the Berlin summit, calling it a great success of German diplomacy. Indeed, Germany will be satisfied that it has now has the status of a key diplomatic player in the region. French Foreign Minister Jean-Yves Le Drian also praised Germany, saying the other EU member states would back the Berlin agreement and work toward bringing peace to Libya. No concrete decisions have been made to this end, however. In the short run, EU member states must discuss and agree in what sense they want to get involved in Libya, and how much money they are willing to spend. The plan is to reach a concrete agreement at the next foreign ministers' summit in February.
New Video Shows Syrian Mercenaries Patrolling Streets Of Libyan Capital -A day after France's Emmanuel Macron condemned Turkey's transferring Free Syrian Army (FSA) militants to fight in Libya at the Berlin peace conference, a new video has surfaced and is going viral which shows a group of foreign fighters strolling through the streets of Tripoli. The regional publication Libya Review describes the short video as featuring a group of Turkish-backed Syrian mercenaries walking through the capital city. Macron on Sunday slammed Turkey's program to send thousands of jihadists to fight Gen. Khalifa Haftar in Libya. Macron expressed "acute concerns over the arrival of Syrian and foreign fighters in the city of Tripoli" which "must end". Erdogan, Putin, Macron, Pompeo and other leaders were present for the talks which produced little definitive agreements other than common commitment to cease the flow of foreign weapons and fighters. According the Middle East news site Al-Masdar, one of the militants appears to be a Syrian teenager, and another greets the group with “Libya welcomes you”: Syrian fighters can be seen walking through a neighbourhood in Libyan capital Tripoli. One fighter can be heard saying “Libya welcomes you” #Libya pic.twitter.com/dBStDhoQzy — Libya Review (@LibyaReview) January 19, 2020The video was actually published by Libya Review on the very day of the Berlin conference on Libyan peace. It also comes days after separate video surfaced showing dozens of Syrian jihadists being flown into Tripoli on a commercial jet, in confirmation of a bombshell Guardian report which said some 2,000 Syrian mercenaries sponsored by Turkey were due to enter the Libyan battlefield in support of the government of Prime Minister Fayez al-Serraj (GNA).
Thousands Of Turkish Proxy Fighters Flood Into Libya Amid Berlin Peace Talks - Turkey is increasing its military involvement in the Libyan conflict.After officially sending its" military advisers "and officers to support the Tripoli-based Government of National Accord (GNA), Turkey set up air defense systems near Mitiga Airport. The airport hosts warplanes of the GNA Air Force, and Turkish-supplied Bayraktar TB2 combat drones. According to photos and videos available online, the deployed Turkish systems included the MIM-23 Hawk, the ACV-30 Korkut SPAAG, and the AN/MPQ-64 Sentinel 3D radar.Since the start of the advance of the Libyan National Army (LNA) led by Field Marshal Khalifa Haftar on Tripoli in April 2019, Mitiga Airport repeatedly became a target of airstrikes. These strikes led to notable losses in GNA military aircraft. The Turkish move is apparently aimed at securing operations from Mitiga Airport. Despite this, the facility still remains too close to the frontline and thus any aircraft deployed there remains in a constant danger.Meanwhile, the number of members of Turkish-backed Syrian militant groups deployed in Libya reportedly grew to 2,400. According to reports, 1,700 more Syrian fighters are now passing training in military camps in Turkey before being deployed to fight on the side of the GNA. The total number of Turkish proxies in Libya remains unconfirmed. However, photos and videos appearing online indicate that hundreds of Turkish-backed fighters arrive Libya via planes on a regular basis.On January 18, the Benghazi-based government allied with the LNA blocked oil exports at ports under his control, slashing output by more than a half. According to Libya’s National Oil Corp., oil output will fall by about 800,000 barrels a day, costing $55 million daily. The corporation declared Force Majeure, which can allow Libya, which holds Africa’s largest-proven oil reserves, to legally suspend delivery contracts. The LNA says that the ports were closed in response to ‘demands of the Libyan nation’ that stands against the GNA-requested Turkish intervention.The move came ahead the Berlin conference demonstrated to international players the LNA readiness to provide own course regardless the possible cost. The conference took place on January 19 involving top delegations from the GNA, the LNA, as well as global and regional players, including the USA, Turkey, the UAE, Egypt, Russia, France, Italy and Germany. The participants of the Berlin conference declared their support the ceasefire between the GNA, the LNA, declared their commitment to a political solution of the conflict. German Chancellor Angela Merkel said that the warring sides in Libya’s conflict agreed to respect an arms embargo and not to provide the varying sides with military support. The representatives of the Libyan conflict agreed to form a five-by-five military commission that should work on resolving the existing tensions. The document on Libya will have to be approved by the UN Security Council. This makes the Libyan peace process dependent on other geopolitical issues.
Haftar Blocks All Libyan Oil Exports Day Before Berlin Peace Conference - Given Libyan commander Khalifa Haftar has over the past two years captured the majority of the oil and gas rich country's energy producing regions, he's now playing his biggest card yet to leverage international peace talks in his favor amid a final push for his Libyan National Army (LNA) forces to take Tripoli. Bloomberg reports Saturday that the Benghazi-based 'rebel' general has now "blocked oil exports at ports under his control, slashing output by more than half and posing a potential setback for an international conference on Sunday that aims to broker an end to a civil war in the OPEC nation." The major talks Sunday are due to be held in Berlin, and a who's who of external backers of each side of the conflict will be in attendance, including Putin, Erdogan, France's Macron, and UK Prime Minister Boris Johnson, as well as the Italian prime minister and US Secretary of State Mike Pompeo.The Berlin conference comes after a failed deal to establish a ceasefire in Moscow earlier in the week, when Haftar left the city after the head of the UN-backed Government of National Accord (GNA) in Tripoli, Fayez al-Sarraj, actually signed the agreement. Haftar also reportedly secretly scuttled to different Mediterranean capitals, including Athens, in a bid to gain recognition as legitimate leader on the ground.Haftar's drastic move to block oil exports is likely aimed at torpedoing the Berlin meeting before it even starts, given he's proven intransigent in the face of international pressure for him to halt the ongoing Tripoli offensive — even during the talks hosted by one of his key political backers Vladimir Putin. Libya's National Oil Corp. (NOC) has now declared Force Majeure, per Bloomberg: As a result of the blockage of ports in the central and eastern parts of the country, oil output will fall by about 800,000 barrels a day, costing $55 million daily, the National Oil Corp. said in a statement on Saturday. The NOC declared Force Majeure, which can allow Libya, which holds Africa’s largest-proven oil reserves, to legally suspend delivery contracts.
US Informs Haftar- Resume Libya's Blocked Oil Exports Immediately - Days after Benghazi-based General Khalifa Haftar and his rebel LNA forces blocked all oil under their control from leaving Libyan ports (the LNA currently controls territory which includes some 90% of the nation's oil facilities), the United States has demanded the immediate resumption of oil exports.“The suspension of National Oil Corporation (NOC) operations risks exacerbating the humanitarian emergency in Libya and inflicting further needless suffering on the Libyan people,” the US embassy in Tripoli said in a Twitter statement Tuesday.“NOC operations should resume immediately,” it said. Haftar had previously issued the order, which immediately resulted in condemnations from some Western capitals, on Saturday just ahead of the Berlin peace conference on Libya. The action blocked several key export terminals, notably Brega, Ras Lanuf and Al-Sidra ports. Bloomberg reported Saturday that pro-Haftar foces "blocked oil exports at ports under his control, slashing output by more than half and posing a potential setback for an international conference on Sunday that aims to broker an end to a civil war in the OPEC nation."The move is seen as aimed at protesting Turkey's increased military intervention in the conflict which has raged for much of the past two years. Turkey has recently sent both national troops and Syrian 'rebel' mercenaries to defend the Tripoli Government of National Accord (GNA). Haftar has in turn declared any Turkish vessel or aircraft a target to be destroyed. The oil stoppage also has military implications on the ground, given the GNA's national army relies on the country's oil revenue to purchase weapons via Tripoli's central bank.
Tankers Idle At Libyan Ports As Oil Exports Dry Up - Ten oil tankers capable of carrying some 8 million barrels of oil are idling near some of Libya’s oil export terminals, tanker-tracking data monitored by Bloomberg showed on Thursday, as the Libyan port blockade entered an ugly sixth day.Groups loyal to eastern strongman General Khalifa Haftar blocked virtually all exports from the African oil producer, and when storage reaches maximum capacity, it will result in a complete loss of all of Libya’s 1.2 million barrels per day of oil production and exports. “Shutdown of all affected oil fields will result in a loss of crude oil production of 1.2 million b/d and daily financial losses of approximately $77 million,” Libya’s National Oil Corporation (NOC) said on Monday, confirming that nearly all of the OPEC member’s production will be lost due to the blockade. This is the largest outage on the oil market since the September attacks on Saudi Arabia’s oil facilities, yet it has failed to move oil prices higher.Market participants are largely ignoring the Libyan outage and are focused on the prospects of global oil demand growth this year and the pace of supply increase from non-OPEC producers, primarily the United States, Brazil, Guyana, and Norway.In addition, the new fear on the market, the outbreak of a coronavirus in China, could cut oil demand and push oil prices down by nearly $3 a barrel, Goldman Sachs said earlier this week.“However while markets are obsessing over virus developments, they seem to be ignoring a number of oil supply risks in the market, which in aggregate would far outweigh the demand impact from the Wuhan virus,” ING strategists said on Thursday. According to ING’s estimates, the current outages around the world sum up to around 1.4 million bpd, “which would be more than enough to shift the global market into deficit over 1H20,” said Warren Patterson, ING’s Head of Commodities Strategy and Senior Commodities Strategist Wenyu Yao. “While the market may shrug at supply losses from Libya, it would be more difficult for the market to ignore large Iraqi supply losses if they became a reality, as Iraq is OPEC’s second-largest producer,” they noted.
Libya's Haftar Threatens To Target Civilian Planes, Declares Blanket 'No Fly Zone' - With the world's attention focused on the Coronavirus outbreak and to a lesser extent on Trump's impeachment trial, the war in Libya just got a lot more scary in terms of the potential for mass civilian death.Incredibly, Gen. Khalifa Haftar's Libyan National Army (LNA) just threatened to shoot down civilian planes after days ago declaring a 'no fly zone' over Tripoli following increased Turkish intervention. The BBC reports the unambiguous and shocking declaration as follows: Gen Haftar's spokesman, Ahmad al-Mesmari, said in a statement on Wednesday that "any military or civilian aircraft, regardless of its affiliation, flying over the capital will be destroyed".In the past days Haftar has accused Turkey, which has lately openly transferred both Turkish national army troops as well as Syrian FSA mercenaries into Tripoli to fight on behalf of Prime Minister Fayez al-Sarraj, of using the Libyan capital's only functioning international airport as a military base. It appears the LNA is saying it will consider even commercial flights as 'fair game' because it's alleging Turkey and the GNA are using civilian aviation in a 'human shield' capacity. BBC reporting that Haftar's spokesman said in a statement Wednesday that "any military or civilian aircraft, regardless of its affiliation, flying over the capital will be destroyed" Said spokesman’s utterances often dismissed as bluster by apologists. https://t.co/AdoHqQ7WVx — Mary Fitzgerald (@MaryFitzger) January 23, 2020The BBC has further details as follows:The GNA branded the strikes a "flagrant threat" to the safety of air traffic and a "new violation" of a ceasefire agreed earlier this month.Gen Haftar's forces did not immediately respond to the accusations, but did say they had shot down a Turkish drone after it took off from the airport.Mitiga is a former military airbase which has been used by civilian planes since Tripoli's international airport was damaged in fighting in 2014. Pro-Haftar officials have also charged that Mitiga international airport has become a drone headquarters, and further that foreign troops are disembarking there.
Tripoli's Only Commercial Airport Targeted By 6 Missiles After Berlin 'Ceasefire' Fails - So much for any "progress" or talk of ceasefire touted days ago at the Berlin conference, when world leaders gathered to try and broker Libya peace. Wednesday's Libya headlines featured rocket attacks on Tripoli's only functioning international airport, forcing a temporary shutdown of the entire commercial hub. Authorities at Tripoli’s Mitiga have said it's since reopened after being closed for an hour due to six military-grade Grad rockets being fired at the airport. A spokesman for the Government of National Accord (GNA) called the attack a "flagrant threat" air traffic safety and a "new violation" of the ceasefire. . The GNA statement further blamed the "war criminal Haftar" for the attack, amid his Libyan National Army (LNA) continuing the months long offensive on the capital, part of a broader two-years long campaign to take the entire country and its oil. It has only been nine days since Mitiga airport's reopening following a truce with the LNA, which clearly didn't hold. In years past, Tripoli International Airport was the major international hub, but had in the years since the 2011 NATO war witnessed intense fighting in its vicinity, causing immense damage. Other than Mitiga, Tripoli residents are often forced to use Misrata Airport, about 125 miles away. Turkey has also weighed in on the newest attack and apparent failure the potentially internationally-brokered ceasefire, which also had Russian and Turkish involvement. "Warlord Haftar, who posed a clear threat against the air traffic in the airport with this assault, has persistently disregarded the ceasefire call of the world," a top Turkish security official was quoted in Middle East Eye as saying. For its part, Haftar's LNA has alleged Tripoli's main aviation hub has become a legitimate military target given it's hosted Turkish aircraft, including according to pro-Haftar forces drone activity.
Syrian Fighters Abandon Libyan War, Flee Towards Italy- Report - Some Syrian fighters that went to fight in Libya have since abandoned the war and fled to Italy, opposition media sites claimed, as cited by Al-Watan.According to the reports, at least 17 of the Syrian fighters have already arrived in Italy after spending a short period of time inside Libya. The reports said that the Syrian fighters intentionally accepted the deployment to Libya in order to later escape into Italy.According to the Syrian Observatory for Human Rights (SOHR), some 2,400 Syrian fighters have already traveled to Libya thus far.Another 1,200 fighters from a number of factions in the Free Syrian Army (FSA) are expected to make their way to Libya in the coming weeks. Middle East-based reporter for The Investigative Journal Lindsey Snell was told by a Libyan National Army (LNA) source: “The mercenaries don’t believe that they will be returning to Turkey or Syria, so trying to get to Europe is the most logical option for them,” the source said.
Time to restore Egypt’s pivotal role in Libya --Since the uprisings in the Middle East, Egyptian foreign policy has seen a change in direction, falling into step with the policy decisions made by those countries opposed to the Arab Spring. This axis is led by the UAE and Saudi Arabia; Egypt’s role has shifted from one of leadership to that of a subordinate. This shift is reflected in Egypt's foreign interests and national security. The first manifestation of this transformation and its damaging consequences was the concession of the islands of Tiran and Sanafir to Saudi Arabia in 2016; the islands are of strategic significance to the Sinai Peninsula and to Egypt's national security.In a similar vein today, the complex Libyan crisis is having repercussions for Egypt’s security and is bound to become a threat on its western borders. From the first moment – as Egypt joined the axis of counter-revolution in supporting General Khalifa Haftar's forces against the internationally recognised government – Cairo sacrificed any leading role it might have played in finding a resolution. Egypt could have been a mediator between the conflicting parties, playing any number of cards to de-escalate the situation and to move towards a political solution. Owing to the complexities on the ground and the escalating military confrontation, the situation in Libya today is so complex that the international community has so far failed to get to grips with it. The conflict now involves multiple parties: there is the Egyptian-Saudi-Emirati alliance facing the Turkish-Qatari alliance, and there is the Franco-Italian struggle alongside Russia’s anti-American agenda. These conflicting and contradictory agendas in Libya represent a stumbling block in the way of any solution, and they underline the international community’s impotence. At the same time, the struggle has spread to the EU, which had been entrusted with finding a solution, but the rivalry between France and Italy, the old colonial powers in Libya, is complicating the EU’s task. Whilst the French government has publicly adopted a position of support for the legitimate government of al-Sarraj, it has been secretly pursuing another agenda of support for Haftar's forces and his military campaigns. By contrast, Italy has adopted a different position in defiance of France and in line with its view of Libya as one of its former colonies, to which it retains "a historical right". This conflict of interests has prevented a peaceful solution from being reached. Indeed, it has obliged the German government led by Chancellor Merkel to make numerous efforts to bring the French and Italian adversaries together, albeit such efforts have been in vain to date. Indeed, there are growing doubts as to whether the Berlin conference scheduled for Sunday 19 January will enable the parties to find a solution which is acceptable to all.
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