Sunday, January 14, 2018

one cold snap burns 11.5% of US natural gas supplies; 8 more weeks like that and our gas storage will be totally empty

the cold week that we saw at the beginning of this month set quite an amazing record for US natural gas supplies, and put an exclamation point on our concerns about the natural gas that we're exporting...in the first week of the new year, or more specifically over the week that ended on January 5th, the demand for natural gas was so great that we had to use nearly eleven and a half percent of all the natural gas that was in storage in the US, in addition to everything that was produced by US wells during the week, to meet the needs of heating, industry, power generation, and contracted exports...as you know, on Thursday of every week (except on holidays), the EIA publishes the Weekly Natural Gas Storage Report, which reports on the amount of natural gas in storage in each of the 5 energy regions and in total as of the prior Friday...this week, that report showed that we had withdrawn a record 359 billion cubic feet of natural gas from storage during the week, an all time high by more than 25% over the previous record gas withdrawal...since not many of you would follow a link to it, we'll just include the lead table from that natural gas storage report here now, and explain what happened:

January 13 2018 natural gas storage report of Jan 11 for Jan 5

the above is a copy of the initial table from this week's Natural Gas Storage Report, covering the changes of natural gas in US storage for the week ending January 5th...the first column of numbers shows the amount of natural gas in billions of cubic feet that was left stored in each US region and naturally as of January 5th; the 2nd column shows the amount of natural gas in billions of cubic feet that had been stored as of a week earlier, ie as of December 29th, and the 3rd column shows the change between the two...then, in the columns on the right, we have similar totals of natural gas in storage during the same week a year ago, and the 5 year averages for this time of year....thus, we see that the US started the week with 3,126 billion of cubic feet of natural gas in storage, and by the end of the week that had fallen to 2,767 billion of cubic feet, which means we used 11.5% of all the natural gas we had in the entire country in just one short week...with just 2,767 billion of cubic feet left at the end of the week, it means quite simply that if we continue using natural gas from storage at the same 359 billion cubic feet rate that we used it this week, we'll run out of it in 8 weeks, completely. there will be no natural gas left in the entire country. period.

next, we'll show you a chart of our natural gas supplies over time so you can see how this week's drop stands out...

January 13 2018 natural gas supplies as of January 5

the above graph also comes from this week's Natural Gas Storage Report, and it shows the quantity of natural gas in storage in the lower 48 states over the period from December 2015 up to the week ending January 5th 2018 as a blue line, the average of natural gas in storage over the 5 years preceding the same dates shown as a heavy grey line, while the grey shaded background represents the range of the amount of natural gas in storage for any given time of year for the 5 years prior to the two years shown by the graph…thus the grey area also shows us the normal range of natural gas in storage as it fluctuates from season to season, with natural gas in storage underground normally building to a maximum by the end of September, falling through the winter, and usually bottoming out at the end of March, depending of course on the weather during any given year...we started the 2017-18 heating season with our supplies roughly 5% below normal, short of 3,800 billion cubic feet, and with this big drop in the first week of 2018, about half of our normal range of winter supplies are already gone, and we are now tracking the 5-year minimum of the polar vortex year of 2014, which is indicated by the bottom of the grey shading...

we can also see by the blue line above that the quantity gas we had stored throughout 2016 was at a record high for each week during the year, up until October, when US natural gas supplies topped 4 trillion cubic feet for the first time in history...gas supplies then dropped from that record to nearly normal by the end of December, at which time we felt that shouldn't have happened in a warmer than normal winter...by March of this past year, based on John Kemp's data that showed heating demand was 17% below normal for the year, we warned that we were not covering our natural gas needs from production, even while winter temperatures were above normal, and that something would have to give if we ever saw a colder than normal winter...

to the best of my knowledge, the EIA does not publish weekly natural gas production figures, or how much gas comes out of US wells each week...they do publish monthly natural gas production figures, however, with a couple month lag for the time it takes them to compile accurate data....looking at that data, we can see that over the first 10 months of 2017, US natural gas production totaled 22,113 billion cubic feet, or an average of 2,211.3 billion cubic feet per month....there are 304 days during the first ten months of the year, so that means our average daily natural gas production was 72.74 billion cubic feet during 2017...multiplying that by 7 gives us a average weekly natural gas production of 509.18 billion cubic feet for the first ten months of the year...if that average held through to the end of the year, that suggests that during the week ending January 5th, we used that 509 billion cubic feet of production, plus the 359 billion cubic feet of natural gas we took out of storage, for an approximate total of 868 billion cubic feet of natural gas for the week ending January 5th...put another way, by using 868 billion cubic feet during that week, we were using 70% more natural gas than what we were producing...

this week's record drawdown really got started on New Year's Day, when the US set a record for natural gas consumption...the EIA commemorated that record with a blog post, titled Cold weather, higher exports result in record natural gas demand which included a couple graphics which we think will be useful in explaining what happened...

January 13 2018 record nat gas demand week of  Jan 5

as we noted, the above graphic comes from the EIA post titled Cold weather, higher exports result in record natural gas demand, which explains the record natural gas usage in the US on New Year's day...on the left half of that graphic, the EIA presents a very tight graph showing US natural gas consumption daily from the beginning of 2013 to the end of 2017...of course, one can't discern any daily amounts on such a small graph, but they highlight the previous record of 143.3 billion cubic feet of natural gas that were used on January 7th, 2014, which was topped by the 150.7 billion cubic feet of natural gas that were used on New Year's day of this year....not coincidentally, that brown graph shows our natural gas exports in a darker shade across the bottom of the graphic...

on the right of that brown graph, the EIA presents a bar graph that highlights the differences in natural gas usage between the old single day record and the new one set on New Year's day...the blue part of each bar represents the portion of the day's natural gas consumption that was used for heating, and it's pretty obvious that heating use was greater on January 7th 2014 than on January 1st of this year...next, the yellow part of each bar is that portion of each day's natural gas consumption that was used for power generation, and here the 2018 record clearly tops the power usage of old record in 2014...industrial usage of natural gas, shown in green, may have also been greater on 1/1/18 than on 1/7/14, but not by much..."other" usage of gas, shown in brown, was also quite close...but the big difference, shown in cherry red and sangria at the top of the bars, is our natural gas exports, by pipeline to Mexico and as LNG by tanker to destinations world wide, that really put this week's record gas demand over the top...

from here, the shortfall during winter can only get worse....for instance, earlier this year, the EIA projected that natural gas for power generation would increase by 8% in 2018...that would add nearly 3 billion cubic feet more to daily demand...but the real issue going forward is going to be increasing LNG exports, which, based on those liquefaction facilities already under construction, could easily triple by the end of next winter...since much of the natural gas that the power plants and the LNG exporters will be using is already under contract at the near record low prices that natural gas has been quoted for over the past few years, it will be the residential and commercial users that will be paying the higher prices that the coming shortage of natural gas will precipitate....

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, also details for the week ending January 5th, and showed a pullback in operations at US refineries from the record pace of recent weeks, but also an equally large drop in oil production from US wells, which meant we again had to pull oil out of storage to meet our needs...our imports of crude oil fell by an average of 308,000 barrels per day to an average of 7,658,000 barrels per day during the week, while our exports of crude oil fell by an average of 460,000 barrels per day to an average of 1,015,000 barrels per day, which meant that our effective trade in oil worked out to a net import average of 6,643,000 barrels of per day during the week, 152,000 barrels per day more than the net imports of the prior week...at the same time, field production of crude oil from US wells fell by 290,000 barrels per day to 9,492,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 16,135,000 barrels per day during the reporting week..

during the same week, US oil refineries were using 17,323,000 barrels of crude per day, 282,000 barrels per day less than they used during the prior week, while 707,000 barrels of oil per day were being pulled out of oil storage facilities in the US....hence, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports, from oilfield production, and from storage was 481,000 fewer barrels per day than what refineries reported they used during the week...to account for that disparity, the EIA needed to insert a (+481,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"..

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 7,863,000 barrels per day, now 4.3% less than the 8,218,000 barrels per day average imported over the same four-week period last year....the 707,000 barrel per day decrease in our total crude inventories was entirely from our commercial stocks of crude oil, as inventories in our Strategic Petroleum Reserve remained unchanged... this week's 290,000 barrel per day decrease in our crude oil production was due to a 293,000 barrel per day decrease in output from wells in the lower 48 states, possibly due to severe weather in North Dakota, while oil output from Alaska, where it was warm, increased by 3,000 barrels per day....the 9,492,000 barrels of crude per day that were produced by US wells during the week ending January 5th was still 8.2% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 12.6% above the interim low of 8,428,000 barrels per day that our oil production fell to during the last week of June, 2016...

US oil refineries were operating at 95.3% of their capacity in using those 17,323,000 barrels of crude per day, down from the record 96.7% of capacity the prior week, but still above normal for this time of year....the 17,323,000 barrels of oil that were refined this week were 2.3% less than the record 17,725,000 barrels per day that were being refined at the end of August of this year, but were 1.3% more than the 17,107,000 barrels of crude per day that were being processed during the first week of 2017, when refineries were operating at 93.6% of capacity....

with the decrease in the amount of oil being refined, gasoline output from our refineries was also lower, decreasing by 157,000 barrels per day to 9,526,000 barrels per day during the week ending January 5th, after falling by 562,000 barrels per day....that drop also left our gasoline production 1.5% lower than the 9,666,000 barrels of gasoline that were being produced daily during the week ending January 6th of last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 301,000 barrels per day to 5,291,000 barrels per day, after rising 386,000 barrels per day to new record highs over the prior two weeks...that decrease left the week's distillates production fractionally lower than the 5,329,000 barrels of distillates per day that were being produced during the the first week of 2017....   

even with the decrease in our gasoline production, our gasoline inventories at the end of the week rose by 4,135,000 barrels to 237,322,000 barrels by January 5th, their ninth increase in a row...that was as our domestic consumption of gasoline rose by 164,000 barrels per day from last week's 10 month low to 8,814,000 barrels per day, and as our exports of gasoline fell by 149,000 barrels per day to 804,000 barrels per day, while our imports of gasoline fell by 85,000 barrels per day to 264,000 barrels per day....however, even after nine consecutive builds, our gasoline inventories are still down by 2.1% from their pre-summer high of 242,444,000 barrels, and down by 1.3% from last January 6th's level of 240,473,000 barrels, even as they are roughly 5.4% above the 10 year average of gasoline supplies for this time of the year...      

likewise, in spite of the drop in our distillates production, our supplies of distillate fuels rose by 4,254,000 barrels to 143,088,000 barrels over the week ending January 5th, following a year high increase of 8,899,000 barrels the prior week...that was even as the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 67,000 barrels per day to 3,655,000 barrels per day, and as our exports of distillates rose by 341,000 barrels per day to 1,203,000 barrels per day, while our imports of distillates rose by 46,000 barrels per day to 175,000 barrels per day... even after this week’s inventory increase, however, our distillate supplies were still 15.9% lower at the end of the week than the 170,041,000 barrels that we had stored on January 6th, 2017, and roughly 1% lower than the 10 year average of distillates stocks at this time of the year… 

finally, despite the slowdown in oil used in refining, the coincident drop in our crude oil production meant that our commercial crude oil inventories fell again, for the 33rd time in the past 40 weeks, decreasing by 4,948,000 barrels, from 424,463,000 barrels on December 29th to a 28 month low of 419,515,000 barrels on January 5th....while our oil inventories as of January 5th were thus 13.2% below the 483,109,000 barrels of oil we had stored on January 6th of 2017, and 7.0% lower than the 451,190,000 barrels of oil that we had in storage on January 8th of 2016, they were still 18.4% greater than the 354,195,000 barrels of oil we had in storage on January 9th of 2015, before the US oil glut became a headline issue... 

This Week's Rig Count

US drilling activity increased for the tenth time in the past 24 weeks during the week ending January 12th, but this week the increase was by the most for any week since May 19th....Baker Hughes reported that the total count of active rotary rigs running in the US rose by 15 rigs to 939 rigs in the week ending on Friday, which was also 280 more rigs than the 659 rigs that were deployed as of the January 13th report of 2017, while it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014...

the number of rigs drilling for oil rose by 10 rigs to 752 rigs this week, which was also 230 more oil rigs than were running a year ago, while the week's oil rig count remained far below the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the number of drilling rigs targeting natural gas formations rose by 5 rigs to 187 rigs this week, which was 51 more gas rigs than the 136 natural gas rigs that were drilling a year ago, but way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...

drilling activity in the Gulf of Mexico increased by 2 rigs to 19 rigs this week, but that was still down from the 24 rigs that were drilling from platforms in the Gulf of Mexico a year ago...the total national offshore count was the same, also up two rigs to 19 rigs for this week, but a year ago there was also a rig drilling offshore from Alaska, which means this week's national offshore total is down 6 rigs from the 25 offshore rigs that were working last January 13th...

this week's count of active horizontal drilling rigs was up by 7 rigs to 805 horizontal rigs this week, and also up by 268 rigs from the 537 horizontal rigs that were in use in the US on January 13th of last year, but 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 8 rigs to 72 directional rigs this week, which was also up from the 59 directional rigs that were working during the same week last year....meanwhile, the vertical rig count wasunchanged at 62 vertical rigs this week, but that was down from the 63 vertical rigs that were deployed on January 13th of 2017...

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of January 12th, the second column shows the change in the number of working rigs between last week's count (January 5th) and this week's (January 12th) count, the third column shows last week's January 5th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday 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 for the 13th of January, 2017...               

January 12 2018 rig count summary

it seems odd that Texas drilling pulled back, even as the country saw the largest increase in drilling in more than half a year...when oil & gas drilling first started coming back after prices stabilized in mid-2016, Texas drilling, especially in the Permian basin, accounted for half the new rigs...now Texas drilling has stalled, while Permian basin work seems to have moved across the border to New Mexico...

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City Council commits to codifying citizen-OKed laws, including anti-fracking, pot de-penalization - Athens NEWS - Athens City Council members agreed Monday evening to codify into city law two successful citizen initiatives, one for de-penalization of marijuana in the city and the other banning fracking and other oil and gas related activities in city limits.Council spent the first 40 minutes of Monday’s committee meetings hearing citizen comments regarding the codification of two citizen initiative petitions that have yet to be written into the official city code.City voters overwhelmingly approved the marijuana de-penalization initiative in November, and passed the anti-fracking Community Bill of Rights and Water Protection initiative in 2014 by a heavy margin. With no proposals for drilling activities in the city since then, the Bill of Rights has not had any reason for enforcement. “Way back when this ordinance or this petition was originally adopted by the voters, it came to council and we really didn’t do anything with it, we didn’t codify it,” City Council member Jeffrey Risner explained, referring to the Community Bill of Rights. He added that council had adopted an ordinance to add the language from the petition to the code but due to a “clerical error,” the language was not the same as what voters had approved on the ballot. Risner said the problem could easily be solved by having City Council President Chris Knisely sign and approve a corrected version of the Bill of Rights ordinance with the appropriate language – a version that Risner said was likely ready for approval already. Both measures should be voted on and codified in next Monday’s regular City Council meeting, he said.

Federal judge slams legal theory behind local fracking laws - Athens NEWS - A federal judge has sanctioned two attorneys for advancing “frivolous” arguments on behalf of the Pennsylvania community attempting to ban oil and gas wastewater injection wells. The legal arguments rejected by the judge closely resemble the basis for an anti-fracking ordinance in Athens and another proposed for Athens County.  The resemblance is not a coincidence.The two sanctioned attorneys, Thomas Linzey and Elizabeth Dunne, work on behalf of the Pennsylvania-based Community Environmental Legal Defense Fund. The CELDF has worked both with Grant Township, Indiana County, Pennsylvania and Athens city and county, Ohio, to pass laws that assert the authority of local community rights over corporate rights and state and federal laws that regulate oil and gas drilling and other industrial activities.The CELDF has worked with numerous communities in Ohio, Pennsylvania and other states to pass similar laws. In Ohio, no civil court to date has endorsed the CELDF’s legal approach any more than federal Magistrate Judge Susan Paradise Baxter did in Grant Township, Pennsylvania. In a decision issued on Friday, Judge Baxter granted sanctions against Linzey and Dunne in the amount of $52,000, to be paid within 120 days to Pennsylvania General Energy Co. (PGE). Baxter also ordered that her decision be forwarded to the Pennsylvania Supreme Court’s disciplinary board “with a request to determine appropriate disciplinary measures, if any, to be imposed upon attorney Linzey…”In a Rolling Stone magazine article on the ruling, Linzey said he intends to appeal the sanctioning to a Circuit Court in Philadelphia. The $52,000 represents 10 percent of more than $500,000 in attorneys’ fees and costs that PGE claims it spent while challenging a community bill of rights ordinance that Grant Township enacted in 2014, with guidance and legal underpinning from the CELDF. The ordinance bans oil and gas wastewater injection wells, an issue that’s also of major concern to many Athens area residents.

Sunoco says its Mariner pipeline adds $9.1B to economy; activists contend it's 'dubious research' -   Less than a week after state regulators shut down construction of the Mariner East 2 pipeline, a consultant for Sunoco Pipeline on Monday updated its estimated economic impact of the project to $9.1 billion — assuming the company is able to resume construction.Sunoco Pipeline LP and its parent company, Energy Transfer Partners LP (ETP), are spending $5.1 billion over five years in Pennsylvania on the Mariner East system, including pipelines and reconstruction of a former refinery in Marcus Hook, according to the report by Econsult Solutions, a Philadelphia firm hired by Sunoco.Econsult more than doubled its 2015 estimated direct and indirect economic impact of the Mariner East project from $4.2 billion to $9.1 billion, attributing the higher estimate to the addition of a third pipeline, as well as the construction of a gas-liquids processing facility in Marcus Hook.  The project, which is designed to carry gas liquids such as  propane from the Marcellus Shale to the Marcus Hook terminal, will support 57,070 direct, indirect, and induced jobs between 2014 and 2019, or 9,500 jobs a year, with total earnings of $2.7 billion, Econsult said.  In addition to the one-time economic boost during construction, the associated projects will produce $140 million to $210 million of ongoing annual economic impact in Pennsylvania, according to the report. The report was released only a few days after the Pennsylvania Department of Environmental Protection halted construction on the Mariner East 2 pipeline to correct “egregious and willful violations,” including unauthorized drilling to install the pipeline and failing to notify the agency when discharges or spills of drilling fluid occurred.

For those living along Sunoco's Mariner East 2 pipeline, a human chain of frustration  - Patrick Robinson is one of 105,419 people who live along the 350-mile, 17-county corridor of the Mariner East 2 natural gas pipeline. Landowners have been complaining about cloudy water, permit violations, illegal drilling and dumping since construction began almost a year ago. Last week, state regulators stopped construction, citing a pattern of "egregious and willful violations" by Sunoco Logistics. The state Department of Environmental Protection has noted more than 30 spills. Millvale-based FracTracker Alliance has posted maps showing locations of spills and proximity of the pipeline to 40 schools. The $2.5 billion pipeline would carry butane, ethane and propane from near Scio in eastern Ohio to the Marcus Hook industrial complex on the Delaware River near Philadelphia, mostly for export. About 480 feet of pipelines run through Mr. Robinson’s property on 9.5 rugged acres in Indiana County, the closest town being Armagh. For him, the state’s halt on construction is “too late. I have rainbow colored water coming up out of the ground. I keep getting told, ‘We’ll fix it later.’ What are they going to fix? They mixed the clay and gravel up already. “I signed the lease because they said they were going to do directional drilling instead of open trench,” he said. “You go for the best deal you can; you have no choice. “They have a 50-foot right of way,” he said, “but they park wherever they want to. Numerous times I’ve been told I have no rights. This is my property. I pay taxes on it. “I have lived here 14 years and never had an issue until they started digging the pipeline” last summer. “My drinking water now has a lot of mud and sediment in it. All my faucet screens are eaten through. I have a sediment filter for washing and flushing, but it clogs. “I don’t know how they got away with some of the stuff they did.”

A Fracking Company Is Suing a Victim of Its Own Pollution for Speaking Out (Video) - Cabot Oil & Gas, a petroleum, natural gas and natural gas liquids exploration and production company based in Houston, Texas, has filed a $5 million lawsuit against water pollution victim Ray Kemble and his lawyers for speaking out about his polluted water well. Kemble, who lives in Dimock, Pennsylvania, a tiny town in the rural northeast corner of the state whose aquifer was famously polluted by gas extraction, hasn't had clean water since Cabot started hydraulically fracturing, or fracking, near his home eight years ago. The town’s fracking-related pollution was featured in the HBO films Gasland and Gasland II. In addition to the stress of living with a contaminated water well, Kemble is now being sued by the same company that polluted his water in the first place. Cabot is arguing that he has defamed its business by speaking publicly about the pollution in his well. At the first hearing in the case in early December, Judge Jason Legg called Cabot's $5 million damage claim improper, noting that such a large number is used only to gain attention and possibly biased media coverage. "Cabot is substantially offering this basically as a marketing exercise because they want to have their version of the story out in the media." said one of Kemble's attorneys, Rich Raider.  Cabot's lawyers argued that once a pollution victim has signed a settlement agreement, Cabot then has the right to re-pollute that victim because the victim has waived all future litigation rights. Cabot's lawyers also argued that the silence agreement contained in the settlement Kemble signed with the company waived his rights to Anti-Slapp law protections and first amendment freedom of speech. Kemble did sign a settlement agreement when Cabot originally polluted his water well. Just after the agreement was signed, Cabot was allowed to frack three gas wells near Kemble’s home. New cases of water pollution were reported in the area and Ray’s water turned a darker black. “You've got new contamination that wasn't there before. That was not from drilling, just fracking. So does fracking cause groundwater contamination? You figure that one out," said Kemble at a press conference.

Victory: Constitution Pipeline Request Denied by FERC - Thursday, the Federal Energy Regulatory Commission (FERC) issued a decision , which spells bad news for the proposed Constitution Pipeline, a 124-mile natural gas pipeline slated to run through New York State and Pennsylvania. Constitution Pipeline went to FERC and asked them to invalidate the New York Department of Environmental Conservation's (NYSDEC) denial for a necessary Clean Water Act permit for the project. Thursday, FERC rejected that request.FERC had already approved the pipeline, but NYSDEC concluded that Constitution did not provide enough information to insure that the pipeline would comply with the Clean Water Act. The company appealed NYSDEC's decision to the U.S. Court of Appeals 2nd Circuit, which upheld the state agency's decision to deny the pipeline company's application in August of 2017. Earthjustice intervened in that case to help defend New York's decision on behalf of Catskill Mountainkeeper, Riverkeeper and Sierra Club.In its decision Thursday FERC maintained the State's decision and rejected Constitution's attempts to shorten the time states have to consider natural gas pipeline applications for Clean Water Act permits."We are ecstatic that FERC rejected Constitution's desperate attempt to undermine New York's authority to safeguard the quality of the State's waterways," said Earthjustice attorney Moneen Nasmith, who represented intervenors helping to defend NYSDEC's decision and a group of organizations that has opposed FERC's approval of the project. "The Commission's decision is great news for the broad coalition of groups and individuals that has been fighting to protect New York's waters from this unnecessary fossil fuel project for years." Constitution will be able to appeal FERC's decision or to go back to New York State and try to reapply with a different application.

New York City is taking on the oil industry by selling off billions in fossil fuel investments and suing the top five oil companies - New York City is taking on the oil industry on two fronts, announcing a lawsuit Wednesday that blames the top five oil companies for contributing to global warming and saying the city will sell off billions in fossil fuel investments from the city's pension funds. Democratic Mayor Bill de Blasio received immediate blowback from some of the companies, while winning praise from environmentalists and others.  "We're bringing the fight against climate change straight to the fossil fuel companies that knew about its effects and intentionally misled the public to protect their profits," the mayor said. "As climate change continues to worsen, it's up to the fossil fuel companies whose greed put us in this position to shoulder the cost of making New York safer and more resilient." The city alleges the fossil fuel industry was aware for decades that burning fuel was impacting climate change. The defendants in the city's federal lawsuit are BP, Chevron, ConocoPhillips, Exxon Mobil and Royal Dutch Shell. Three of the companies shot back against the mayor's accusations, while two others — ConocoPhillips and BP — declined to enter the fray. Reducing greenhouse gas emissions is a global issue and requires global participation and actions," said Exxon Mobil's Scott Silvestri. "Lawsuits of this kind — filed by trial attorneys against an industry that provides products we all rely upon to power the economy and enable our domestic life — simply do not do that." Chevron spokesman Braden Reddall called the lawsuit meritless and said the litigation will do nothing to address climate change. Curtis Smith, a Shell spokesman, said the courts are not the venue to address climate change. New York's lawsuit, filed in federal court follows similar litigation filed by San Francisco, Oakland, and Santa Cruz in California.  Also Wednesday, de Blasio and Comptroller Scott Stringer said they intend to divest the city's five pension funds of roughly $5 billion in fossil fuel investments out of its total of $189 billion. They say the divestment is the largest of any municipality in the U.S. to date.

Cold weather, higher exports result in record natural gas demand - Estimated U.S. natural gas demand on January 1, 2018 reached 150.7 billion cubic feet, surpassing the previous single-day record set in 2014, according to estimates from PointLogic. Much colder-than-normal temperatures across much of the United States have led to increased demand for heating, much of which is provided by natural gas. Although residential and commercial natural gas consumption did not appear to surpass previous records, higher consumption in the electric power and industrial sectors, greater exports of natural gas to Mexico, and more demand for liquefied natural gas (LNG) feedstock gas contributed to the recent record demand level.  Natural gas consumption is typically highest in the winter months, when residential and commercial demand for heating fuels increases. Industrial sector consumption of natural gas is relatively less seasonal but is also higher in winter months. Although the electric power sector consumes the most natural gas during summer months, when overall electricity demand is highest, power sector consumption of natural gas can also increase in winter months. Many homes and commercial buildings use electricity either as their primary or secondary heating fuel, and overall increases in electricity demand are often met by natural gas-fired generators.  This past week, increases in demand led to higher prices in natural gas and electricity markets. Day-ahead natural gas prices for delivery for January 1, 2018, neared $30 per million British thermal units at trading locations in the Mid-Atlantic region, New York, and Boston, according to Natural Gas Intelligence. Because the spot price of natural gas affects power prices in many parts of the United States, spot wholesale electricity prices also rose, surpassing $200 per megawatthour (MWh) in New York City and $185/MWh in New England, according to data from SNL Energy.  Record demand levels are likely to lead to high withdrawals of natural gas from storage fields. EIA’s Weekly Natural Gas Storage Report (WNGSR) showed that in the Lower 48 states, natural gas storage levels as of Friday, December 29, were 3,126 billion cubic feet (Bcf), or about 6% lower than both the previous five-year average (2012–2016) and year-ago levels.  During the previous record withdrawal for the week ending January 9, 2014, U.S. population-weighted heating degree days reached 255. In that week, 288 billion cubic feet of natural gas were withdrawn from storage. For the week ending January 5, 2018, heating degree days are forecast to reach 281.

Fuel price spikes add to weather misery in US north-east  -Oil typically accounts for a tiny fraction of the fuel mix behind New England’s electricity. But in the past week, oil-fired stations such as Canal were generating more than one-third, according to the grid operator. As energy demand soared during a record-breaking cold snap, oil made sense despite being a dirtier fuel. After spot prices for natural gas soared in the region and a winter storm knocked out a large nuclear power plant, using oil suddenly became an economical way to keep the lights on.  The shifts reveal the fragility and complexity of US energy markets, even at a time of overall abundance. And they put a spotlight on efforts to maintain reliable energy supplies while addressing greenhouse gas emissions from fossil fuels.   The ISO New England grid operator warned late Sunday that managing the region’s power system “continues to be challenging”, noting that some of the region’s oil-fired generators were “quickly depleting their fuel supply”.  New England generates almost half its electricity from gas-fired plants, on average. But these plants were forced to compete for fuel with homeowners trying to keep warm as low temperatures crashed through records in cities such as Hartford, Connecticut and Providence, Rhode Island. Enbridge, a pipeline company, says it had to limit volumes from its recently-expanded Algonquin Gas Transmission system for customers that did not have firm contracts.  “The situation in New England is due to a lack of adequate natural gas pipeline capacity, despite repeated efforts by pipeline companies to boost capacity,” says a spokeswoman for the Interstate Natural Gas Association of America, a pipeline industry group. “This lack of capacity has cost New Englanders dearly.”  Meanwhile, plant owner NRG Energy says it might have to curtail operations at Canal to comply with rules set forth by the Global Warming Solutions Act, a state climate law. 

New England dual-fuel units burning through oil, emissions limits amid cold snap - New Yorkers and New Englanders are cranking up their thermostats to stay warm amid an extreme cold snap, but New England's grid overseer and its generators are finding that dual fuel generators are burning through not only needed wintertime oil supplies but also emissions allowances for the rest of the year. ISO New England spokesperson Marcia Blomberg said the regional power system is operating under normal conditions but the extreme cold weather is increasing demand for natural gas for heating, creating pipeline constraints, driving up natural gas prices and causing dual-fuel generators to switch fuels. As a consequence, oil- and coal-fired power plants are generating much more power than usual and wholesale power prices have soared, said Bloomberg.  34% of New England's electricity was being supplied by oil-fired generation (which over a given year supplies less than 1% of the region's generation), followed by natural gas at 25%, nuclear at 23%, renewables at 9%, coal at 6% and hydro at 4%. Of the renewable generation, 62% of it was supplied by greenhouse gas-emitting wood-, refuse- and landfill gas-fired generation, with wind supplying 38% and solar less than 1%. According to data from SNL Energy, ISO-NE's internal hub clocked a day-ahead power price of $210/MWh at peak on Jan. 2, up from a Dec. 22 peak of just $66.25/MWh. In neighboring New York, which also faces wintertime gas capacity constraints, grid overseer New York ISO said the state has sufficient generation capacity and reserves to meet Jan. 2's projected peak demand of 24,500 MW, with some dual fuel units switching to oil as a result of increased demand for natural gas and both higher gas and wholesale electricity prices.  "We are seeing a historic cold snap here with the longest sustained period of high temperatures under 20 [Fahrenheit] degrees in over a hundred years," asserted Dan Dolan, president of the New England Power Generators Association, in an interview. "We usually see this type of severe cold later in January, early February."

What Happens When You Don't Build Natural Gas Pipelines? - What happens when you don't build natural gas pipelines? A really, really bad chain reaction, magnified during winter and peak demand. With a pipeline shortage, a natural gas shortage is created, prices for both natural gas and electricity skyrocket, and CO2 emissions go up because more carbon-intensive fuels are forced to compensate. Centered in New York, New Jersey and New England (hereafter collectively described as the Northeast), the devastating consequences of the anti-pipeline business just popped up again as we faced the coldest temperatures since the Polar Vortex of 2013-2014. Two fellow writers recently knocked this issue outta the park again in pieces for FORBES, so see them for mind-blowing stats on price spikes:

Let me just say that natural gas prices in some parts of the Northeast boomed 60-70 times their recent rates because there's not enough pipeline capacity in the region to bring in natural gas in times of high demand. After years of warnings, this remains a massive problem: Gas is increasingly being utilized in the Northeast for generating both electricity and heat. For example, gas provides over half of the power in the region, despite no significant gas-producing state there. With such gas shortages, heating oil was forced to make up about 35% of New England's electricity during the time, which is highly problematic for those in the region that promote themselves as "climate leaders" but continually block new gas pipeline capacity: heating oil's CO2 emissions are 30-40% higher than those for natural gas.  Indeed, bad policy helps explain why yearly home electricity rates in the Northeast average about 19 or 20 cents per kWh, compared with the national average of 12-13 cents.

Climate Change Fanatics Would Have You Die (Opinion) - News Radio 1310 KLIX -- Let’s say you wake tomorrow and discover a new United Nations mandate, supported by our own government, has banned pumping oil.  Oh, and fracking for natural gas and nuclear power are outlawed.Meanwhile heating your home now requires wood. Or whatever sagebrush you can scrounge. In a couple of days your car runs out of gas and you now must walk or bike from Buhl to Twin Falls for work.  At 5:00 A.M., before sunrise and sometimes in snow and ice.  Meanwhile heating your home now requires wood.  Or whatever sagebrush you can scrounge.How long before the global economy tanks and billions freeze and starve?I’m a big proponent of solar power.  The sun will come up every morning for a very, very long time.  It’s just at the moment we’re not ready to transition civilization away from traditional fuels.  I saw a post on the web about the recent cold snap in the Northern Midwest and Northeast.  In New England 80 percent of the fuel used to keep people warm came from oil, natural gas and nuclear.  These are all enemies of granola chomping leftists and just like they did with coal they plan to put these industries out of business. Then they call themselves compassionate.  They claim if we don’t starve and freeze 5 billion people today we may have scarcity 100 years in the future.  Again, “may” have scarcity due to climate change.  Currently, I’m not freezing.  I’ll take my chances with what I know today against what may or may never occur.

“Drive Fast, Freeze a Yankee!” - Power Line (blog) It is now well understood that the “energy crisis” of the 1970s was entirely the product of bad government policy.  Federal price and allocation controls meant that disruptions in the oil market by OPEC were magnified here at home, with the result being artificial shortages.Everyone remembers the lines for gasoline. What is less recalled are the shortages and price spikes for natural gas, whose price and supply was also regulated at the federal level. But in Texas, intrastate natural gas outside the federal purview was abundant and cheap, and the lack of pipeline capacity to transport it, along with the price controls, meant Texas enjoyed cheap natural gas while the rest of the country shivered or paid out for expensive home heating oil and oil-fired electricity (oil-fired electricity was nearly 20 percent of the nation’s total electricity in 1973; today the figure is less than 1 percent). Hence there was a popular bumper sticker in Texas back then: “Drive fast, freeze a Yankee.” . But from the looks of things the northeast is living back in the bad old days during the current bout of global warming climate change gripping so much of the country. The spot prices for natural gas and electricity are soaring:  Gee—how can natural gas be so expensive when its abundant and cheap (thank you fracking—see the chart at the bottom*), and moreover available in nearby states like Pennsylvania and Ohio? It’s not necessary any more for eastern natural gas customers to have to deal with those cowboy hat-wearing folk in Oklahoma and Texas. Ah, maybe headlines like this have something to do with it: In fact Gov. Cuomo has blocked at least three natural gas pipelines in New York. (The Federal Energy Regulatory Commission overruled Cuomo on one of these last fall.) And since Cuomo has blocked fracking activity for gas in New York state, it is missing out on the prosperity that has revived so many parts of rural Pennsylvania and eastern Ohio.

Cold Snap Leads To Biggest US Natural Gas Draw Ever - The freezing temperatures in most of the Eastern U.S. in the week to January 5 led to the biggest ever weekly withdrawal from natural gas storage, data by the U.S. Energy Information Administration (EIA) showed on Thursday.  In its Weekly Natural Gas Storage Report, EIA said that in the week to January 5, working gas in storage decreased by 359 billion cubic feet (Bcf) from the previous week. As of January 5, working gas in storage was 2,767 Bcf. Natural gas stocks were 415 Bcf less than at this time last year, and 382 Bcf below the five-year average of 3,149 Bcf. At 2,767 Bcf, total working gas is within the five-year historical range, EIA said.Last week’s draw was the largest weekly withdrawal ever, according to Reuters estimates of government energy data since 1994. The previous record natural gas withdrawal was 288 Bcf in January 2014 when an Arctic cold airmass surged south into the central and eastern U.S.The record withdrawal in the first week of this year also beat estimates by analysts polled by Reuters, who had predicted a 333-Bcf withdrawal.  Even though the stocks are below the five-year average for this time of the year, traders told Reuters that natural gas supplies are enough to meet demand for heating in the winter. Weather forecasts also suggest that U.S. temperatures will remain mostly within seasonal limits for the rest of the winter. Expectations are also that U.S. production will stay high. On New Year’s Day, the U.S. burned the most natural gas ever recorded. The U.S. consumed 143 bcf of natural gas on January 1, breaking the previous record of 142 bcf during the polar vortex in 2014. While natural gas stocks are currently below the five-year average and the market has significantly tightened over the past few months, natural gas prices are not surging because soaring production keeps the markets confident that there won’t be supply shortages, analysts say. 

Working gas stocks post all-time record weekly withdrawal -- Net withdrawals from natural gas storage totaled 359 billion cubic feet (Bcf) for the week ending January 5, 2018, topping the previous record of 288 Bcf set four years ago by 25%. Weekly net withdrawals have totaled at least 249 Bcf only 10 times since 1993, most recently in January 2015, and have never exceeded 300 Bcf. Of the 10 largest storage pulls on record, four occurred during the winter of 2013–14, which was significantly colder than normal. Net withdrawals from storage since December 22, 2017, have totaled 565 Bcf, which is higher than the previous two-week withdrawal record of 510 Bcf reported during January 1–15, 2010.Similar to January 2014, sustained periods of frigid temperatures in the East, Midwest, and South Central regions resulted in strong natural gas demand for space and water heating, contributing to robust withdrawals from storage. At the end of December 2017, temperatures were quite cold in large areas of the Lower 48 states and turned markedly colder during the first few days in January, especially in the eastern half of the country. Consumption of natural gas in the residential/commercial sector, as estimated by PointLogic Energy, totaled 452 Bcf during the week ending January 5, compared with 348 Bcf during the prior report week. Overall, total natural gas consumption in the Lower 48 states increased 150 Bcf during the storage week to 961 Bcf, which includes exports (pipeline exports to Mexico were 29 Bcf and liquified natural gas (LNG) feedstock exports were 21 Bcf). Freezing temperatures had an impact on natural gas production during the cold snap. Dry natural gas production was at a record level of 539 Bcf during the December 29, 2017 report week, and declined to 517 Bcf during the following week, according to PointLogic Energy estimates. Cold weather led to freeze-offs in the Appalachian and Permian Basins that reduced natural gas production. Pipeline imports from Canada and LNG imports increased during this period, partially offsetting some of the production declines. Withdrawals from storage played a key role during this period in meeting natural gas demand.

Report: US May Get First LNG Import From Russia Despite Sanctions (Reuters) - A vessel that may be carrying liquefied natural gas from Russia's new Yamal LNG export terminal could be heading to the United States despite sanctions against the company that operates the Russian facility, according to a report by S&P Global Platts and Thomson Reuters shipping data. The tanker Chris. De Margerie picked up a cargo from Novatek PAO's Yamal facility, Russia's second LNG export terminal, on Dec. 9 and dropped it off at National Grid Plc's Isle of Grain LNG facility near London on Dec. 28, according to Thomson Reuters data. Since then, Engie SA's Gaselys LNG tanker picked up LNG from the UK facility on Dec. 30 and is expected to arrive in Boston on Jan. 22. It is possible that some of the LNG on the Gaselys is from Yamal, according to a report by S&P Global Platts. Reuters has not independently verified that report, but the shipping data does show the routes the tankers are taking. The final destination could change. Carol Churchill, a spokeswoman for Engie, which bought the cargo in the United Kingdom and loaded it onto one of its vessels, said: "This transaction is compliant with all U.S. trade laws." "Given the exceptionally cold temperatures and resulting high gas demand in the U.S. Northeast, Engie purchased this spot cargo to supplement our other contracted supplies from Trinidad," Churchill said. Engie owns the Everett LNG import terminal near Boston. Churchill did not answer a question about whether any of the gas came from Russia. National Grid said customer confidentiality limited what information it could disclose. "But I also believe we told people at the time that the gas from the Christophe de Margerie had not entered the UK grid," said Sean Kemp, said a spokesman for National Grid, directing further questions to the shippers and owners. The U.S. Energy Department was not immediately available for comment. 

Siberian Gas by Way of London Rescues Chilly Boston - Not many people had expected the U.S. to turn to Europe for natural gas this winter. Yet the polar chill that gripped the U.S. East Coast this month, and sent spot prices to records, has led to a tanker loading a cargo of liquefied natural gas in the U.K. for Boston, some of which was likely produced by a project in Siberia targeted by U.S. financial curbs.  The Gaselys tanker is due to arrive in Boston on Jan. 22 after loading fuel from storage tanks at the U.K.’s Isle of Grain, according to ship-tracking data compiled by Bloomberg. The vessel docked at Grain shortly after the terminal near London received the first cargo from the $27 billion Yamal LNG plant in Russia’s icy north.   “Gas from anywhere is profitable into that northeastern U.S. gas market as prices are the highest in the world,” said Trevor Sikorski, head of natural gas, coal and carbon at Energy Aspects Ltd. in London.  The arrival from the U.K. would make it the first LNG reload into the U.S. since a cargo from the tanks of the Huelva terminal in Spain was imported in June 2014, according to data through October from the U.S. Department of Energy. U.S. imports of the super-chilled fuel, mostly into Boston from Trinidad and Tobago, have dropped since exports started from the Gulf of Mexico coast in 2016.  Isle of Grain terminal operator National Grid Plc said it doesn’t comment on the intentions of gas shippers using its facilities. It’s not immediately clear who owns the cargo.  U.S. domestic demand climbed to a record last week as snow and winds bombarded Americans on the East Coast. Temperatures tonight in Boston may fall to as low as 15 degrees Fahrenheit (minus 9 degrees Celsius), with a cold outlook persisting through this month, according to AccuWeather Inc.

Why would Russia be selling natural gas to the US? --  Companies in the United States are trying to force Russia out of the European gas market. Now, though, it has emerged that Russian liquefied natural gas is being supplied directly to the US. How does this fit together? Russia is the world's biggest exporter of natural gas. And for decades, Moscow has been dependent on the pipelines that carried the valuable commodity from its gas fields in northern Russia and Siberia to Western Europe. State energy giant Gazprom still does the majority of its business via these pipelines. They are often the subject of disputes, however, as there are always several countries involved. The Kremlin is relying more and more on liquefied natural gas, which is created by cooling natural gas until it is condensed into a liquid, thereby allowing it to be transported via tanker rather than through a pipeline.  For years now, Novatek has been developing a gigantic liquefied natural gas delivery system on the Yamal polar peninsula. Novatek controls 60 percent of the operation, but the French oil company Total is also involved, as are Chinese investors. News that Russian liquefied natural gas from Yamal is being transported to the United States for the first time, via a French intermediary, came as quite the surprise. To the US!  Washington is doing everything it can to make it harder for Russia to export gas to Europe. And now the US itself is buying Russian gas? These circumstances are less spectacular than they at first appear, though. Energy prices in the US have temporarily spiked because of the recent cold snap there. The country suddenly needs natural gas to cope with the severe weather, and it's turning to the international market for a solution. "There's nothing political about it," 

It’s a Record Year for Natural Gas. Yay? - The Energy Information Administration's latest short-term outlook, published on Tuesday, had an eye-catching prediction: America's gas production is forecast to set new records this year and next.   That 68 percent increase since 2005 is pretty remarkable on its own. What isn't clear from that chart is just how big a year 2018 is expected to be. Here's the same data, but showing the change each year: This year isn't just expected to see the highest U.S. natural gas output ever, but also the biggest jump in production by far  That extra 6.9 billion cubic feet of gas production expected in 2018 is like the U.S. adding the entire output of Turkmenistan -- one of the world's largest gas exporters -- in the space of just one year. Two big reasons for this are logistics and oil. Pipelines able to carry roughly 7 billion cubic feet of gas a day away from the prolific Appalachian region are due to start up this year, allowing production that's been bottled up in the East to flood out. Meanwhile, rising oil production in the Permian shale basin and elsewhere will bring increased quantities of associated gas.  I wrote last week about how gas prices were strangely subdued despite the bitter cold gripping large parts of the U.S. These projections are a big reason. It is notable that the EIA's numbers incorporate estimates for lower gas prices this year and next compared to 2017. The cost structure of U.S. gas production has changed fundamentally.  The structure of supply and demand has also changed fundamentally, and in tandem. In the first decade of this century, the U.S. was short of about 9 billion cubic feet a day of gas, on average, relative to its consumption. Imports made up the difference. The latest projection from the EIA shows that this has almost entirely flipped:  The structure of the U.S. gas market is set to flip on its head in 2018.  Growing exports of gas, via pipelines to Mexico and, increasingly, shipped as a liquid on tankers, are the one bright spot in the market today. Just as new pipelines spreading out from the eastern U.S. will allow Appalachian producers to tap into higher prices, so foreign markets will provide a relatively small, but vital and growing, outlet for the country's excess supply overall. Similarly, U.S. oil producers got some relief when restrictions on crude exports were lifted in late 2015.

NYMEX Feb natural gas up 2.7 cents at $2.933/MMBtu as storage offsets weather -- NYMEX February natural gas futures edged higher in overnight US trading as bullish storage expectations offset bearish weather outlooks. At 6:55 am EST (1155 GMT), the contract was 2.7 cents higher at $2.933/MMBtu. High heating demand because of freezing weather is expected to be reflected in a record high US storage withdrawal in the week ended January 5.The data from the Energy Information Administration due for release at 10:30 a.m. EST is expected to show a 337-Bcf withdrawal, according to an S&P Global Platts analysts survey. Responses ranged between 324 and 365 Bcf.However, storage draws could slow as the cold abates. The National Weather Service sees average to below-average temperatures in most of eastern two-thirds of the US in the next six to 10 days, but becoming confined to the Northwest and the Pacific in the eight-to-14-day forecast.

NYMEX February gas contract soars following record draw from US storage - The NYMEX February natural gas futures contract spiked Thursday after the US Energy Information Administration announced an all-time high withdrawal from storage. The February contract settled at $3.084/MMBtu, up 17.8 cents from Wednesday's close, its highest since November 29. The EIA announced an estimated 359 Bcf pull from national storage stocks for the week ended January 5, well above the 337 Bcf withdrawal expected by a consensus of analysts surveyed by S&P Global Platts. The withdrawal topped the previous record of 288 Bcf in the week ended January 10, 2014, according to EIA data. The record pull from stocks came as temperatures across much of the country were well below average for the duration of the week, pushing demand to record levels and causing production freeze-offs in some areas. The unprecedented withdrawal led to record pulls in the East, Midwest, Mountain and South Central regions, and dragged total national stocks down to an estimated 2.767 Tcf, a 12.1% deficit to the five-year average, according to EIA data. The upward movement in price brings the front-month contract to a familiar place, the $3/MMBtu level. Since May 22, the front-month contract has only strayed more than 25 cents in either direction of $3/MMBtu 11 times, during a period in mid-December when record production met unseasonably warm temperatures. US demand is projected by Platts Analytics' Bentek Energy to climb over the next week, averaging 104.2 Bcf/d over the next seven days, well above the 89.2 Bcf forecast for Thursday. The increase in demand can be attributed in part to a forecast drop in temperatures across some demand areas in the US, as the most recent outlook for Chicago from the National Weather Service calls for a likelihood of below-average temperatures, with high temperatures reaching the low 20s through Wednesday, below the average high of 31.

Another Round of Arctic Cold Lifts Natural Gas Spot Prices; Futures Surge to $3.20 -- Coming off a record storage pull, and with the latest weather data trending colder, prompt-month natural gas futures rallied Friday to their highest levels since November. Meanwhile, the arrival of more cold weather saw elevated winter pricing return to the cash market, especially along the East Coast; the NGI National Spot Gas Average jumped $1.97 to $5.15/MMBtu.  February natural gas traded higher Thursday overnight and carried that momentum through to the close, settling 11.6 cents higher at $3.200 after a 17.8-cent surge the day before. Friday's intraday high of $3.224 is the most expensive February 2018 trade since prices reached $3.244 on Nov. 15. March settled 6.8 cents higher at $2.993.In the midday weather data Friday “colder trends held” for the coming week before a break expected Jan. 19-22, NatGasWeather.com said. But guidance “was impressively colder-trending with a weather system tracking out of the Central U.S. and into the East Jan. 23-25,” which appeared to get a reaction from the market, according to the firm.“We must expect that any further colder trends over the weekend and prices could continue higher, while if the Jan. 24 system were to trend back milder” and if warmer conditions Jan. 26-28 “were to look to last a little longer, a gap lower could be expected,” NatGasWeather said.The Energy Information Administration (EIA) reported a staggering 359 Bcf withdrawal from U.S. natural gas stocks for the week ending Jan. 5, a bullish surprise that easily toppled the previous record set in January 2014.Coming off the most potent stretch of heating demand since the notorious polar vortex-influenced 2013-2014 winter, consensus estimates before the report had predicted a record withdrawal. But the actual number still surpassed the median estimates by around 25 Bcf.

Eminent domain challenge heads to appeals court - A high-stakes dispute over how natural gas pipelines are built across private property is heading to a federal appeals court.The 4th U.S. Circuit Court of Appeals will hear a case involving the constitutionality of the Federal Energy Regulatory Commission's practice of granting eminent domain authority to pipeline developers. The Mountain Valley pipeline, which would stretch from Virginia to West Virginia, is facing new legal challenges. Mountain Valley Pipeline LLCA group of Virginia and West Virginia landowners last night gave notice of their appeal of a recent district court decision scrapping their challenge to FERC's eminent domain system.The landowners have argued that the conferral of condemnation authority to pipeline companies violates property rights protected under the Fifth Amendment. In particular, they're challenging the use of eminent domain in relation to the 303-mile Mountain Valley pipeline, which would stretch from West Virginia to Virginia.The argument against FERC's eminent domain practice is gaining traction among pipeline critics and property rights advocates, with other cases pending in district courts in New Jersey and Washington, D.C. (Energywire, Sept. 13, 2017).If any case is successful, it would likely dramatically change the way pipelines are approved and constructed, making it much more difficult for developers to acquire land from holdout property owners along a proposed route.Attorneys pushing the argument had hoped district courts would agree to weigh the claims. So far, however, district courts in Ohio and Virginia have refused, ruling that the lawsuits essentially challenge FERC pipeline certificates and the Natural Gas Act directs all certificate challenges to appellate courts. The U.S. District Court for the Western District of Virginia dismissed the eminent domain arguments in the Mountain Valley case last month, prompting yesterday's appeal to the 4th Circuit (Energywire, Dec. 12, 2017). The Richmond-based appellate court will be the first circuit court to weigh in on the recent spate of similar cases.

NASA just made a stunning discovery about how fracking fuels global warming - A new NASA study is one final nail in the coffin of the myth that natural gas is a climate solution, or a “bridge” from the dirtiest fossil fuels to low-carbon fuels like solar and wind. NASA found that most of the huge rise in global methane emissions in the past decade is in fact from the fossil fuel industry–and that this rise is “substantially larger” than previously thought. And that means natural gas is, as many earlier studies have found, not a climate solution. Natural gas is mostly methane, a potent greenhouse gas. And methane emissions are responsible for about a quarter of the human-caused global warming we’re suffering today. So scientists have been scrambling to figure out why methane emissions have been soaring in recent years after leveling off around the year 2000. The total methane in the air has been rising by 25 teragrams (27.5 million U.S. tons) a year, which NASA helpfully explains is the weight of some 5 million elephants. Many studies have estimated that leaks from oil and gas production, particularly fracking, are a major driver of rising methane emissions. “A review of more than 200 earlier studies confirms that U.S. emissions of methane are considerably higher than official estimates,” as one 2014 Stanford University analysis explained. “Leaks from the nation’s natural gas system are an important part of the problem.” But, NASA notes, other research groups have estimated that the rise in methane emissions was due to a rise in “microbial production in wet tropical environments like marshes and rice paddies.”  After a very deep dive into multiple ground and satellite datasets, NASA determined that a third source of methane emissions — global fires — had been declining much more rapidly than previously realized (see animation below). Significantly, the authors point out that the huge rise in fossil fuel methane emissions “found here is substantially larger than in previous literature.” In short, the recent jump in methane emissions from oil and gas production appears to be a whole lot bigger than we previously thought.

Trump Proposes Most Aggressive Offshore Drilling Plan Ever - The Trump administration just proposed the most sweeping offshore drilling plan in history, a proposal that calls for opening up the Arctic, Atlantic and Pacific Oceans for drilling, while also opening up parts of the Gulf of Mexico that have been off limits. Experts say the proposal is unprecedented in regards to the geographical extent and in the number of lease sales. The five-year drilling plan from the Department of Interior for 2019-2022, which would replace the 2017-2022 plan from the Obama administration, calls for 47 lease sales. The acreage on offer would consist of more than 90 percent of the entire U.S. outer continental shelf, including areas that have either never seen drilling or haven’t experience drilling in decades. The only area that would remain off limits would be the North Aleutian Planning Area in Alaska. In other words, Trump is trying to open up essentially the entire U.S. coast to oil and gas drilling. The administration believes the proposed territory holds some 90 billion barrels of oil and 319 trillion cubic feet of natural gas, or reserves that are about 80 percent larger than is currently available. "Under President Trump, we are going to become the strongest energy superpower this world has ever known," Interior Secretary Ryan Zinke told reporters. Needless to say, the proposal is being met with some pushback. Opposition from environmental groups is expected – a joint letter from 64 environmental groups blasted the decision, arguing it will inflict “severe and unacceptable harm” to U.S. publicly-owned oceans, coastal economies and marine life. "This radical offshore drilling free-for-all is a clear example of politics over people, ignoring widespread local and state opposition," Diane Hoskins, a campaign director Oceana, said in a statement.  Argus Media points out that the Interior Department typically includes very large swaths of territory in the draft proposals because new territories cannot be added at a later date without starting the lengthy process all over again. So, the inclusion of so much territory is, in part, intended to simply keep options open. The likelihood of drilling in all of these regions is pretty low. The oil and gas industry praised the move. “To kick off a national discussion, you need a national plan — something that has been lacking the past several years,” said Randall Luthi, president of the National Ocean Industries Association.

Trump’s Offshore Oil Drilling Plans Ignore the Lessons of BP Deepwater Horizon Spill - The Trump administration is proposing to ease regulations that were adopted to make offshore oil and gas drilling operations safer after the 2010 Deepwater Horizon disaster. This event was the worst oil spill in U.S. history. Eleven workers died in the explosion and sinking of the oil rig, and more than 4 million barrels of oil were released into the Gulf of Mexico. Scientists have estimated that the spill caused more than US$17 billion in damages to natural resources. I served on the bipartisan National Commission that investigated the causes of this epic blowout. We spent six months assessing what went wrong on the Deepwater Horizon and the effectiveness of the spill response, conducting our own investigations and hearing testimony from dozens of expert witnesses. Our panel concluded that the immediate cause of the blowout was a series of identifiable mistakes by BP, the company drilling the well; Halliburton, which cemented the well; and Transocean, the drill ship operator. We wrote that these mistakes revealed “such systematic failures in risk management that they place in doubt the safety culture of the entire industry.” The root causes for these mistakes included regulatory failures. Now, however, the Trump administration wants to increase domestic production by “reducing the regulatory burden on industry.” On December 7, 2017 BSEE ordered the National Academies to stop work on a study that the agency had commissioned on improving its inspection program. This was the most recent in a series of studies, and was to include recommendations on the appropriate role of independent third parties and remote monitoring. BSEE estimates that its proposals to change production safety rules could save the industry at least $228 million in compliance costs over 10 years. BSEE’s projected savings are also trivial compared to the $60 billion in costs that BP has incurred because of its role in the Deepwater Horizon disaster. Since then explosions, deaths, injuries and leaks in the oil industry have mainly from production facilities. On-the-job fatalities are higher in oil and gas extraction than any other U.S. industry. Some aspects of the Trump administration’s proposed regulatory changes might achieve greater effectiveness and efficiency in safety procedures. But it is not at all clear that what Angelle describes as a “paradigm shift” will maintain “a high bar for safety and environmental sustainability,” as he claims. Instead, it looks more like a shift back to the old days of over-relying on industry practices and preferences.

Trump has big plans for offshore oil development--but will it ever happen? - With characteristic flamboyance, the Trump administration has set in motion a grand scheme to lure energy companies to explore for oil and gas across virtually all of America’s outer continental shelf, a deep marine domain encompassing billions of acres of ocean bottom. Drawing a distinction from the Obama administration’s concerns about climate change and restricting offshore fossil energy development, Interior Secretary Ryan Zinke cast President Trump’s offshore drilling campaign as a study in American strength. “We’re embarking on a new path for energy dominance in America,” Zinke said. “We are going to become the strongest energy superpower.” Yet like other marquee directives that Trump has issued in the past year to empower the domestic fossil fuel industry, the offshore plan may not bear out its grand ambitions. Many energy analysts already are predicting that exorbitant costs, flat prices, civic opposition, climate concerns and new transportation technology make major new offshore drilling enterprises, at least outside the Gulf of Mexico, unlikely.  Even in the Gulf, which produces 1.6 million barrels of oil daily, or 16% of U.S. production, the cost of exploration, permitting and operations in deep water is well over $1 billion per well, according to the American Petroleum Institute. Energy analysts also say it will take at least 10 years for a new well to begin producing in the Gulf, and twice that anywhere else on the outer continental shelf. By that time, according to industry forecasts, demand for oil will be well past its peak and dropping due to the advent of electric vehicles, more efficient engines for planes and ships and new materials that are not made with oil or natural gas. In short, many of these experts say, the administration’s offshore drilling plan could be out of touch with its time. “The price of crude is the determining factor,” said Ron Stein, founder of PTS Staffing Solutions, an Irvine-based company that provides professional staff to energy companies. Producing oil offshore is a money-burner, he said. “If the price of oil isn’t right, they won’t do it.”

Michael Moore Threatens to Begin Fracking Off Trump's Florida Resort -- Filmmaker Michael Moore threatened Saturday to begin fracking off President Donald Trump's Mar-a-Lago resort in Florida to protest the administration's decision to open nearly all U.S. offshore waters to drilling for oil and natural gas. Moore, who has long opposed Trump and his policies, took to Twitter:  We are back on the air in September — in prime time! “Michael Moore LIVE FROM THE APOCALYPSE!” Our fracking off the coast of Mar-a-Lago begins right after Labor Day. I’ve already got the rig — a beautiful Halliburton G-0008 fracking system with a monster Caterpillar engine! https://t.co/riUn0QgvkG  — Michael Moore (@MMFlint) January 6, 2018  Here’s our fracker! We’ll be drilling right off the coast of Mar-a-Lago. God Bless You Donald Trump for making this possible! The oil we drill just off your beach will pay 4 our entire show! And any spills - we’re going to let the ppl of Florida keep whatever they collect 4 free! pic.twitter.com/iGq2f1Gi33  — Michael Moore (@MMFlint) January 6, 2018  Interior Secretary Ryan Zinke announced a plan Thursday to open nearly all U.S. offshore waters to oil and gas drilling, reversing protections in the Arctic, Atlantic and Pacific.  He said the draft National Outer Continental Shelf Oil and Gas Leasing Program for 2019 to 2024 would make over 90 percent of the outer continental shelf's total acreage available for leasing, including areas put off-limits by the Obama White House.

Zinke removes waters off Fla. from leasing plan - Interior Secretary Ryan Zinke said late yesterday that federal waters surrounding Florida would not be open to exploration, an abrupt change of course after the Trump administration proposed new leasing areas in the region last week. Earlier this month, the White House proposed plans to open vast new waterways around the U.S. to leasing, including the eventual lifting of an eastern Gulf of Mexico drilling moratorium. But yesterday, after meeting with Florida Gov. Rick Scott (R), Zinke said the state's waters would be off limits. "I support the governor's position that Florida is unique and its coasts are heavily reliant on tourism as an economic driver," Zinke said in a statement. Democrats and environmentalists are interpreting the move as political because Scott may run for Senate. "This is a political stunt orchestrated by the Trump administration to help Rick Scott, who has wanted to drill off Florida's coast his entire career. We shouldn't be playing politics with the future of Florida," Sen. Bill Nelson (D-Fla.) said. Alex Taurel, deputy legislative director for the League of Conservation Voters, called Zinke's move a "publicity stunt." "Florida is at risk for offshore drilling because the Trump administration chose to put it at risk," he said.Diane Hoskins, campaign director at Oceana, wondered whether the administration would "give equal consideration to all the other coastal governors from both parties who overwhelmingly reject this radical offshore drilling plan." Republicans tend to support more oil and gas development, but some GOP lawmakers from states with sensitive coasts or military installations questioned the Zinke plan.

Zinke rolls out Fla. exemption on Twitter -- Yesterday afternoon, Interior Secretary Ryan Zinke was stuck in the airport. "Delayed three hours and counting," he tweeted at 2 p.m. "At some point I'll make it to #Florida. #WheelsUp." Zinke was making good on a promise to meet with Florida's Republican governor, Rick Scott, to discuss Interior's draft proposed five-year offshore drilling program.Unveiled last week, the plan would open nearly all federal waters for leasing. On a phone call Thursday with reporters, Zinke indicated that he would have a dialogue with Scott, a likely Republican candidate for U.S. Senate later this year, who he knew would oppose the plan (Energywire, Jan. 5).   Almost as soon as Zinke touched down in the Sunshine State, Florida was exempted from the sweeping effort to open U.S. waters to oil and gas drilling. Drilling would still be banned off Florida's coast. "I have witnessed Governor Scott's leadership through hurricane season and am working closely with him on Everglades restoration. He is a straightforward leader that can be trusted," Zinke wrote in a statement attached to a 6:48 p.m. tweet. "President Trump has directed me to rebuild our offshore oil and gas program in a manner that supports our national energy policy and also takes into consideration the local and state voice," he added. "I support the governor's position that Florida is unique and its coasts are heavily reliant on tourism as an economic driver. As a result of discussion with Governor Scott's and his leadership, I am removing Florida from consideration for any new oil and gas platforms."The decision was far from sudden, Scott and Zinke told reporters yesterday in the Tallahassee, Fla., airport. Both said the agreement evolved during meetings over the last 12 months."Our tactic was to open everything up and then meet with the governors, meet with the stakeholders to make sure as we shape it, we shape it right," Zinke said. "The president makes it very clear that local voices count, states count." Zinke held firm that it was Scott who swayed the White House's decision and did not offer any other explanation when pressed by reporters. His answer was the same when asked why this decision meant there would be no drilling off Pensacola but there could be off of Gulf Shores, Ala., which is a mere 20 miles away.

Politically important Florida gets a pass on drilling plan --The Trump administration says it will not allow oil drilling off the coast of Florida, abruptly reversing course under pressure from Republican Gov. Rick Scott. Interior Secretary Ryan Zinke said Tuesday after a brief meeting with Scott at the Tallahassee airport that drilling would be "off the table" when it comes to waters in the eastern Gulf of Mexico and the Atlantic Ocean off Florida. The change of course — just five days after Zinke announced the offshore drilling plan — highlights the political importance of Florida, where President Donald Trump narrowly won the state's 29 electoral votes in the 2016 election and has encouraged Scott to run for Senate. Zinke said Tuesday that "Florida is obviously unique" and that the decision to remove the state came after meetings and discussion with Scott. Zinke announced plans last week to greatly expand offshore oil drilling from the Atlantic to the Arctic and Pacific oceans, including several possible drilling operations off Florida, where drilling is now blocked. The plan was immediately met with bipartisan opposition on both the Atlantic and Pacific coasts. Scott, who is expected to run for Senate later this year, came out against the Trump administration plan when it was first announced, saying his top priority is to ensure that Florida's natural resources are protected. "For Floridians we are not drilling off the coast of Florida, which clearly the governor has expressed that's important," Zinke said, adding that he knew when he announced the drilling plan last week that it would spark discussion across the country.

Oil industry slams Zinke for closing Florida waters to offshore drilling | TheHill: The oil industry criticized the Trump administration Wednesday for excluding waters near Florida from offshore drilling. The American Petroleum Institute (API) said the decision to remove the eastern third of the Gulf of Mexico from drilling consideration is “premature” and ignores safety advances the industry has made. “This announcement is premature,” API President Jack Gerard said in a statement following the late Tuesday decision from Interior Secretary Ryan Zinke. “The Gulf of Mexico is the backbone of our nation’s offshore energy production and restricting access to the Eastern Gulf puts hundreds of thousands of jobs at risk across the country and along the Gulf Coast, particularly in Florida, Alabama, Louisiana, Texas, and Mississippi,” he said. “Not only that, but securing reliable sources of energy helps fuel other industries like tourism, especially in states like Florida that relies on more than 200 million barrels of gasoline and diesel each year to fuel its economy.” Zinke’s action has also been criticized by governors and other leaders of various other coastal states. The administration said last week it is considering allowing drilling all along the Pacific and Atlantic coasts. Nearly all of those states’ leaders have come out in opposition to it. Zinke also excluded the Atlantic coast of Florida. But the Gulf of Mexico hosts the bulk of the United States’ offshore drilling, so the eastern Gulf is the industry’s top prospect. 

Florida decision puts Trump drilling plan on shaky ground - Interior Secretary Ryan Zinke may have put the Trump administration on shaky legal ground by agreeing to remove Florida’s waters from consideration for offshore drilling.Zinke announced his decision Tuesday, minutes after meeting with Florida Gov. Rick Scott (R) at Tallahassee’s airport. Florida would be removed from consideration for drilling, Zinke said, due to the importance of tourism to the state. “I support the governor’s position that Florida is unique and its coasts are heavily reliant on tourism as an economic driver,” Zinke said in a statement late Tuesday. But after Zinke’s announcement, the leaders from numerous other coastal states quickly chimed in, saying they’re entitled to the same treatment. “New York doesn't want drilling off our coast either. Where do we sign up for a waiver @SecretaryZinke?” New York Gov. Andrew Cuomo (D) tweeted. “We'd like a word in Virginia,” wrote incoming Virginia Gov. Ralph Northam.  Rep. Mark Sanford (R-S.C.), an opponent of offshore drilling, criticized the decision, saying it was likely self-serving on President Trump's part due to the costal location of his private Mar-a-Lago club. “I mean, you can't say 'I don’t want to see an oil rig from Mar-a-Lago as I look out from the waters of Palm Beach, but it’s OK to look at an oil rig out from Hilton Head of Charleston, S.C.,' " he said on CNN. From both a political and a legal perspective, Zinke may have painted himself into a corner. If the Trump administration extends the logic applied to Florida to the rest of the country, its “Energy Dominance” agenda could be in peril.  Zinke, last week, proposed considering offshore oil and natural gas drilling nearly everywhere, including along the Pacific, Atlantic and Gulf of Mexico coasts and in nearly every spot around Alaska, save for Bristol Bay.  The only coastal state governors who have not asked to be excluded from the drilling are in Maine, Georgia and Alaska.

Christie wants Trump admin to exempt N.J. from offshore drilling | TheHill: New Jersey Gov. Chris Christie (R) on Wednesday announced his intention to request an exemption from the Trump administration's expansion of offshore drilling rights, similar to the one granted to the state of Florida. In a press release from the governor's office, Christie called for the Interior Department to grant New Jersey an exemption to Interior Secretary Ryan ZinkeRyan Keith ZinkePatagonia files suit against Trump cuts to Utah monuments Presidential power over monuments should have checks and balances Overnight Regulation: Feds push to clarify regs on bump stocks | Interior wants Trump to shrink two more monuments | Navajo Nation sues over monument rollback | FCC won't delay net neutrality vote | Senate panel approves bill easing Dodd-Frank rules MORE's recent announcement that nearly all of the nation’s outer continental shelf is being considered for drilling. Zinke on Tuesday granted Florida an exemption through 2024."For eight years, the Governor has been steadfastly opposed to drilling off the New Jersey coast. He remains so today. If exceptions are being made for other states, the Governor will certainly pursue the same type of exception for New Jersey. He also will consult with the Attorney General on additional steps to continue his policy of protecting New Jersey's coastline," Christie's press secretary Brian Murphy said in the release.  Christie's request follows similar ones from the governors of California and New York, who issued similar statements after Zinke's announcement. “New York doesn't want drilling off our coast either,” Cuomo tweeted Tuesday. “Where do we sign up for a waiver @SecretaryZinke?” Florida's exemption came after a near-unified opposition effort from the state's elected officials on Capitol Hill as well as Florida Gov. Rick Scott (R), who met with Zinke on Tuesday to discuss the drilling expansion. Last week, Florida's senior Sen. Bill Nelson (D) spoke out against the expansion of offshore drilling on the Senate floor.

Bayou Bridge pipeline winds up in court as environmentalists, state square off - Opponents of the Bayou Bridge Pipeline have sued the state for granting a permit needed to allow construction. The state and company responded with disbelief. Pipelines are safer than transporting oil by truck and train, and Bayou Bridge underwent arduous vetting, said assistant attorney general Harry Vorhoff and pipeline attorney Jimmy Percy. As Vorhoff discussed why it's desirable to bundle oil and gas pipelines, the judge broke in. Turner didn't disagree, but remarked that the state's argument didn't sound great. It may be advantageous to build pipelines and storage facilities in concentrated areas so there aren't pipes and tanks strewn across Louisiana, but that's of little consolation to the people who live nearby and are subjected to higher emissions. History has also shown that when companies and regulators decide where to place the infrastructure, it disproportionately winds up in the backyards of African-American communities, he observed. "The question is, 'When does it stop?'" Turner said. But he also emphasized that he doesn't put decades of industrial development at the feet of Bayou Bridge, nor does he necessarily think it's his place to try to unilaterally reverse the trend. 

Keystone XL pipeline opponents appeal Nebraska route approval (Reuters) - Opponents of TransCanada Corp’s proposed Keystone XL pipeline appealed a decision by Nebraska regulators to approve a path for the project through the state, a lawyer for the opponents said on Friday. The legal challenge throws up another obstacle to the long-delayed project, which environmentalists have made a symbol of their fight against climate change but which President Donald Trump supports as a job creator. The Nebraska Public Service Commission in November approved a route for Keystone XL, lifting what appeared to be the last big regulatory hurdle for the 1,179-mile (1,897-km) pipeline linking the oil fields of Canada’s Alberta province to U.S. refineries, initially proposed nearly a decade ago. But the approval was not for TransCanada’s preferred path, and was instead for an alternative route that shifted it eastward to an existing pipeline right-of-way. Lawyers for opponents of the pipeline - which include landowners along the route - have argued that the commission was not permitted to approve anything but the original route TransCanada had requested in its application. Attorney David Domina told Reuters on Friday that TransCanada’s approval was for a “route not supported by an application. ... So we appealed.” The appeal was filed on Dec. 29. The proposed pipeline has been a lightning rod of controversy for nearly a decade, pitting environmentalists worried about spills and global warming against business advocates who say the project will lower fuel prices, shore up national security and bring jobs. The Trump administration granted TransCanada a federal permit for the pipeline in March, reversing a decision by former President Barack Obama to reject the project on environmental grounds. That left Nebraska - the only one of three states that had not approved a route for the line - as the final hurdle.

Trump plan to expand oil and gas leasing in West draws, for the most part, a big yawn from industry    - Federal lease auctions have attracted far less excitement than anticipated from oil and gas producers, even in heavily drilled areas of Wyoming, North Dakota, Utah and Colorado. In other Western states, and in Alaska, producers greet most new auctions with yawns. In March, Trump issued an executive order to unshackle the energy industry from “regulatory burdens” and dispatched Interior Secretary Ryan Zinke to accelerate and expand the scope of federal oil and gas lease auctions. It was a major part of the president’s plan to re-establish “American energy dominance.” Overall, the administration has insisted that its efforts are successful: The Interior Department reported that auctions of federal drilling leases earned $316.2 million in revenue in 2017, about 61% higher than the $196.7 million that the government made from leasing in 2016. In a handful of oil-rich areas of the West, producers are eager to lease. A February lease auction attracted $129 million in sales for 183,155 acres, mostly in Wyoming, an average of $705 an acre. A September lease sale in New Mexico’s Permian Basin attracted nearly $131 million in sales from 61 parcels covering 15,331 acres, an average of about $8,545 an acre. But those leases are the exception. In early December, the Bureau of Land Management, a unit of the Interior Department, held a lease auction for 900 parcels and 10.25 million acres of the National Petroleum Reserve along Alaska’s North Slope. Just seven parcels covering nearly 80,000 acres received bids. The highest bid was $14.99 an acre, indicating meager interest. Another December auction in Wyoming offered 45 parcels for lease. Four parcels covering 2,978 acres attracted strong bids ranging from $301 to $3,271 an acre. But 19 parcels covering almost 37,000 acres were bid at just $2 an acre, the minimum amount accepted by the government. Four other parcels covering over 4,000 acres attracted no bids at all.  

US oilfield service firms dust off IPO plans as crude prices surge (Reuters) - U.S. oilfield service companies are gearing up for initial public offerings, according to regulatory filings and analysts, after several shelved equity sales last year during a weak period for oil prices. Oil is trading near its highest level since early 2015, fueling demand for service firms to bring new shale wells to production. Energy executives surveyed last month said they would increase drilling sharply at prices above $60 a barrel. Crude CLC1 recently traded at about $61.50 a barrel. Investors’ appetite for the shares will be tested soon. Liberty Oilfield Services, which provides hydraulic fracturing services to shale producers, last week filed to raise about $160 million by selling 10.7 million shares at about $15 a share. If its IPO performs well, it could open the gates for several other companies aiming to raise funds for new expansion or to buy rivals. Since August, the Van Eck Vectors Oil Services ETF (OIH.P) is up nearly 28 percent, behind the 32 percent gain in the SPDR S&P Oil and Gas Exploration and Production ETF (XOP.P). Denver, Colorado-based Liberty was one of four oilfield firms that shelved IPOs last year after producers trimmed spending budgets as crude dipped to $45 a barrel. Liberty did not respond to requests for comment. Other service firms also have updated their filings, signaling they may try again. “We could see a quick ramp up (in IPOs) because there are so many in a good position to go quickly once market conditions improve,” said A.J. Ericksen, a partner with law firm Baker Botts who focuses on mergers and acquisitions and capital markets. His firm represents the underwriters in Liberty’s public offering. Underpinning the improving market for fracking services, there are some 7,300 drilled-but-uncompleted wells across the United States as of November, the U.S. Energy Information Administration recently reported. Those are wells that have yet to be hydraulically fractured. BJ Services, FTS International and Nine Energy Service, all of which offer hydraulic fracturing of shale wells, last year filed registration statements with the U.S. Securities and Exchange Commission but did not proceed.

Denver-based Liberty Oilfield Services pumping up for a big IPO - Liberty Oilfield Services plans to offer 10.7 million shares at between $14 to $16 a piece next week, according to a securities filing by the Denver-based company. Liberty Oilfield said it plans to price its shares on Thursday evening, with trading to start Friday on the New York Stock Exchange under the ticker LBRT. Depending on investor demand, the company expects to raise between $142.1 million to $161.3 million after expenses. Producers contract with the company for hydraulic fracturing fleets to complete drilled wells. The company started with one fleet in 2011 and had 19 at the end of last year.“The demand for our hydraulic fracturing services exceeds our current capacity, and we expect, based on discussions with customers, to deploy three additional standard fleets, as well as upgrade four existing standard fleets to high pressure fleets,” the company said in its filing.Proceeds from the offering will go to add the additional fleets, as well as to make asset acquisitions and repay debt. Assuming an offering price of $15 a share, investors in the IPO will control about 16.1 percent of class A common shares, with voting control of about 9.2 percent.

Why Oil Is Up But Rig Count Is Not – - For U.S. shale drillers who have seen prices climb almost 50 percent in six months, it’s been largely a rig-less recovery, a conundrum for traders seeking to forecast the future. The reason: explorers are doing more with less, forcing traders to use a bigger toolbox of stats, metrics and gauges to track U.S. production that’s expected to top 10 million barrels a day as the year progresses. That includes everything from producer spending surveys to oilfield hiring reports, and even demand for the tiny grains of sand that prop open oil-bearing cracks. The combination of faster and faster horizontal drilling and more intense fracking has allowed production to explode even as the number of rigs drop. Up until about four years ago, it was safe enough to use the rig count to track activity because the industry was more reliant on single vertical wells. "You’ve got different levers to pull to get increasingly efficient," James Wicklund, an analyst at Credit Suisse in Dallas, said in a phone interview. "There is not one clear acknowledged reporting source for the metrics that we use. It makes it a little bit murkier." Brad Handler and other analysts at Jefferies cobbled together a chart of nine other metrics besides the rig count in a note to investors this month. For example, the number of frack stages in a well are expected to increase 14 percent this year to an average of 28.5, more than double what explorers were able to do in 2014. And the total amount of sand crammed into wells this year is expected to grow 20 percent to more than 100 million tons.Chesapeake Energy Corp. heralded in the arrival of the monster frack a little more than a year ago, declaring what it called "propageddon" on one gas well in Louisiana with more than 25,000 tons of sand pumped into it.After switching from the old standby rig count to closely watching the well count a few years back, the latest shift about a year and a half ago is to track how long the wells are drilled sideways under ground and how many frack stages are in each of those wells, Wicklund said.At 7,500 feet, the average lateral length of a well is 50 percent longer compared to three years ago. And a rig can drill 25 wells a year, compared to 15 just two years ago, he said.

Colo. grappling with response to suburban pipeline explosion --Colorado regulators appeared no closer to resolving conflicts about the state's proposed pipeline safety regulations yesterday, after two days of testimony.The Colorado Oil and Gas Conservation Commission wrapped up its hearing yesterday without taking a final vote on the rules, which Gov. John Hickenlooper (D) ordered last year in response to a pipeline-related explosion that destroyed a home.The rules would require more safety tests and reporting for flow lines, which are low-pressure lines that connect oil or gas wells with tanks and other equipment. Local governments and environmental groups have argued for tougher requirements, including a publicly available map of all the flow lines in the state (Energywire, Jan. 5).Industry groups, though, objected to the idea of mapping the lines, saying it could create the potential for vandalism, though that's rarely happened. Turning the information over to local governments could create problems, too, a pipeline operator said.The industry also objected to some of the staff proposals, which were negotiated over several months, such as a requirement that companies test the shut-off valves on their pipelines. A requirement for a "root cause analysis" of serious oil-and-gas-related accidents could force companies to turn over information protected by attorney-client privilege, since companies sometimes use attorneys for those investigations, a producer said.The nine-member commission didn't indicate how it would resolve those concerns, but the comments seemed to leave the commission staff and some of the individual commissioners nonplussed. "I feel like we're in a semantic spin cycle here," commission Director Matt Lepore said in response to the testimony about root-cause analyses. The COGCC has ordered two companies to produce those reports in the last few months, without running into legal issues, Lepore said.

Five Spills, Six Months in Operation: Dakota Access Track Record Highlights Unavoidable Reality — Pipelines Leak - Representatives from Energy Transfer Partners, the company behind the controversial Dakota Access pipeline, traveled to Cambridge, Iowa, in October to present a series of $20,000 checks to emergency management departments in six counties, an acknowledgement of the months of anti-pipeline protests that had taxed local agencies during construction.  Less than a month later, in Cambridge, the Iowa section of the Dakota Access pipeline would experience its first spill.  On November 14, “excessive vibration” caused 21 gallons of crude to leak out of a crack in a weld connection at one of the pump stations, which are situated along pipelines to keep the product moving and monitor its flow. Since the leak was contained at the site, it went unreported to the Iowa Department of Natural Resources, although it did make it into a federal pipeline monitoring database. The Dakota Access pipeline leaked at least five times in 2017. The biggest was a 168-gallon leak near DAPL’s endpoint in Patoka, Illinois, on April 23. According to federal regulators, no wildlife was impacted, although soil was contaminated, requiring remediation. DAPL went into operation on June 1, along with its under-the-radar sister project, the Energy Transfer Crude Oil pipeline, a natural gas pipeline converted to carry crude. Together, the two make up the Bakken pipeline system. ETCO leaked at least three times in 2017. Most of the Bakken system leaks were considered minor by state and federal monitors. According to regulators, water was not impacted in any of the cases. The only spill considered “significant” by the federal Pipeline and Hazardous Materials Safety Administration, or PHMSA, was a 4,998-gallon leak on the ETCO pipeline in Dyersburg, Tennessee, on June 19. Tennessee Department of Environment and Conservation spokesperson Kim Schofinski told The Intercept that reporting the spill to the agency was not required because it was contained within the pumping station where it occurred. The series of spills in the pipelines’ first months of operation underlines a fact that regulators and industry insiders know well: Pipelines leak.

Could good times be coming soon for a resurgent Bakken? -  During the oil market’s downturn from mid-2014 through 2016, the Bakken Shale, primarily located in North Dakota, was at the forefront of the collapse. The Bakken rig count dropped from a high of 219 to a low of 24 as production fell by 300 Mb/d, or 24%. For many, it was time to write off the Bakken as a one-hit wonder. But as drilling productivity increased and prices rebounded, so did production. Crude oil output is again above 1.1 MMb/d and the rig count has doubled from its low point. Today, we begin a blog series on recent developments in Bakken production, well productivity and market pricing, and discuss RBN’s latest production forecast for the play. As producers in the Bakken reduced their capital expenditures in 2015-16, the Bakken’s oil rig count dropped from the low 200s to a low of 24 (orange line and right axis in Figure 1) in June 2016, with most of the decline occurring in 2015.  Shortly thereafter, production fell too, dropping from 1.26 MMb/d at the end of 2014 to below 1 MMb/d by the summer of 2016, bottoming out at just under 960 Mb/d in December 2016 (see What Goes Up). Since then, crude oil prices have recovered to well above $55/bbl and we’ve seen the rig count steadily rise, averaging almost 50 rigs in the latter half of 2017. Bakken production climbed back over the 1 MMb/d mark in February 2017 and rose another 100 Mb/d or so over the next 10 months — putting the play’s output close to its peak level three-plus years ago.

900-mile natural gas liquids pipeline proposed for Bakken -  Oneok recently announced plans for a 900-mile natural gas liquids pipeline that will accommodate increasing North Dakota production and play a role in reducing natural gas flaring. The proposed Elk Creek Pipeline will have the capacity to transport up to 240,000 barrels per day of natural gas liquids from a terminal near Sidney, Mont., to Bushton, Kan. The pipeline will run adjacent to Oneok’s existing Bakken NGL and Overland Pass pipelines, which are operating at full capacity.Terry Spencer, Oneok president and CEO, said in a statement that a new pipeline is “critical to meeting the needs of producers who are increasing production and are required to meet natural gas capture targets in the Williston Basin.” The $1.2 billion Elk Creek Pipeline will not cross North Dakota but will connect to existing pipelines in northwest North Dakota. It’s expected to be complete by the end of 2019, but still needs regulatory approvals from federal, state and local agencies. Justin Kringstad, director of the North Dakota Pipeline Authority, said additional pipelines are needed to transport growing volumes of natural gas liquids, such as ethane, propane and butane. Kringstad estimates that North Dakota produces more than 400,000 barrels of natural gas liquids per day. But due to insufficient pipeline capacity, about 40,000 to 60,000 barrels a day are transported by rail, he estimates. Under Kringstad’s forecast, North Dakota natural gas liquids production is projected to more than double by the 2030s to between 800,000 and 1 million barrels per day. Oneok said the Elk Creek Pipeline could be expanded to transport 400,000 barrels per day with additional pump facilities. The pipeline, which will cross Montana, Wyoming, Colorado and Kansas, also will transport natural gas liquids from the Rocky Mountain region. The Elk Creek Pipeline would transport Y-grade natural gas liquids to existing Oneok facilities in Kansas. That means the natural gas liquids are mixed together for transportation and later separated into products, such as ethane and propane. 

Radioactive Bakken waste buried in Montana, while ND has no licensed dump sites – — Montana's capacity for radioactive oilfield waste could be nearing expansion soon as regulators finalize rules for disposal. State officials are reviewing the license application for the Yellowstone Disposal landfill. It's a project backed by a North Dakota-based company, which plans to build on 2,600 acres of land 4.5 miles southeast of Sidney. Within that site would be a 55-acre special waste unit with a capacity of more than 5 million cubic yards. That area would be licensed to handle material with radioactivity levels up to 50 picocuries per gram, or pCi/g. Most of the waste comes to Montana from North Dakota, where the state's health department created rules specific to this kind of waste after scores of illegal dumps were found around the Bakken region. While North Dakota enacted those rules in 2016, no landfills have been licensed to operate under them. Companies have looked across the border to Montana, which still has no universal set of rules for that type of waste. Officials have been working on a draft set and may have a final version by the fall. Montana has licensed landfills on a case-by-case basis. If approved, the Yellowstone Disposal landfill would be the fourth facility licensed to handle that material. The state received praise for the move toward regulation, but eastern Montana residents have wondered why their area is the destination for radioactive oilfield waste. "Until Montana develops standards and protections, we're going to continue to be North Dakota's dumping ground," said

Upside Down - A Drill Down Report On Big Changes Coming To The Condensate Market --Through the first half of the 2010s, U.S. production of field condensate — the ultra-light liquid hydrocarbon that bridges the gap between superlight crude oil and heavier natural gas liquids like natural gasoline — more than doubled, peaking at about 640 Mb/d in early 2015. As condensate production ramped up in the Eagle Ford and other plays, conde prices were discounted to move the product, markets were developed to absorb the barrels, and infrastructure was built to move the conde to those markets. Then, in a dramatic turnaround that continued into 2017, condensate production fell by more than one-third, the new markets — splitters and exports — were starved for product, and conde prices flipped from discounts to premiums. But the market is shifting yet again. Conde production is once more on the rise, with the Eagle Ford rebounding and production rising in the star of the show in crude oil markets: the Permian. Today, we discuss highlights from RBN’s new Drill Down Report on the condensate market roller-coaster. In the half-century before the Shale Revolution, field condensates were a proverbial backwater of energy commodity markets, ignored and forgotten except by accountants who had to tabulate the few barrels produced. Most of those conde barrels never made it beyond a few miles from the lease — they were blended off into crude oil near the wellhead or at a nearby terminal. But with the Shale Revolution came expanded U.S. production of light and superlight crude (with API gravities of 40 to 50 degrees and 50 to 55 degrees, respectively) and their ultra-light cousin, field condensate, which has an API gravity of 55 to 70 or more. The Eagle Ford played (and continues to play) an outsized role; the South Texas production region for several years now has been churning out more than half of total U.S. output of field condensate.

Trump’s plan to open California coastal waters to new oil and gas drilling probably won’t go very far -  There are two things working against the Trump administration’s proposal to open up California coastal waters to new oil and gas drilling: state regulators and simple economics. California has powerful legal tools to head off new offshore development, and the price of oil offers little incentive to the energy industry to pursue expensive drilling projects next to a hostile state. “This just seems like grandstanding” by the Trump administration.  The Interior Department on Thursday released plans to open vast areas off the Atlantic and Pacific coasts to new oil and gas exploration and drilling through a five-year leasing program that would begin in 2019.  But there are myriad obstacles opponents can throw in front of the proposal, not to mention questions about whether the oil industry has much of an interest in California’s offshore reserves at a time when domestic oil production is at its highest level in decades. Under the plan, the federal government would offer 47 leases in U.S. waters on the outer continental shelf, including two each off the Northern, Central and Southern California coasts and one off Washington and Oregon. The governors of all three states issued a joint statement Thursday saying they would do whatever it takes to block new leasing off their shores, which include some of the nation’s most pristine coastlines.  In California, the state coastal commission also has the authority to review activities in federal waters to ensure they are consistent with the state’s coastal management plans.

Trump’s offshore drilling plans rattle coastal communities across Alaska --  For years, the debate over offshore drilling in Alaska has focused on the Arctic. But this week, the Trump administration proposed opening almost all Alaska waters to oil and gas leasing, from Southeast to the Bering Strait to the Canadian border. That includes areas that have never seen drilling, and it’s raising concerns in Alaska’s coastal communities. Linda Behnken heads up the Alaska Longline Fishermen’s Association in Sitka. Asked for her reaction when she first heard the Trump administration’s proposal, Behnken took a deep breath. “I probably better not say that on tape,” she said. And that pretty much sums up the response in many of Alaska’s coastal communities, where residents worry that oil and gas development could threaten commercial fisheries and subsistence resources. Behnken said she’s concerned that an oil spill anywhere in the Gulf of Alaska or Bering Sea could affect fish stocks all over the state. “It’s really deeply disturbing to see a willingness to place at risk…the renewable resources that are the cornerstone of the economy and people’s way of life,” she said. That’s a feeling echoed by Mark Vinsel, who runs the United Fishermen of Alaska, representing the state’s commercial fisheries. Vinsel said he’s glad the Trump administration excluded the North Aleutian Basin planning area, which borders Bristol Bay. But, he said, fishermen haven’t forgotten the 1989 Exxon Valdez oil spill. He said one major lesson from the spill was the need for robust community oversight, and if more waters are opened up to oil and gas development, UFA would want local input modeled after the citizens’ advisory councils in Prince William Sound and Cook Inlet.

US oil output to surpass record earlier than expected: EIA (Reuters) - U.S. crude oil production is expected to surpass 10 million barrels per day (bpd) next month, en route to an all-time record months ahead of previous forecasts, the U.S. Energy Information Administration said Tuesday. Production was expected to rise to an average 10.04 million bpd during the first quarter of this year, the agency said in a monthly report. The 10 million-bpd milestone previously had not been expected to be reached until the fourth quarter. That would match the all-time monthly record of 10.04 million bpd set in Nov. 1970; oil production declined after that as the United States increasingly relied on imported crude. That has changed in the last several years due to the shale revolution, but these projections surpass earlier expectations. The monthly average for February is expected to surpass 10 million bpd, said Tim Hess, the lead analyst for the report. That will be the first time production has reached that level since 1970. Only Russia and Saudi Arabia have produced more crude, hitting peak output of over 11 million bpd and about 10.7 million bpd respectively in recent years. The EIA revised its production growth forecast for 2018 sharply higher to 970,000 bpd from 780,000 bpd in its previous outlook. U.S. output will continue to rise in 2019, surpassing 11 million bpd by the end of that year, the EIA report said. The average production in 2019 will rise 580,000 bpd to 10.85 million bpd, the agency said in its first outlook for next year. “The major risk factors would be more global in nature, rather than anything specific domestically,” EIA acting administrator John Conti said on a conference call. “Domestically, things are lining up in terms of moderate prices and increased opportunity for production.” Much of the production growth will be concentrated in the Permian Basin, the largest U.S. oilfield stretching across Texas and New Mexico, said John Staub, the EIA director of the office of petroleum, natural gas and biofuels analysis. As a result, pipeline capacity constraints should not be a major limiting factor in starting new production, he said. Despite the rising production, oil prices edged higher on Tuesday, with U.S. crude touching its highest since December 2014, closing at $62.96 a barrel. 

Tax overhaul could hold unexpected downsides for oil companies - The cuts to corporate tax rates that headlined the recent tax overhaul won praise from oil majors, but other features of the new system could prove less favorable to the sector.A new provision that reduces the interest payments that companies can deduct from 100 percent of taxable income to 30 percent could "hit a fair number of those highly leveraged companies," according to Steve Marcus, a tax partner at Baker Botts LLP.The cut to corporate rates also carries a downside for companies with "tax assets," or deductions on future earnings stemming from past losses. And companies will only be able to offset 80 percent of their annual earnings, down from 100 percent before the tax law took effect.Other changes to the taxation of costs associated with exploration could favor shale drillers over conventional oil and gas producers.Such provisions have injected uncertainty into the fourth-quarter earnings reports slated for later this month. "We're going to have to see what companies say in their earnings call to get a sense of how they see this new law," said Bloomberg Intelligence analyst Andrew Silverman. "In some cases, it may be surprising"

Oil lobby wants pipelines in Trump’s infrastructure push | TheHill: The oil industry wants President Trump and Congress's infrastructure plan to include policies boosting oil and natural gas pipelines and making them easier to build. American Petroleum Institute (API) head Jack Gerard told policymakers and reporters on Tuesday that the group is making a push to jump on the bipartisan excitement for a promised infrastructure bill. The oil lobby group, which represents numerous parts of the industry, has long been looking for regulatory and permitting changes to simplify and speed up pipeline decisions.“We’re not looking for a government program, we’re not looking for funding in that way,” Gerard said after delivering his annual “State of American Energy” speech, which he uses to set the group’s annual agenda. “We’re merely looking for certainty and predictability in things like permitting processes and the ability to get the requisite permit necessary to build infrastructure.” The oil sector also relies on railroads and maritime transportation to move products, but pipelines are usually the cheapest and safest option when they’re available. The API’s push comes after years of high-profile protests of pipelines by environmentalists, fueled by major projects like the Keystone XL pipeline and the Dakota Access pipeline. Combined with increased local opposition to pipelines, the oil industry is having more difficulty than it has before in developing its infrastructure. API wants reforms at the Federal Energy Regulatory Commission and elsewhere to reduce opportunities to block pipelines and to streamline the permitting process, among other changes. 

Oil lobby aims to defend NAFTA in 2018 - Retaining trade protections through the North American Free Trade Agreement and enhancing regulatory "certainty and predictability" top the American Petroleum Institute's wish list for 2018 as the oil and gas industry sets priorities for a second year of Republican control in Washington.Speaking at an annual "state of the industry" event, API President and CEO Jack Gerard said yesterday that North American energy companies have prospered under the liberal trade structure provided by NAFTA, and holding onto that framework is the lobbying group's top policy goal."NAFTA makes energy more affordable and improves opportunities for U.S. companies in Canada and Mexico," Gerard told an audience of industry executives. "If we can modernize NAFTA, we should, and if not, we should leave it alone."Gerard pointed to an integrated supply chain for petroleum products as an example of NAFTA's effectiveness. Oil might be produced in Mexico, shipped to Houston for refining and then shipped back south of the border to Mexican markets. Oil sands crude from Canada is similarly shipped to the Lower 48 for refining in Gulf Coast facilities before sale. Ensuring that those cross-border flows continue without new regulation is important to the North American energy marketplace, he said.  The policy worry comes as the White House continues trade talks on the future of the North American pact. Gerard said API has engaged extensively with Congress and the administration on the issue, with a message that NAFTA has served the energy industry well and should not be abandoned (Energywire, Nov. 17, 2017). The existing NAFTA, established in 1992, makes little mention of energy, in part because at the time Mexico's energy industry was under government control and not open to free trade. Reforms of the past few years have led to an opening of the industry to private players throughout the oil and gas value chain, and a surge of new investment by U.S. energy companies in projects south of the border. Gerard suggested that development of new oil and gas leases and other planned projects could stall out without a free-trade agreement in place.

Rail shipments of Canadian oil to US seen rising over 60 percent - Canadian crude shipments to the United States by rail could rise more than 60 percent this year on demand by Gulf Coast refiners for the heavy crudes and the wide differential between Canadian grades and the U.S. benchmark. The rail shipments could reach as much as 350,000 barrels per day (bpd) by year end and average some 400,000 bpd in 2019, estimated analysts at Tudor, Pickering, Holt & Co. Last year, the shipments averaged 130,000 bpd, according to U.S. government data. Canadian crudes have been replacing heavy oil from Venezuela and Mexico at the Gulf Coast, due to production declines in both countries. "Canadian barrels are a great fit for Gulf Coast refiners right now. It's just a matter of getting those barrels down here," said a Gulf Coast trader. Western Canada Select for February delivery traded Thursday at $25.05 per barrel below West Texas Intermediate, the widest since December 2014. Including transportation costs of between $11 and $14 a barrel to ship the crude by rail to the Gulf Coast, it is affordable to more refiners, said analysts and traders. "Based on where the differentials are today, as an oil producer, you're incentivized to ship product by rail to the Gulf Coast," said Matt Murphy, a Tudor Pickering researcher. The current differential is driven in part by increased supplies. Canadian crude oil production averaged 4.2 million barrels per day in 2017, according to National Energy Board estimates, up from 3.9 million bpd in 2016. Production is expected to rise further this year as new projects like Suncor Energy's 190,000 bpd Fort Hills oil sands plant expand operations. However, the increase in shipments will be capped by railroad operators' willingness to accept spot deliveries. Companies such as Canadian National Railway, have insisted on long-term crude-by-rail commitments before providing more rail capacity.

Ineos 'misled' public over fracking in Sherwood Forest -- One of Britain’s top fracking firms has been accused of misleading the public over its intent to explore for shale gas in a protected area of ancient woodland in Sherwood Forest.Ineos, a UK-based petrochemicals firm, has said publicly it would exclude sensitive areas of the legendary home of Robin Hood from its seismic surveys.However, documents released under freedom of information rules reveal the company privately later sought and won permission from authorities to survey those areas, which involves laying small explosive charges underground. Guy Shrubsole, a campaigner at Friends of the Earth, the group that obtained the documents, said: “It’s clear that Ineos will stop at nothing to explore for shale gas, even in Sherwood Forest, home of Robin Hood and one of our most cherished woodlands. “They have misled everyone, promising publicly to spare the most ecologically sensitive parts of Sherwood Forest from their intrusive seismic surveys – while negotiating behind closed doors to press ahead with them.” Ineos is one of the four main players exploring for oil and gas trapped below ground in shale rock across the country. The firm has taken a robust and sometimes controversial approach to exploration, winning and defending an injunction against anti-fracking campaigners, bypassing tardy councils and appealing to authorities to force the National Trust to allow it access to their land.In planning documents submitted to Nottinghamshire county council in May, Ineos said it would not undertake a seismic survey in a part of the forest known as a site of special scientific interest (SSSI), one of 4,000 of the most important nature sites in England. But just over a month later, the company sought a licence agreement with the Forestry Commission that included maps showing parts of the Birklands SSSI would be within its survey areas.

Petrochemicals giant Ineos unveils legal challenge to Scottish fracking ban - A petrochemicals giant has announced it is taking SNP ministers to court in the hope of overturning their “unlawful” fracking ban in Scotland.   Ineos, the operators of the huge Grangemouth petrochemical plant, which is responsible for four per cent of Scotland’s GDP, said it has lodged a petition for judicial review at the Court of Session.The firm and business partner Reach argued that Scotland's highest civil court should find there was a "failure to adhere to proper statutory process and a misuse of ministerial power".Tom Pickering, its operations director, said the company had “no option” but to initiate legal action after £50 million it had spent on acquiring two fracking licenses and planning permissions had been “rendered worthless” without the payment of any compensation.The SNP administration now faces a protracted legal fight and a potential outlay of millions of pounds of taxpayers’ money.The ban was announced in October following a two-year moratorium during which Scottish minsters commissioned a series of reports about the controversial shale gas extraction technique.Although energy policy is reserved to Westminster, their control over the planning system means they can block any application to frack.Paul Wheelhouse, the SNP Energy Minister, sought to justify the ban by arguing the move had overwhelming public support, fracking would add only 0.1 per cent to Scotland’s GDP and it would be concentrated around densely populated areas in central Scotland. But Ineos warned Scotland’s communities will miss out a billion pounds of investment and 3,100 jobs over the next two decades as the oil industry declines, with England reaping the benefits.

Europe to Resume Role as Global Gas Sink - Europe will resume its role as a global gas sink from 2018-2020, absorbing surplus volumes of global LNG as supply growth outstrips demand.That is the view of oil and gas analysts at BMI Research, who stated in a recent report that the region’s ‘large and liquidly traded’ gas hubs, strong pipeline interconnectivity, extensive regasification capacity, substantial volumes of flexible supply and price responsive demand will enable Europe to adopt this position.BMI analysts highlighted that Europe's role in rebalancing the LNG market was previously established from 2009-2011, when it absorbed volumes that had been backed out of the US market by the rise in shale and released them out to Asia following the Fukushima nuclear incident.For 2018, BMI analysts forecast a net LNG import growth of 9.3 billion cubic metres for the EU28 + Turkey, compared to 8.5bcm in 2017. Growth last year was not a result of a global LNG surplus, the analysts said.“The growth in 2017 was largely the result of higher gas demand in Europe, due to a range of factors including a strong pickup in economic activity, rising coal prices, closure of the Rough storage facility in the UK, nuclear outages in France and low hydropower generation in Southern Europe,” BMI analysts stated in a report sent to Rigzone.“It was not the result of a global LNG surplus, with the LNG market remaining tight, driven by a surge in emerging market demand (largely China) and delays in the start-up and commissioning of various liquefaction plants,” the analysts added.

Europe Becomes Victim Of Russia's Newest Oil Strategy -- Higher shipments of Russian crude oil to China may saddle European importers with a fatter bill, an industry consultancy warned at the end of last year, noting the latest stage of Russia’s Eastern pivot: the launch of the expanded East Siberia-Pacific Ocean pipeline that would lift Urals crude supply to China twofold, to 30 million tons annually. FGE said in a note quoted by Bloomberg that Russia will start moving more Urals eastward right after the launch of the pipeline extension, at a rate of 160,000 bpd. The overall increase of Russian crude shipments to China, according to the consultancy, could be around 200,000 bpd. This means less oil for Europe, which is Russia’s number-one oil client. This only highlights the significance of Moscow’s Asian pivot amid lingering European sanctions following the 2014 annexation of Crimea and Russia’s involvement in separatist conflicts in the Ukraine. In 2016, Russia exported an average 3.7 million barrels daily to European countries, compared with less than a million bpd to China, according to figures from the Energy Information Administration (EIA). In percentage figures, Europe accounted for 70 percent of Russia’s 2016 crude oil exports, while the share of China was just 18 percent. Yet this is changing fast, as this chart from the EIA shows: The rise in Chinese exports has been quite steep since 2014: as of November last year, Russia shipped 1.3 million barrels of oil daily to China. All the latest signs point to further growth. However, exactly how much this would hurt European buyers is unclear.  The Urals is currently trading at a discount of about $4 to Brent crude but WTI’s discount to the international benchmark is $6 a barrel. In other words, Russia’s diverting of crude oil from Europe to China could be an opportunity for U.S. exporters as long as they can keep their transport costs low enough. Europe will probably be grateful for the diversification. Over the long term, things are even more uncertain.  Clearly, Russia has prioritized its relationship with China: In addition to the ESPO expansion, Gazprom is on track to complete the Power of Siberia gas pipeline by 2019. The 2,500-km mammoth of a pipeline will pump 1.3 trillion cu ft of gas to China annually.

Analysis: Venezuela's oil production plummets amid chaos and industry defections - Staggering debt, crumbling equipment and infrastructure, and mass worker resignations, have set back Venezuela's oil industry decades, with experts saying they see scant prospects of any turnaround. Crude output of 1.70 million b/d lowest since strike in 2003: Platts survey Lack of safety protocols could cause 'catastrophic' refinery accident: analyst Traders say PDVSA's moves in the market signal company distress Venezuelan crude output plummeted in December to 1.70 million b/d, according to the latest S&P Global Platts OPEC survey released Monday. The output level represented a decline of 100,000 b/d from November and a low not seen for more than 15 years, when a major strike from December 2002 to February 2003 hobbled production. Not counting strike-affected months, Venezuela's production was last this low in August 1989, more than 28 years ago. Sources in the country say new PDVSA President Manuel Quevedo, a brigadier general in the National Guard who was also named the country's oil minister in November, sacked several high-level company officials in a so-called corruption purge at the end of the year and these people have yet to be replaced. PDVSA is also facing internal protests and widespread resignations of refinery personnel who fear a serious accident, since security protocols are not being followed, added the sources, who spoke on condition of anonymity. Several market watchers have put Venezuela top of their geopolitical risk lists, with the economic crisis and PDVSA woes seen likely to continue, if not accelerate, amid threats of further US sanctions. "The Venezuelan economy could collapse at any moment," said Torbjorn Kjus, oil market analyst with Norway's DNB Bank. "We could envisage scenarios spanning from outright civil war to a state coup, to a general strike or even just one more year of strangulating slow death for the economy. Neither of these outcomes bodes well for Venezuelan oil production."

Venezuela Oil Production Plummets To 28 Year Low Amid Chaos, Corruption - Staggering debt, crumbling equipment and infrastructure, and mass worker resignations, have set back Venezuela's oil industry decades, with experts saying they see scant prospects of any turnaround. Venezuelan crude output plummeted in December to 1.70 million b/d, according to the latest S&P Global Platts OPEC survey released Monday. The output level represented a decline of 100,000 b/d from November and a low not seen for more than 15 years, when a major strike from December 2002 to February 2003 hobbled production. Not counting strike-affected months, Venezuela's production was last this low in August 1989, more than 28 years ago. Sources in the country say new PDVSA President Manuel Quevedo, a brigadier general in the National Guard who was also named the country's oil minister in November, sacked several high-level company officials in a so-called corruption purge at the end of the year and these people have yet to be replaced. PDVSA is also facing internal protests and widespread resignations of refinery personnel who fear a serious accident, since security protocols are not being followed, added the sources, who spoke on condition of anonymity. Several market watchers have put Venezuela top of their geopolitical risk lists, with the economic crisis and PDVSA woes seen likely to continue, if not accelerate, amid threats of further US sanctions.   Service company Baker Hughes, which tracks rig counts internationally, reported this week that Venezuela had 50 rigs drilling in December, up from 39 in October, which had been the fewest since 2003 during the worker strike. Einstein Millan, an independent Venezuela-based analyst who formerly worked for PDVSA, estimated that the company would need 100 to 110 active rigs to reverse its production decline, let alone achieve a presidential directive of increasing oil output by 1 million b/d. The rig pullback and accelerating field decline rates will cause Venezuelan oil production to fall by another 300,000 to 400,000 b/d in 2018, analysts with Washington-based Rapidan Energy forecast. The scarcity of rigs is only part of Venezuela's problem. There is evidence of advanced stages of corrosion and deterioration in much of the country's operational infrastructure, including pipelines, gas compression plants, crude upgraders, storage facilities and refineries.

3 Million Barrels Per Day Could Go Offline In 2018 -- Venezuela’s oil production has been falling for years, but 2018 could mark a new, darker chapter for the South American nation.Late last year, Venezuela’s government defaulted on millions of dollars’ worth of debt, with larger and more significant payments maturing this year. The ability to service billions in debt payments this year is almost certainly out of the question, although the size of the default this year remains to be seen.The cash crunch that Venezuela has suffered through has worsened substantially over time, and the country’s oil sector has paid the price. Venezuela produced over 3.5 million barrels per day (mb/d) in the late 1990s, but output has been falling for much of the past two decades, although often at a gradual pace. The declines really started to accelerate in the past two years. But 2018 could be even worse. A year ago, Venezuela produced between 2.0 and 2.2 mb/d, depending on whose data one uses. By the end of 2017, production really began to plunge, dipping to just 1.7 mb/d in December, according to S&P Global Platts. That is the lowest figure since the 1980s, aside from a brief period in 2003 when a strike knocked output offline.Worryingly for Venezuela, the monthly declines are accelerating. A year ago, monthly declines typically ran somewhere between 10,000 bpd and 30,000 bpd. By the third quarter, those monthly dips ballooned to around 40,000 bpd, month-on-month. But Between November and December, output fell by massive 100,000 bpd, according to S&P Global Platts. Argus Media says the losses are even larger than that, with production falling by 151,000 bpd in December to 1.686 mb/d. The scary part is that the situation is probably only going to grow worse. Venezuelan President Nicolas Maduro removed the head of PDVSA in November, putting a general in charge at the state-owned oil company. The move was probably made to placate the military, but it also jeopardized the operations of the oil company. S&P Global Platts says that the general in charge, Manuel Quevedo, purged the company of officials at the end of the year. The move, ostensibly to root out corruption, will likely hollow out some of the technical talent that helps keep oil operations running, such as they are.

ExxonMobil sees sixth 'home run' oil discovery in Guyana - ExxonMobil's sixth "home run" oil find on the Stabroek block offshore Guyana in less than three years may not only push estimated recoverable reserves notably higher, but could further whittle down breakeven costs, analysts said Friday. The Ranger exploration well, announced by ExxonMobil Friday, also opens a new part of the frontier Guyana play, located about 130 miles offshore the South American country, where 3.2 billion boe of recoverable oil equivalent has been found in ExxonMobil's five prior discoveries -- Liza, Payara, Liza Deep, Snoek and Turbot. Ranger will add to the total, Hess Corp, a 30% partner in the Stabroek block, said separately, without providing an estimate. ExxonMobil holds 45% of Stabroek, and CNOOC Nexen the remaining 25%. ExxonMobil and Hess could not be reached for comment, but analysts agree that Stabroek appears to hold much more potential. "What is significant is [the] size" of the Stabroek block, which is 6.6 million acres, or 26,800 square kilometers, PIRA Energy analyst Rene Santos said. "This is equivalent to over 1,000 Gulf of Mexico Outer Continental Shelf blocks."

OPEC's Oil Cuts Claim a Victim as Supertanker Earnings Crash -- OPEC’s strategy to end a worldwide crude glut is causing havoc for a vital link in the oil industry’s supply chain: the fleet of supertankers that shuttle fuel between continents.The ships’ average earnings plunged last year by more than half to levels not seen since 2009 and far below what shipping analysts had been predicting. Now, the producer group’s extension of output cuts throughout 2018 is adding to the downturn.“These cuts reduced the number of cargoes from the Middle East to Asia significantly at a time when a large amount of newly-built vessels are being delivered,” Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said in a phone interview. Oil supertankers, known in the industry as very large crude carriers, or VLCCs, can measure a quarter of a mile in length and haul about 2 million barrels of crude. Since the beginning of 2017, the Organization of Petroleum Exporting Countries and its allies have sought to reduce oil production by almost 1.8 million barrels a day, curbing exports and business for tankers on key trade routes. The group in June plans to revisit the cuts, which currently run through the end of the year.Crude exports from OPEC’s Persian Gulf members last month dropped below 18 million barrels a day for the first time since August, tanker-tracking data compiled by Bloomberg show. In particular, observed shipments declined to China and Japan from Saudi Arabia, Iran and the United Arab Emirates.Meanwhile, the global supertanker fleet is expected to expand by 4 percent this year, after growing 5.3 percent last year and 7.4 percent in 2016, Clarkson Research Services Ltd. estimates. Shipping rates have tumbled in recent months, a time of year when they often strengthen.“If OPEC lifts the output cut in its revision in June, the rates would improve as more oil will be pumped to the market,” said Jakob. “But if it doesn’t then the rates would suffer the whole year.”

India's 2017 oil demand growth posts lowest gain since 2013  (Reuters) - Indian oil consumption in 2017 grew at its slowest in four years, according to government statistics, hit by the government’s demonetisation move and a tax increase that knocked the gain in fuel use back to a modest 2.3 percent. The low growth also coincided with another year of weak, albeit improving, new vehicle sales. Last year’s oil demand was held back “by headwinds from demonetisation and a new goods and services tax,” U.S. bank Morgan Stanley said in a note to clients. India imports almost all of its oil, shipping in around 4.2 million barrels per day (bpd) of crude in 2017, according to trade flow data in Thomson Reuters Eikon. “Gasoline demand rose 7.4 percent, or 41,000 barrels per day, down from 12 percent growth in 2016 as demand was affected by demonetisation at the start of the year,” the bank said. India in late 2016 pulled all 500- and 1,000-rupee notes out of circulation, crimping retail and wholesale markets. “The demonetization exercise hit consumption, particularly in the first half of 2017. We are likely to see better growth this year,” said Sukrit Vijayakar, director at Indian energy consultancy Trifecta. India also saw some structural demand changes that affected the use of refined oil products. A government push for household to use more liquefied petroleum gas (LPG) has India challenging China as the world’s top LPG importer. This has come at the cost of a straight 15-month decline in jet fuel and kerosene demand in India, Morgan Stanley said. Also, “naphtha demand ... was down 8 percent for 2017 as a whole, possibly driven by more LPG use in petrochemicals,” it said. 

China gas heating crisis leaves fertilizer makers in the cold (Reuters) - China’s campaign to heat millions of homes this winter by natural gas has left fertilizer producers short of supplies and profits, an industry association said, with urea and ammonia plants halving their operating rates from a year ago. The feedstock crunch has tightened supplies and boosted prices of fertilizer components in the world’s top agriculture market, and the trouble may carry into spring planting. Chinese fertilizer and chemical industry associations are considering an appeal to the government to lower natural gas prices once winter is past to allay the effects of the supply shortages, according to two officials from the groups. “We are losing lots of money every day,” said Huo, a manager at a major gas-based urea and compound fertilizer producer in northwestern China. Huo declined to give his full name or identify his company due to the sensitivity of the issue. His company had to halt production of urea and synthetic ammonia last month to help ensure supplies of natural gas to households in the north. “Prices of urea and synthetic ammonia went up significantly ... We need to buy these raw materials now,” Huo said. “We also still need to pay maintenance fees for the machines and salaries for the workers. The loss is severe.” Gas-based ammonia and urea plants usually limit operations during winter and ramp up when gas supplies are ample, but this winter, shortages have been worse than expected. “In previous years, we were also asked to limit usage but suspension was incremental ... This year, we were asked to basically shut all lines,” Huo said. Operating rates at gas-based nitrogen fertilizer plants have plunged to just 15 percent, down from about 31 percent at the same time last year, data from the China Nitrogen Fertilizer Industry Association (CNFIA) showed. Chinese urea prices as of Wednesday were at 2,044 yuan ($314.11) per tonne, the highest in four years. Synthetic ammonia has jumped 8 percent to 3,242 yuan a tonne in the past 30 days, according to Zhuochuang, a commodity consultancy based in Shandong province. “The supply gap in natural gas is hitting gas-based urea producers harder this year. Many plants may not reopen once they halt production,” 

Oil tanker burning off China's coast at risk of exploding - An Iranian oil tanker that caught fire after colliding with a freighter off China's east coast is at risk of exploding and sinking, Chinese state media reported Monday as authorities from three countries struggled to find its 32 missing crew members and contain oil spewing from the blazing wreck. State broadcaster China Central Television, citing Chinese officials, said none of the 30 Iranians and two Bangladeshis who have been missing since the collision late Saturday have been found as of 8 a.m. Monday. Meanwhile, search and cleanup efforts have been hampered by fierce fires and poisonous gases that have completely consumed the tanker and surrounding waters, CCTV reported. The Panama-registered tanker Sanchi was sailing from Iran to South Korea when it collided late Saturday with the Hong Kong-registered freighter CF Crystal in the East China Sea, 257 kilometers (160 miles) off the coast of Shanghai, China's Ministry of Transport said. China, South Korea and the U.S. have sent ships and planes to search for Sanchi's crew, all of whom remain missing. The U.S. Navy, which sent a P-8A aircraft from Okinawa, Japan, to aid the search, said late Sunday that none of the missing crew had been found. All 21 crew members of the Crystal, which was carrying grain from the United States to China, were rescued, the Chinese ministry said. The Crystal's crew members were all Chinese nationals. It wasn't immediately clear what caused the collision. State-run China Central Television reported Sunday evening that the tanker was still floating and burning, and that oil was visible in the water. Photos distributed by the South Korean government showed the tanker on fire and shrouded in thick black smoke.

Fears of Environmental Disaster After Oil Tanker Collision - The oil tanker that set fire after colliding with a freight ship off the east coast of China may explode and sink , possibly putting the environment and human health at risk, experts warned. The Iranian tanker was carrying 150,000 tons, or nearly 1 million barrels, of condensate crude oil when it collided with the CF Crystal on Saturday. Condensate is an ultra-light hydrocarbon that is highly toxic and much more explosive than regular crude oil. The size of the oil spill from the ship and the extent of the environmental harm are currently unknown but the disaster has the potential to be the worst since the ABT Summer spill off the Angolan coast in 1991, Reuters noted. Chinese authorities have since dispatched three cleaning boats to the site. Search and rescue are also underway for the 32 crew members that have gone missing after the collision in the mouth of the Yangtze River Delta. "First and foremost, Greenpeace hopes that the search and rescue operations of the Chinese coast guard go smoothly and the 32 missing crew will be found," said Greenpeace East Asia campaigner Rashid Kang. But the environmental organization is also concerned about the potential environmental damage that could be caused by the release of the oil on board.  "We are worried about the potential environmental impact that could be caused by leakage from the vessel that was holding almost 42 million gallons of crude oil. A clean up procedure is already underway and we will be monitoring its progress," Kang said.   As the BBC reported, condensate is both color- and odor-less, making it hard to detect, contain and clean up compared to heavy crudes.  Additionally, condensate is "not like crude, which does break down under natural microbial action; this stuff actually kills the microbes that break the oil down," Simon Boxall, of the National Oceanography Centre at the University of Southampton, explained to the news service.

A giant oil tanker is on fire and could explode in the East China Sea -- Beating rains, fire and 10-foot waves are making it impossible for rescue crew to reach the Sanchi, an oil tanker on fire in the East China Sea.Three days after it collided with another ship off the coast of Shanghai, the tanker is still ablaze. At least 30 Iranians and two Bangladeshi citizens were aboard the tanker when the collision occurred. One body has been recovered but not publicly identified. Rescue crews said there were no signs of survivors.The South Korean Coast Guard told Reuters they had to stay three miles from the tanker.Since the crash, the Sanchi has been billowing thick plumes of black smoke into the air. Unless the fire can be brought under control, officials worry that the ship might explode and sink, releasing its 1 million barrels of oil into the water. The resulting spill would be about three times as big as the Exxon Valdez spill of 1989, one of the worst environmental disasters in history. It would double what the Prestige oil tanker released when it sank off the coast of Spain in 2002. That accident damaged beaches in France, Spain and Portugal, and led to the closure of one of Spain's richest fishing areas. The Sanchi was transporting oil from Iran to South Korea on Saturday when it ran into the CF Crystal, a Hong Kong-registered ship carrying grain from the United States. The crash occurred about 160 miles off the coast of Shanghai and near the mouth of the Yangtze River. The cause remains unknown. Experts are especially worried because the ship is carrying condensate, an ultralight version of crude oil. Condensate is highly toxic and even more combustible than regular crude oil. It also is nearly colorless and odorless, which makes it difficult to detect.

East China Sea oil tanker burns for third day as winds, high waves lash rescuers (Reuters) - Strong winds, high waves and toxic gases are hindering dozens of rescue boats struggling to locate missing sailors from a stricken oil tanker in the East China Sea and to extinguish a fire that has burned for the past three days on the ship. The poor conditions, with rain and waves as high as 3 meters (10 feet), frustrated efforts to tame the fire and search for the 31 remaining tanker crew members, China’s Ministry of Transport said in a statement on Tuesday. The flames were forcing the South Korean Coast Guard’s search and rescue team to stay as far as 3 miles (4.8 km) away from the tanker, two South Korean officials told Reuters. The Chinese government said late on Tuesday it had not found a “large-scale” oil leak, and the ultra light oil, known as condensate, was burning off or evaporating so quickly it would leave little residue - less than 1 percent - within five hours of a spill. That reduces the chances of a crude-style oil slick. Still, condensate is highly volatile when exposed to air and water and concerns were growing the tanker could explode and sink while a flotilla of 13 search and rescue vessels comb a 900-square-nautical-mile (3,100 sq km) area for the crew. The tanker Sanchi, run by Iran’s top oil shipping operator, National Iranian Tanker Co, collided on Saturday with the CF Crystal (IMO:9497050), carrying grain from the United States, about 160 nautical miles (300 km) off China’s coast near Shanghai and the mouth of the Yangtze River Delta. The Sanchi was carrying 136,000 tonnes of condensate to South Korea, equivalent to about 1 million barrels and worth about $60 million. Chinese state media CCTV showed footage on Monday of boats dousing the flames with water as plumes of thick dark smoke continued to billow from the tanker. The size of the oil spill from the ship and the extent of the environmental harm were not known, but the disaster has the potential to be the worst since 1991 when 260,000 tonnes of oil leaked off the Angolan coast. Satellite imagery of the ship showed the blaze has weakened since the weekend, although the strong winds are dragging the tanker away from the Chinese coast, according to Greenpeace. Between Sunday and Monday, the floating inferno traveled some 50 kilometers (31 miles) south east, according to Rashid Kang, campaigner at Greenpeace East Asia. Another major concern is damage to the region’s rich fish reserves. The Zhoushan fishing ground where the crash occurred is known as one of the biggest in the East China Sea, particularly for mackerel and croaker, according to Greenpeace. 

Iranian tanker accident: Impact on shipping and oil markets – Platts Commodities Spotlight podcast - An Iranian tanker carrying condensate bound for South Korea was involved in a fiery accident in the East China Sea. In this podcast, Shipping associate editor Wanda Wang and Oil analyst Alexander Yap examine the incident's impact on tanker, condensate and naphtha markets.

Analysis: South Korea may seek prompt naphtha after condensate cargo collision - Ultra-light crude and naphtha sellers in Asia may focus on South Korea for potential sale of prompt oil supplies after a crude tanker carrying close to a million barrels of Iranian condensate caught fire over the weekend, failing to reach the country's petrochemical complex in Daesan as planned, market sources said Monday. An Iranian tanker, carrying around 960,000 barrels of South Pars condensate, caught fire late Saturday after a collision with another vessel off in the East China Sea. The cargo was purchased by South Korea's Hanwha Total Petrochemical and it was scheduled for delivery to Daesan on January 8-10. Hanwha Total said the company will implement its own contingency plan as it has sufficient ultra-light crude in storage units, but may need to look for some alternate feedstocks in the regional spot market for prompt delivery. "We have our contingency plan for backup. We have an alternative fleet and backup storage to replace it," a spokesperson at Hanwha Total told S&P Global Platts. "Still, we might need to look around [in the regional spot] markets to see if any prompt [condensate or naphtha] is available ... it's probably best to buy straight-run naphtha because regional condensate supply is very tight," a company trade source said. Industry sources said Hanwha Total may scramble to find naphtha for the typically busy winter season as plants typically run close to their maximum capacities during early first quarter.

EIA's Short-Term Energy Outlook -- January 9, 2018 -- Oil markets:

  • EIA estimates that OPEC countries cut crude oil production output in 2017, but those cuts were offset by increased production in non-OPEC countries, especially the United States and Canada
  • EIA forecasts U.S. crude oil production to grow by 980,000 barrels per day in 2018, and we expect most of that growth to come from tight rock formations in Texas and North Dakota
  • led by U.S. production, particularly in the Permian Basin, and new oil sands projects in Canada, non-OPEC production is forecast to continue growing through the end of 2019. We expect to see growth near 2.0 million barrels per day in 2018 and 1.3 million barrels per day in 2019
  • EIA expects Brent crude oil prices to remain near $60 per barrel over the next two years
  • EIA estimates that U.S. crude oil production averaged 9.9 million barrels per day in December, which would be the fourth-highest level of monthly production on record, behind only the final three months of 1970
  • EIA raised its estimate for December production from its previous estimate as reported survey data on October production came in significantly higher than expected. The incoming data contributed to a reassessment of our previous views on well productivity, particularly in the Eagle Ford, Bakken, and Permian regions.
  • EIA forecasts U.S. motor gasoline consumption in 2018 to total about 9.3 million barrels per day, which would top the record for highest annual consumption set in 2016 [making America great again]
  • EIA is expecting a strong increase in the use of ethane in 2018 and 2019 as several new petrochemical facilities on the U.S. Gulf Coast that use ethane as a feedstock open
  • EIA forecasts LNG exports to increase to 3 billion cubic feet per day in 2018. The sharp increase from 2017’s level of 1.9 billion cubic feet per day is the result of infrastructure projects in several states, including Maryland, Georgia, and Texas, coming online in 2018
  • the forecast for natural gas exports to Mexico anticipates that growth will continue in the wake their reforms to the energy market and our increased capacity from new export infrastructure in the United States
  • the electric power sector reduced its use of natural gas in 2017. EIA attributes that shift to competitive coal prices and higher-than-average hydroelectric generation, which was part of increased competition from renewables as a whole
  • EIA is forecasting reduced U.S. coal production in 2018, retreating by 2% following a 6% increase in 2017. We expect to see the biggest production decreases in the Appalachia region, which is currently forecast to dip by 25 million short tons
  • EIA is forecasting 2019 to be the first year wind overtakes hydropower as the leading source of renewable electricity generation, due to a combination of hydro’s cyclical nature and the continued growth in wind capacity

Hedge funds build record long position in heating oil and diesel: Kemp - Hedge funds have built record bullish positions in the middle distillates used as heating oil and diesel fuel – even as they become more cautious about the outlook for crude following a blistering rally.Hedge funds and other money managers had amassed a record net long position of 92 million barrels in U.S. heating oil futures and options and 137 million barrels in European gasoil by Jan. 2.Portfolio managers boosted their net long position in heating oil by almost 10 million barrels and their net long position in gasoil by 0.8 million tonnes or about 6 million barrels.There were few changes in other parts of the petroleum complex, according to position data published by regulators and exchanges (http://tmsnrt.rs/2D5Onkn) Net long positions in gasoline rose by 2 million barrels to 81 million. .Growing bullishness towards mid-distillates masked a more wary approach to crude and other refined fuels in the week to Jan. 2.Portfolio managers have solid fundamental reasons to think middle distillate prices and refining margins will increase further in 2018.Distillate consumption, which is closely linked to industrial activity and freight movements, is growing rapidly as a result of the synchronised global economic expansion and faster growth in world trade.At the same time, refiners are struggling to make enough to meet demand. U.S. distillate stocks fell by 24 million barrels over the course of 2017, the largest annual drawdown for at least a decade.Exceptionally cold weather across the major population centres of the central and eastern United States since the start of the year has boosted consumption of heating oil and threatens to draw down stocks even further.The most intense cold is concentrated in parts of the northern and northeastern United States that rely most heavily on heating oil to warm homes and offices and as an auxiliary fuel for power stations.The winter heating season has not yet reached the half-way point in the United States and already heating demand has been much higher than in the two previous years, though still slightly below the long-term average. Even before the recent burst of cold weather, U.S. stocks of distillate fuel oil had fallen below the 10-year seasonal average.

NYMEX Feb natural gas up 6.5 cents at $2.860/MMBtu as high storage draw seen - NYMEX February natural gas futures rose in overnight US trading as the recent cold supported expectations of a record storage draw. At 7:00 am EST (1200 GMT) the contract was 6.5 cents higher at $2.860/MMBtu. Freezing weather through and coming off the New Year's holiday weekend drove total demand to an all-time high estimated at 150.7 Bcf on January 1, surpassing the previous single-day record set in 2014, the US Energy Information Administration said in its latest Natural Gas Weekly Update. The National Weather Service's six-to-10-day forecast shows a large swath of below-average temperatures across most of the Midwest and south-central US flanked by bands of average temperatures enveloping nearly the entire Eastern Seaboard and parts of the west-central US, as above-average temperatures hold over the entire West and fringes of the west-central US In the eight-to-14-day forecast, above-average temperatures overtake nearly the entire country.

Oil prices rise, reclaim level near 3-year highs - Oil prices finished higher on Monday, adding to last week's rally as traders welcomed data showing a weekly decline in the number of U.S. drilling rigs. February West Texas Intermediate crude gained 29 cents, or 0.5%, to settle at $61.73 a barrel on the New York Mercantile Exchange, recouping some of its 0.9% loss on Friday. March Brent crude added 16 cents, or 0.2%, to $67.78 after a 0.7% decline Friday. Even with the slides in Friday's session, WTI and Brent still scored weekly gains of 1.7% and 1.1%, respectively, boosted by a seventh-straight weekly drop in U.S. crude supplies and ongoing concerns over unrest in Iran. Analysts said Friday's pullback was only natural after such a strong rally that had sent both contracts to their highest level since December 2014 on Thursday, above $62 for WTI and above $68 for Brent. Data out on Friday further added to the overall upbeat assessment of the oil market. Weekly data from Baker Hughes (BHGE) showed the number of active U.S. rigs drilling for oil unexpectedly fell by five to 742 last week. That indicates production could slow down, which usually is a positive factor for oil prices. Stephen Brennock, oil analyst at PVM Oil Associates, said that despite its "air of invincibility", U.S. shale oil is now facing several headwinds that could curtail production. "Shareholders have grown tired of the negative cash flow model that has become the norm among shale players," he said in a note. "Drillers are now coming under pressure to prioritize profit margins over supply growth. Accordingly, producers must balance higher production and shareholder returns which in turn may put the brakes on spending plans," he added. Against this backdrop of lower U.S. oil supplies and geopolitical concerns, speculative financial investors continue to bet on further price rises, with net long Brent positions climbing to a record high last week, according to Commerzbank. This "increases the potential for correction once the factors that are currently determining prices move out of focus or disappear," the analysts said.  

Crude oil futures gain on Iran tensions, prospect of US stock draw - Crude oil futures edged higher in mid-morning European trading Tuesday, on the back of bullish market sentiment driven by recent US stock draws and uncertainty over the future of crude exports from Iran. At 1131 GMT, ICE March Brent crude futures were 8 cents/b higher from Monday's settle at $67.78/b, sitting comfortably in the price range last seen in mid-2015, while NYMEX February light sweet crude contract was up 22 cents/b at $61.94/b. The US Dollar Index was up 0.18% at 92.26. On Tuesday, the market was looking ahead to whether US stock data released on Tuesday and Wednesday will show another large weekly draw. Analysts surveyed Monday by S&P Global Platts were expecting US crude stocks to fall 3.5 million barrels for the week ended January 5, after stocks fell 7.42 million barrels the previous week, exceeding analyst expectations. Figures from the American Petroleum Institute are due on Tuesday, while the more definitive numbers from the US Energy Information Administration will be released on Wednesday. Meanwhile, the market is awaiting a Friday deadline for US President Donald Trump regarding sanctions on Iran which had been waived as part of the nuclear deal. If that deal unravels, some analysts say up to 800,000 b/d of crude exports from the country could be at risk. Iran is also in the midst of anti-government protests that have erupted over the previous two weeks, raising concerns that exports could eventually be disrupted. Meanwhile in the South China Sea, an Iranian oil tanker carrying nearly a million barrels of condensate is still on fire, according to local media, following a collision.

US crude hits three-year high as prices climb in tight market (Reuters) - Oil prices edged higher on Tuesday, with U.S. crude touching its highest since December 2014, supported by OPEC-led production cuts and expectations that U.S. crude inventories have dropped for an eighth week in a row. The Organization of the Petroleum Exporting Countries and allies including Russia are keeping supply limits in place in 2018, a second year of restraint, to reduce a price-denting glut of oil held in inventories. U.S. West Texas Intermediate (WTI) crude rose $1.23, or 2 percent, to settle at $62.96 a barrel after touching its highest since December 2014 at $63.24. Brent crude ended the session up $1.04, or 1.5 percent, at $68.82 per barrel after hitting a session high of $69.08, its highest since May 2015. Both contracts had their strongest close since December 2014. Prices extended gains in post-settlement trade after industry group the American Petroleum Institute said crude inventories fell by 11.2 million barrels in the week to Jan. 5 to 416.6 million, compared with analysts’ expectations for a decrease of 3.9 million barrels. [API/S] If confirmed by U.S. government data at 10:30 a.m. EST (1530 GMT) on Wednesday, the draw will be the largest since Sept. 2, 2016. U.S. stockpiles fell by 14.5 million barrels during that week. “You’re so long this market at this point, you could certainly get more interest at these levels,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “This is a little more confirmation of what speculators have been looking for and after tomorrow’s (U.S. government inventory) report, we’ll see if they look to do some profit-taking.” OPEC is cutting output by even more than it promised and the restraint is reducing oil stocks globally, a trend most visible in the United States, the world’s largest and most transparent oil market. 

WTI/RBOB Spike After Massive Crude Draw - WTI/RBOB prices soared once again today amid hopes for an 8th straight week of crude draws (and overall stockpiles near 5y average levels). API did not disappoint with a massive 11.19mm crude draw (biggest since Sept '16) and continued builds in gasoline and distillates. WTI Knee-jerked to the highs of the day. The market is anticipating a pretty good draw in the crude oil storage number,” Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York, said by telephone. API

  • Crude 11.19mm (-421k exp) - biggest draw since Sept 2016
  • Cushing -2.156mm (-1.5mm exp)
  • Gasoline +4.685mm (+3.25mm exp)
  • Distillates +4.635mm (+2.25mm exp)

Last week's massive product inventory builds (and ongoing crude draw - last week biggest draw since Aug) continued with a massive crude build (11.19mm would be the bigg4est crude draw since Sept 2016 if it hold sup for DOE data).

Can Oil Break The $70 Threshold? -  Oil has held onto the strong gains from last week, despite some choppy trading. As of early trading on Tuesday, Brent was sitting at roughly $68 per barrel and WTI at $62. Brent is not far from the key psychological threshold of $70, a level that hasn’t been hit since 2014 during the beginning of the market downturn.   Iran’s oil minister said that OPEC does not want oil to rise any more than it already has so as not to spark a shale drilling boom. “Members of the Organization of the Petroleum Exporting Countries are not keen on increased Brent crude prices above $60 a barrel because of shale oil," Bijan Namdar Zanganeh said in comments on the ministry’s news agency Shana. Earnings for supertankers that move oil around the world fell by more than half in 2017, in large part because of the OPEC cuts. Fewer shipments came at a time when the shipping industry brought new capacity online, crushing their day rates. “These cuts reduced the number of cargoes from the Middle East to Asia significantly at a time when a large amount of newly-built vessels are being delivered,” Olivier Jakob, managing director at Petromatrix GmbH, told Bloomberg. Earnings per day fell to $17,794 on average in 2017, the lowest figure since 2009. The poor conditions for the oil tanker industry are set to continue this year, with capacity expected to expand by another 4 percent at a time when OPEC will continue to hold back supply.. FERC, the powerful energy regulator in the U.S., rejected a proposal from the Department of Energy to prop up aging coal and nuclear power plants. The logic behind the proposal was to reward power plants that provide “resilience” to the grid. That is, the proposed rule change would have led to a premium for plants that held a 90-day supply of fuel on site – a definition only met by coal and nuclear plants. FERC rejected the proposal, and instead asked grid operators to come up with ideas to improve resilience. The rejection is a blow to the coal and nuclear industry, as well as the Trump administration, which supported the proposal.

US crude stocks drop, fuel inventories up: EIA (Reuters) - U.S. crude oil stocks fell last week while gasoline and distillate inventories rose more than anticipated, the Energy Information Administration said on Wednesday. Crude inventories fell 4.9 million barrels in the week to Jan. 5, compared with analysts’ expectations for a fall of 3.9 million barrels. Oil prices dipped on the news before recovering. The decline in crude stocks fell short of industry group the American Petroleum Institute, which reported an 11 million-barrel crude draw on Tuesday evening. In addition, refining runs fell, pulling back from a 12-year-high in capacity utilization, and stocks of gasoline and distillates like diesel rose. However, U.S. production dropped sharply, though those figures are not considered as reliable as monthly data, which is released with a lag. U.S. production fell 290,000 barrels per day to 9.5 million bpd, the EIA said. “There must be a special factor at play, perhaps the extreme winter weather in North Dakota, which hampered shale oil production in the Bakken,”  U.S. crude futures CLc1 were trading 22 cents to $63.19 a barrel as of 10:49 a.m. EST, while Brent rose 14 cents to $68.95 a barrel. Gasoline stocks rose 4.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.6 million-barrel gain. Distillate stockpiles, which include diesel and heating oil, grew 4.3 million barrels, versus expectations for a 1.5 million-barrel increase, the EIA data showed.. Refinery crude runs fell 285,000 bpd as utilization rates fell by 1.4 percentage points to 95.3 percent of total capacity, EIA data showed. Crude stocks at the Cushing, Oklahoma, delivery hub USOICC=ECI fell by 2.4 million barrels, EIA said. Net U.S. crude imports USOICI=ECI rose last week by 152,000 bpd.

Oil Stays At 3-Year Highs as U.S. Crude Stocks Fall More Than Forecast - Crude prices held on to gains on Wednesday, staying close to their strongest level in around three years after data showed U.S. oil supplies fell more than forecast last week.The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 4.9 million barrels in the week ended Jan. 5. That compared with analysts' expectations for a decline of 3.9 million barrels, while the American Petroleum Institute late Tuesday reported a supply-drop of 11.2 million barrels.Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, decreased by2.4 million barrels last week, the EIA said.Total U.S. crude oil inventories stood at 419.5 million barrels as of last week, which the EIA considered to be in the middle of the average range for this time of year.U.S. crude oil production fell by 290,000 barrels per day (bpd) to 9.49 million bpd.The report also showed that gasoline inventories increased by 4.1 million barrels, much higher than expectations for a gain of 2.6 million barrels. For distillate inventories including diesel, the EIA reported a rise of 4.3 million barrels. U.S. West Texas Intermediate (WTI) crude futures tacked on 32 cents, or about 0.5%, to $63.28 a barrel by 10:40AM ET (1540GMT). Prices were at around $63.34 prior to the release of the inventory data. Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., were at $68.95 a barrel, up 11 cents from their last close. The contract rose to its best level since May 2015 earlier.

US Crude Oil Inventories Decreased Almost 5 Million BPD -- EIA -- January 10, 2018 - EIA weekly petroleum report:

  • US crude oil inventories decreased by 4.9 bbls (significantly different than what API reported yesterday afternoon
  • US crude oil refineries operated at 95.3% capacitiy
  • gasoline production decreased, averaging about 9.3 million bpd
  • interestingly enough, distillate fuel production also decreased, averaging 5.3 million bpd
  • gasoline product supplied up slightly during same period last year

WTI/RBOB Extend Losses After Smaller Crude Draw; Production Plunged -  Both WTI/RBOB are fading into this morning's data after API's massive crude draw print. DOE disappointed with a mere 4.95mm draw (vs 11.2mm draw from API) as gasoline inventories built for the 9th week in a row. However, production plunged almost 3%. Bloomberg Intelligence Senior Energy Analyst Vince Piazza noted that U.S. oil inventories typically build this time of year, but refineries are chugging away and focusing on West Texas intermediate instead of higher-priced Brent. The North Sea grade's price remains elevated, reflecting tensions in the Middle East.)   DOE:

  • Crude -4.95mm (-3.75 exp)
  • Cushing -2.4mm (-1.5mm exp)
  • Gasoline +4.13mm (+3.25mm exp)
  • Distillates +4.25mm (+2.25mm exp)

8th week in a row of crude draws and gasoline builds, but the crude draw was considerably lower than API predicted... Notably Cushing stockpiles are below their 5year average for the first time since Jan 2015...

Crude oil futures hit fresh three-year highs on US stock drawdowns - Crude futures held at fresh three-year highs in European morning trading Thursday, as a larger-than-expected draw on US crude stocks continued to outweigh signs of rising oil product stocks, and the market looked ahead to a deadline Friday on the fate of the Iranian sanctions waiver. At 1120 GMT, ICE March Brent crude futures were 32 cents higher than Wednesday's settle of $69.20/b which was the highest since early December 2014. The NYMEX February light sweet crude contract was up 40 cents at $63.97/b. The US Dollar Index was up 0.08% at 92.19. Weekly data released on Wednesday from the US Energy Information Administration showed stockpiles fell 4.948 million barrels in the week to January 5, to 419.515 million barrels. As a result of that fall, the surplus to the five-year average has nearly halved over the past eight weeks. Those figures exceeded analysts' expectations of a drawdown of 3.5 million barrels, but were far lower than figures published on Tuesday by the American Petroleum Institute that indicated a drawdown of 11.2 million barrels, which helped push prices to fresh three-year highs. The EIA drawdown was also in contrast to larger than expected builds in gasoline and distillate stocks. Gasoline stocks rose 4.135 million barrels, while distillate stocks rose by 4.254 million, roughly double analysts' expectations. "It was a bit [of a] mixed outlook when you look at products. It gave some swings around when both [API and EIA figures] published, [but] prices look still very supported by the Iran question and a lot of technical trading," senior oil risk manager at Global Risk Management in Copenhagen Michael Poulsen said. On Friday, US President Donald Trump will face a deadline on the waiver for Iranian sanctions as part of the nuclear deal. Analysts have said that 800,000 b/d of Iranian exports could be at risk if the deal unravels. Alongside falling production from Venezuela, where economic and political crisis has pushed output to its lowest in around 15 years, that would offer a further boost to bullish sentiment and help the pace of overall production cuts, analysts said, but that same bullishness could also risk promoting further supply.

Oil prices sit at three-year highs as march to $70 slows - As oil prices marched up to three-year highs today, US stockpile data somewhat dampened the black stuff's momentum.Weekly data from the US Energy Information Administration (EIA) showed crude stockpiles fell by 4.9m barrels, more than the 3.89m barrel draw analysts expected, according to Thomson Reuters.Gasoline inventories rose by 4.1m barrels to near the top of the average range, while analysts expected a smaller 2.6m barrel increase. A knee-jerk drop sent Brent crude oil to an intra-day low of $68.75 a barrel, but it soon recovered to trade around $69 again. Earlier in the day it reached a high of $69.37 a barrel. US West Texas Intermediate (WTI) prices reached a December 2014 high of $63.67 a barrel earlier on. David Madden, market analyst at CMC Markets UK, said: "WTI and Brent crude oil have sold off in the wake of the EIA report which showed yet another decline in oil stockpiles, while gasoline inventories increased. "It was the typical market reaction as oil initially jumped due to the drop in oil inventories, then [it sank] in that gasoline stockpiles surged, which prompted selling."

Brent crude settles below $70 per barrel as global inventories tighten (Reuters) - Oil prices retreated from big gains on Thursday, but still managed to settle at three-year highs after the global Brent benchmark hit $70 a barrel on signs of tightening supply in the United States. Brent crude futures settled 6 cents higher at $69.26 a barrel, after hitting $70.05 a barrel during the session, its highest level since November 2014. Brent’s settlement still represents a three-year closing high. Brent has gained 5 percent since the beginning of the year, picking up from its late-year surge. U.S. West Texas Intermediate (WTI) crude futures settled at $63.80 a barrel, up 23 cents, the highest since December 2014. Prices came off highs after an early surge that took benchmarks past key resistance levels that produced a flurry of buying in an active day in the market. However, analysts said it would take more than one day to convincingly break through $70 a barrel on Brent. “The propulsion of the upside was due to short-covering and no buying,” The relative strength index (RSI), which measures the speed and breadth of a rally, shows oil in an overbought condition, suggesting the move has come too far, too fast. “You have a very overbought market. Oil is acting like an internet stock and when it does that you know it’s getting overcooked,” Oil has been in an upward trend thanks to a steady, pronounced drop in global supply, particularly in the United States, the world’s largest consumer. On Wednesday, the U.S. Energy Information Administration said crude inventories fell almost 5 million barrels to 419.5 million barrels last week. Production slowed by nearly 300,000 barrels per day, which analysts attributed to colder-than-usual weather across the United States last week. Adding to bullish sentiment on Thursday, market intelligence firm Genscape estimated a draw of more than 3.5 million barrels at the Cushing, Oklahoma delivery point for U.S. crude futures for the week ended Tuesday, according to traders who saw the data. Production cuts, led by the Organization of the Petroleum Exporting Countries and Russia, which are set to continue throughout 2018, have underpinned prices. The United Arab Emirates (UAE) Energy Minister and OPEC President Suhail al-Mazrouei said he expects the market to balance in 2018 and that the producer group is committed to its supply-reduction pact until the end of this year. 

Oil Prices Higher, Up 19% Year-over-year - From Bloomberg: Crude Oil Prices Are Up 49%, and It’s Not All Thanks to OPEC: The bottom line: A 49 percent surge in benchmark North American crude futures since late June, putting prices at a three-year high... "We expect inventories are going to build this year -- slightly,” said Michael Cohen, Barclays Head of Oil Markets Research, in an interview on Bloomberg TV. "You’re going to see a bunch of new crude supply coming on to the market this year from the U.S. So all in all, on a balanced basis, we don’t see the kind of shortage to bring us to $80 for a sustainable basis." The first graph shows WTI and Brent spot oil prices from the EIA. (Prices today added). According to Bloomberg, WTI is at $64.29 per barrel today, and Brent is at $69.66. Prices really collapsed at the end of 2014 - and then rebounded a little - and then collapsed again at the end of 2015 and in early 2016. Now, with the global economy stronger and less domestic production, oil prices are rising. The second graph shows the year-over-year change in WTI based on data from the EIA. Six times since 1987, oil prices have increased 100% or more YoY.  And several times prices have almost fallen in half YoY. Currently WTI is up about 19% year-over-year.

Oil Tops $70 For First Time Since 2014 - As WTI crude futures top $64.50, amid what looks like a stop-run over $64. At the same time, Brent crude futures spiked above $70 for the first time since Dec 2014. As Citi notes, just before the London open, Reuters, citing the UAE energy minister said that OPEC would commit to a supply deal for all of 2018.  WSJ also rehashed higher Street forecasts, which have been coming in since the end of 2017. Investors have piled into commodities markets in the last month as the most bullish oil market structure in years is buttressed by OPEC-led production cuts, strong global economic growth and a softer U.S. dollar.  WTI hits $64.50... And Brent tops $70...

Oil prices expected to trade around $60-$70 through 2020: Kemp (Reuters) - Oil prices are expected to remain close to current levels, averaging around $60 to $70 per barrel through the end of the decade, according to the annual survey of energy professionals conducted by Reuters.Forecast prices have changed very little since the last survey a year ago, and are only modestly higher than in the first survey conducted in 2016, when spot prices were much lower than they are today and near the bottom of the cycle.Long-term price expectations have become anchored around $70 per barrel - with forecasts clustered in a range of $60-$70 for 2018 widening to $60-$80 by 2020 (http://tmsnrt.rs/2DjWDNK).The results are based on a questionnaire sent to over 7,000 energy market professionals. Responses were received from just over 1,000 between Jan. 9 and Jan. 11.Brent prices in 2018 are expected to average $65 per barrel, which is only marginally higher than the $60-65 forecast in last year's survey. Brent prices in 2019 are expected to average $65-70, up from about $65 in the 2017 survey.By the end of the decade, prices are expected to average around $70 in 2020, basically unchanged since the surveys in 2017 and even 2016. Forecasts for 2018 and even 2019 are tightly clustered, with only 5 percent of respondents expecting prices to average less than $55 per barrel in either year.  Similarly, only 5 percent of respondents think prices will average more than $75 in 2018 or more than $85 in 2019.Even by 2020, the majority of respondents think prices will average between $60 and $80, with few expecting prices to be below $55 or above $85. Compared with previous surveys, fewer forecasters expect prices to slump again to very low levels in the $30s and $40s – which perhaps reflects growing confidence in the sustainability of the cyclical recovery. But only 4 percent of respondents expect prices to return to average $100 or more by 2020, the level that prevailed between 2011 and the first half of 2014.

Brent crude tops $70 a barrel, West Texas Intermediate approaches $65 - Oil prices retreated from big gains on Thursday, but still managed to settle at three-year highs after the global Brent benchmark hit $70 a barrel on signs of tightening supply in the United States. Brent crude futures settled 6 cents higher at $69.26 a barrel, after hitting $70.05 a barrel during the session, its highest level since November 2014. Brent’s settlement still represents a three-year closing high. Brent has gained 5 percent since the beginning of the year, picking up from its late-year surge. U.S. West Texas Intermediate (WTI) crude futures settled at $63.80 a barrel, up 23 cents, the highest since December 2014. Prices came off highs after an early surge that took benchmarks past key resistance levels that produced a flurry of buying in an active day in the market. However, analysts said it would take more than one day to convincingly break through $70 a barrel on Brent. “The propulsion of the upside was due to short-covering and no buying,” said Marty Wallace, broker for iitrader.com LLC in Chicago. The relative strength index (RSI), which measures the speed and breadth of a rally, shows oil in an overbought condition, suggesting the move has come too far, too fast. “You have a very overbought market. Oil is acting like an internet stock and when it does that you know it’s getting overcooked,” said Walter Zimmerman, chief technical analyst for United-ICAP. Oil has been in an upward trend thanks to a steady, pronounced drop in global supply, particularly in the United States, the world’s largest consumer. On Wednesday, the U.S. Energy Information Administration said crude inventories fell almost 5 million barrels to 419.5 million barrels last week. Production slowed by nearly 300,000 barrels per day, which analysts attributed to colder-than-usual weather across the United States last week.[EIA/S]

Rig Count Shoots Up As Oil Nears $70 - The number of active oil and gas rigs rose this week, according to Baker Hughes data, increasing by 15 total rigs, bringing the total rigs to 939, which is an addition of 280 rigs year over year.The number of oil rigs in the US increased by 10, while the number of gas rigs increased by 5. The number of oil rigs stands at 752 versus 522 a year ago. The number of gas rigs in the US now stands at 187, up 136 a year ago. At 11:35am EST, the price of a WTI barrel was trading down $.34 (-0.53%) to $63.46, while the Brent barrel was trading down $0.30 (-.43%) to $68.96. Both benchmarks are up week on week, but down from Thursday levels which saw Brent over $70. This week marks four straight weeks of gains. Despite the oil price rise, US crude oil production dipped last week. It had been on a steady upward trajectory during Q4 2017—a thorn in OPEC’s side which has managed to cap price spikes courtesy of various supply disruptions and unrest in Iran. But the first week of 2018 saw production in the United States slipping from 9.782 million bpd in the last week of 2017, down to 9.492 million bpd. Canada has seen severe swings in its active oil and rig count. This week, Canada saw 87 oil rigs and 15 gas rigs added.The Permian basin rig count increased by 3 this week, standing at 403 rigs, or 135 above this same week last year. Arkoma Woodford, DJ-Niobrara, Haynesville, and the Mississippian basins each gained a rig. By state, New Mexico and Louisiana were the big winners this week, both adding 5 rigs. At 1:09pm EST, WTI was trading at $63.94 (+$0.14) with Brent trading at $69.42 (+$0.16).

U.S. drillers add most oil rigs in a week since June: Baker Hughes -  (Reuters) - U.S. energy companies added 10 oil rigs this week, the biggest increase since June, as crude prices rose to their highest levels in three years, prompting drillers to return to the well pad. The total rig count rose to 752 in the week to Jan. 12, the most since September, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. The U.S. rig count, an early indicator of future output, is much higher than a year ago when only 522 rigs were active after energy companies boosted spending plans in 2017 as crude started recovering from a two-year price crash. The increase in U.S. drilling lasted 14 months before briefly stalling in the second half of last year as some producers trimmed their 2017 spending plans after prices turned softer over the summer. “Drilling activity may not be up every week, but we continue to expect growth through the first quarter of 2018 and longer if prices hold,” U.S. crude futures traded around $64 a barrel this week, near its highest since December 2014. That compares with averages of $50.85 in 2017 and $43.47 in 2016. Looking ahead, futures were trading around $62 for the balance of 2018 and $58 for calendar 2019. In anticipation of higher prices in 2018 than 2017, U.S. financial services firm Cowen & Co said 23 of the roughly 65 E&Ps they track have already provided capital expenditure guidance for 2018 indicating a 12 percent increase in planned spending over 2017. Cowen said the E&Ps it tracks said they would spend about $66.1 billion on drilling and completions in the lower 48 U.S. states in 2017, which was about 53 percent over what they planned to spend in 2016.   There were 939 oil and natural gas rigs active on Jan. 12. On average, there were 876 rigs available for service in 2017, 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas. Overall, U.S. production is expected to rise to an all-time high of 10.3 million barrels per day in 2018 and 10.9 million bpd in 2019, up from 9.3 million bpd in 2017, according to a federal energy projection this week. U.S. output peaked on an annual basis at 9.6 million bpd in 1970, according to federal energy data.

US Oil Rig Count Surges By Most In 7 Months - Will Shale Show Restraint? - Just as we suggested, US oil rig counts surged last week, tracking the lagged uptick in WTI prices and suggesting production's upward path will continue (after last week's weather-impacted drop).US Oil Rig Count rose 10 to 752 last week - the most since June 2017... The question is - as OilPrice.com's Nick Cunningham asks (and answers) - Will Shale restrain itself?Brent recently hit $70 per barrel and WTI surpassed $64.50, and oil executives from the Middle East to Texas no doubt popped some champagne. The big question is whether or not U.S. shale will spoil the party by ramping up production to extraordinary heights, setting off another downturn.The EIA made headlines a few days ago when it predicted that U.S. oil production would surge this year and next, topping 11 million barrels per day by the end of 2019.But shale executives repeatedly promised their shareholders that they would be prudent this time around, eschewing a drill-no-matter-what mentality that so often led to higher levels of debt…and ultimately to lower oil prices. Shale executives repeatedly insisted in 2017 that they would not return to an aggressive drilling stance even if oil prices surged.We will soon find out if oil in the mid-$60s can entice shale drillers to shed their caution and jump back into action in a dramatic way. For its part, Goldman Sachs seems to believe the promises from the shale industry.The investment bank said that at an industry conference in Miami on January 10-11, shale executives reiterated their strategies of caution. “Shale producers are largely not looking to use $60+ oil in their budgets and spoke more proactively about debt paydown, corporate returns and returning cash to shareholders.”This newfound restraint would contribute to still more gains in oil prices, the investment bank said. “With Discipline along with Demand and Disruptions (the 3 Ds) key drivers of Energy equity sentiment, we see potential for a grind higher as long as datapoints are favorable,” Goldman wrote. Global oil demand is set to grow at a robust rate this year, and a series of disruptions could keep supply offline in places like Venezuela, Iraq, Iran, Libya and Nigeria. It remains to be seen if Goldman, along with the rest of us, are being taken for a ride by the shale industry. The investment bank said that guidance announcements in February will be “key” to figuring out if shale drillers will follow through on their promises of restraint for 2018.

Oil retreats from $70 highs but set for fourth week of gains (Reuters) - Oil prices rose for a sixth day on Friday after Russia’s oil minister said that global crude supplies were “not balanced yet,” alleviating market concerns about a wind-down of the OPEC-led deal to reduce production. Russian Energy Minister Alexander Novak said ministers from leading OPEC and non-OPEC producers will discuss the possibility of exiting the deal at a coming committee meeting, but said that “we see that the market surplus is decreasing, but the market is not completely balanced yet.” His comments boosted prices, which rebounded from earlier decline, though the market has not hit the heights it touched on Thursday, when Brent crude topped $70 a barrel for the first time since December 2014. Markets remained buoyed by the comments throughout the session, shrugging off data that suggested the U.S. production may continue to surge. Brent crude futures LCOc1 rose 61 cents to settle at $69.87 a barrel. U.S. West Texas Intermediate (WTI) crude futures CLc1 rose 50 cents to $64.30. WTI hit its strongest since late 2014 at $64.77 on Thursday. For the week, Brent rose 3.3 percent while WTI jumped 4.7 percent. The agreement between the Organization of the Petroleum Exporting Countries and Russia reached in late 2016 to cut 1.8 million barrels of crude daily is due to last until the end of 2018. Novak said the current oil price was short-term, and he would discuss the situation at a ministerial monitoring committee meeting in Oman, scheduled for Jan. 21. Russia’s Lukoil Chief Executive Vagit Alekperov said Russia - part of the global agreement with the Organization of the Petroleum Exporting Countries to reduce supply - should start to exit the pact if crude prices remain at $70 a barrel for more than six months. Major oil producing-countries have grown concerned that as prices remain near these levels, it will spur additional production from U.S. shale patches in Texas and North Dakota, risking overwhelming the market with additional supply, and hurting OPEC’s market share.

OPEC Doesn’t Want Brent Over $60 a Barrel, Says Iran’s Oil Minister - A key OPEC minister has warned that the group risks overheating the oil market as crude prices head toward $70 a barrel.“Members of the Organization of Petroleum Exporting Countries are not keen on increased Brent crude prices above $60 a barrel because of shale oil,” Iran Oil Minister Bijan Namdar Zanganeh said, according to the ministry’s news service Shana. Prices have climbed in recent days because of production cuts and increased demand for petroleum products due to cold weather, he said. While the view isn’t universally held among OPEC ministers, the comments show concerns among some countries that keeping production curbs in place as a strengthening global economy drives demand could spur more output from shale producers in the U.S. Higher prices also encourage producers to hedge future output, adding to supplies. OPEC and allies including Russia agreed in November to extend output cuts to the end of this year to reduce global inventories. Iran, OPEC’s third-largest producer, pumped 3.8 million barrels a day in December, according to data compiled by Bloomberg.

Shadows picked up by satellites suggest Saudi Arabia under reported its oil stores last year — Satellite imagery of two of Saudi Arabia's largest oil refineries suggests the kingdom may have underreported its oil stores in the first half of 2017. Satellite images gathered by the tech startup Bird.i suggest the level of crude oil held in two major Saudi refineries, Ras Tanura and Yanbu, increased last year from January to June. The kingdom's official figures show supplies as having declined amid a commitment to reduce supply in the face of low prices. Bird.i collects and analyzes satellite, drone, and airborne images from numerous sources, some of which are captured in monochrome and some in full color. The technology allows the fullness of oil tanks to be estimated according to the shadows cast by tanks' floating roofs: More shadow suggests the roof and oil stores are low. Factors such as the time the photos were taken, the position of the sun, and the satellite's position are also considered. Images taken of the Ras Tanura refinery, which with a capacity of 550,000 barrels a day is Saudi Arabia's largest, suggest stocks were relatively low in January compared with in May, when the shadows cast were much shorter — indicating a higher supply. The Ras Tanura refinery in January 2017. Image © 2017 DigitalGlobe, Inc. Ras Tanura refinery in May — where less shadow can be seen. Images of Yanbu terminal, a major refinery on the Red Sea with a capacity of 225,000 barrels a day, suggest stocks in November 2016 were relatively low compared with those in May of last year, when the tanks look to be "almost full," according to Corentin Guillo, the founder and CEO of Bird.i. A third — and the most recent — image of Yanbu, taken in December, shows more shadow, suggesting oil supplies fell again in the second half of the year.   Saudi Arabia also reported falling stores throughout 2017. In official data submitted to the Joint Organisations Data Initiative, the kingdom reported oil stocks had declined by 5.4 million barrels last year from January to June and were on a downward trajectory from March to September.  "It would be pretty destabilising for the oil price, and for OPEC, if Saudi Arabia was shown to be saying one thing and doing another,"

Eleven Saudi princes detained following protest over utility bills - (Reuters) - Saudi Arabian authorities have detained 11 princes after they gathered at a royal palace in Riyadh in a rare protest against the government suspending payment of their utility bills, the public prosecutor said on Saturday. Saudi Arabia, the world’s top oil exporter, has introduced reforms that include reducing energy subsidies, introducing value-added tax and cutting some perks to royal family members to try to cope with a drop in crude prices that has caused a budget deficit estimated at 195 billion riyals ($52 billion) in 2018. The princes had gathered on Thursday at Qasr al-Hokm palace demanding the cancellation of a recent decree that halted state payment of water and electricity bills for royal family members and seeking compensation for a death sentence implemented in 2016 against one of their cousins, Prince Turki bin Saud al-Kabeer. “Despite being informed that their demands are not lawful, the 11 princes refused to leave the area, disrupting public peace and order. Members of a security services stepped in to restore order and the princes were arrested,” the public prosecutor’s statement said, without identifying the princes. “Following their arrest, they have been charged on a number of counts in relation to these offences. They are detained at Al-Hayer prison south of the capital pending their trial.” News website Sabq earlier identified the leader of the group of princes by the initials S.A.S. The Saud al-Kabeer branch of the House of Saud descend from a cousin of late King Abdulaziz, who founded the modern kingdom. The meteoric rise of 32-year-old Crown Prince Mohammed bin Salman, the king’s favored son, and his ambitious, sometimes aggressive, policies have caused rare tensions within the royal family, which for decades favored rule by consensus. Dozens of prices, high officials and senior businessmen were rounded up in November in a crackdown on graft that has boosted Prince Mohammed’s power. They have been held at the five-star Ritz-Carlton hotel in Riyadh while government officials negotiate financial settlements, asking them to hand over assets and cash in return for their freedom. The round-up followed a meticulously planned palace coup in June through which Prince Mohammed ousted his elder cousin Prince Mohammed bin Nayef as heir to the throne. 

Saudi Handouts Show Prince Bet on Citizens After Royal Crackdown -  Saudi Crown Prince Mohammed bin Salman’s high-speed U-turn on state handouts suggests he’s betting on the backing of ordinary citizens rather than traditional pillars of support as he consolidates power. It took less than a week of Saudis grousing on social media and TV for authorities to announce they’d plow billions of riyals into people’s pockets to help offset government-initiated price increases. That sidestepped a mainstay of the prince’s plan to revamp the economy in part by weaning citizens off government largesse, indicating that consistency in fiscal policy isn’t his top priority right now.  During his swift rise to power, the kingdom’s 32-year-old de facto leader has swept aside rivals, arrested senior royals and billionaires -- including 11 princes detained on Thursday -- and defied the ultra-conservative religious establishment by letting women drive. That’s left him reliant on those Saudis eager for social change but struggling with austerity measures needed to achieve his vision of turning Saudi Arabia into a global investment hub no longer reliant on oil.  “The crown prince can’t afford to alienate his young constituency,” said Fawaz Gerges, a professor of international relations at the London School of Economics. “It’s not just about economic reforms. It’s also about the consolidation of the new leadership’s social base and the opposition from very entrenched interests by some members of the royal family.”  King Salman on Saturday ordered extra pay for Saudi government workers and soldiers this year after the Jan. 1 introduction of value-added taxation and a surge in fuel prices stirred grumbling among citizens. The cost to the state: more than 50 billion riyals ($13.3 billion), Saud Al-Qahtani, an adviser to the royal court, said on his Twitter account. Saudis privately expressed mixed feelings about the about-face, with some overjoyed, and others finding it too stingy or worried about its limited duration. Some said the sudden swerve -- one of several since the prince announced his Vision 2030 blueprint for reordering the economy nearly two years ago -- made them question the government’s strategy.

Saudi Arabia Is Taking Over The Binladin Group - Back in November, among the numerous high-profile figures arrested in Saudi Arabia on “anti-corruption” charges, in addition to the shocking detention of prince Alwalaleed bin-Talal another unexpected name emerged: that of Bakr bin Laden, chairman of Saudi Binladin Group and brother of Osama bin Laden. Considering that the real intention of the mass arrests was a shakedown of royals for money, bin Laden's arrest made sense: after all The Binladin Group is one of Saudi Arabia's biggest construction companies, with an annual turnover of $30 billion.Or rather was, because as Reuters reports, Saudi Arabia is confiscating taking managerial control of Saudi Binladin Group and discussing a possible transfer of some of the giant construction group’s assets to the state while its chairman and other family members are in detention. As we discussed in November, Binladin, which had over 1 00,000 employees at its height, is the biggest builder in the country and important to Riyadh’s plans for large real estate, industrial and tourism projects to help diversify the economy beyond oil. However, over the past couple of years, the group was hurt financially by the slump in the local construction industry and a temporary exclusion from new state contracts after a crane accident killed 107 people at Mecca’s Grand Mosque in 2015. It was forced to lay off thousands of employees.Why the forced nationalization?One suggestion, provided by Reuters industry sources, Riyadh’s move to take control appears "aimed at ensuring the group can continue to serve Saudi Arabia’s development plans." Another, more realistic one, is that Saudi Arabia will simply exchange corporate assets in exchange for bin Laden's freedom.

Caught On Video: Houthi Rebels Shoot Down Saudi F-15 Over Yemen - Houthi rebels have released dramatic footage showing the use of a FLIR Systems sensor turret, manufactured by an American defense company, recording the moment a Surface-to-air missile shot down a Royal Saudi Air Force F-15 over Yemen's capital, Sana’a.On Monday, Houthi rebels released the infrared video, which shows the sensor tracking the F-15S (Boeing MFG.), while it was shot down over Yemeni skies, according to Saba News.The video was first released by the Houthi-run al-Masirah television network on Monday, which shows the FLIR Systems logo on the top left of the frame. A separate statement by the group’s Saba News Agency says their forces shot down the Saudi warplane over northern Saada province on Sunday.Yemen air defense on Monday morning fired a ground-to-air missile at a Saudi enemy warplane while it was flying over the capital Sanaa, the army said in a statement received by Saba. The targeted plane is F-15, read the statement without providing further details. Monday missile attack came one day after the Yemeni army shot down a Saudi warplane over northern Saada province.In the video, the FLIR Systems sensor turret is seen in full working capacity as it tracks the Saudi warplane overhead. Watch the video below:According to The Drive, if confirmed the downing  of the F-15 could be somewhat embarrassing for the United States, considering the Americans have sold defense products to Yemen.

Iran's Former President Mahmoud Ahmadinejad Arrested For Inciting Unrest: Report -- The London-based Arabic daily newspaper Al-Quds Al-Arabi reports this morning that former Iranian president Mahmoud Ahmadinejad has been arrested by security forces for allegedly inciting unrest against the government, according to "reliable sources in Tehran." The newspaper describes the former president's arrest in the southwest city of Shiraz as coming after a series of provocative statements given in support of anti-government protests that have gripped the country for more than a week, and that his detention was granted approval by Supreme Leader Ali Khamenei.Starting early in the protests, Ahmadinejad, who led the nation from 2005 to 2013 and has long been considered a hardliner, made public statements denouncing the Rouhani government as well as the clerical establishment as being detached from the daily reality of ordinary Iranians. Starting in November 2017 Ahmadinejad began making what was widely viewed as a surprise political comeback while running a populist message, focusing on the fight against corruption as his main emphasis and attacking the rich and corrupt, along with severe criticisms against the government for squandering public funding intended for the people's welfare. He's also reported to have broadly utilized social media for aggressive rhetoric targeting the judiciary and challenging Iran's supreme leader.

Iran has foiled plot to use protests to overthrow system, leader says (Reuters) - Iran has foiled attempts by its foreign enemies to turn legitimate protests into an insurgency to overthrow the Islamic Republic, supreme leader Ayatollah Ali Khamenei said on Tuesday. Comments on his Twitter feed and in Iranian media underscored the establishment’s confidence that it has extinguished the unrest that spread to more than 80 cities in which at least 22 people died since late December. “Once again, the nation tells the U.S., Britain, and those who seek to overthrow the Islamic Republic of Iran from abroad that ‘you’ve failed, and you will fail in the future, too’,” Khamenei tweeted. The Revolutionary Guards, the military force loyal to Khamenei, said on Sunday security forces had put an end to the unrest that it also said had been whipped up by foreign enemies. At least 1,000 people have been arrested in the biggest anti-government protests for nearly a decade, with the judiciary saying ringleaders could face the death penalty. A judiciary official said on Tuesday that a detainee in Arak, a town about 200 km (124 miles) south of Tehran, committed suicide, according to Mizan, the website of the Iranian judiciary. On Monday, a separate judiciary official announced that a detainee had committed suicide in Tehran’s Evin prison. The reports have raised concerns among human rights activists and some Iranian politicians that detainees may have been killed by security forces while in custody. “I warn the president and security and judiciary officials to prevent the occurrence of a second Kahrizak,” Mahmoud Sadeghi, a parliamentarian, tweeted on Monday. The Kahrizak prison gained notoriety when a handful of detainees were tortured and killed at the site after unrest in 2009.

After mass protests, Iran bans English in schools to fight Western 'cultural invasion' - Iran has banned the teaching of English in primary school classrooms. The announcement follows claims by Iran's supreme leader Ayatollah Ali Khamenei that early learning of the language paves the way for "cultural invasion" of Western values. The government's decision comes shortly after a week of mass protests against the country's leadership which spread to more than 80 cities and small towns and left at least 21 dead.“Teaching English in government and non-government primary schools in the official curriculum is against laws and regulations,” Mehdi Navid-Adham, head of the High Education Council, told state TV on Saturday.Adham added that primary education is crucial in instilling the Iranian culture and values in its students. Khamenei has often criticized creeping Western influence in the Islamic Republic, and expressed deep concern in 2016 over the spread of English to "nursery schools," The Guardian reported.“That does not mean opposition to learning a foreign language, but [this is the] promotion of a foreign culture in the country and among children, young adults and youths,” he said at the time. English will still be taught in middle schools and high schools.

Who Killed The Iran Protests? - One prime indicator that anti-government protests in Iran have truly died down to the point of now being completely snuffed out as reports today suggest, and as we began reporting at the end of last week, is that current headlines are now merely focused on the barely lingering and ephemeral "social media battle" and anonymous YouTube activism, along with multiple postmortem accounts of a failed movement already out. It seems there's now clear consensus that Iran's streets have grown quiet.   It was evident by the end of last week that demonstrations were fizzling - even as the headlines breathlessly attempted to portray a bigger and more unified movement than what was really occurring on the ground. By many accounts, it was the much larger pro-government rallies that began to replace the quickly dying anti-regime protests by the middle of last week. But a central question that remains is, who killed the Iran protests? There seemed to be a direct correlation between Western and outside officials weighing in with declarations of "solidarity" and support for regime change, and the drastic decline in protest size and distribution. And then there was Bibi Netanyahu's surprising televised address to "the Iranian people" on behalf of the state of Israel, wishing them "success in their noble quest for freedom" - something which we predicted would only have an adverse effect on the demonstrators' momentum, considering that authorities in Tehran accused protest leaders of serving the interests of and being in league with foreign "enemies" like Saudi Arabia and Israel nearly from day one. The address was surprising precisely because it was the surest way to kill the protests as quickly as possible. From the moment Netanyahu publicly declared, "When this regime [the Iranian government] finally falls, and one day it will, Iranians and Israelis will be great friends once again" - all the air was sucked out of whatever momentum the protesters had.  For many average Iranians who had not yet joined anti-government demonstrations at that point, Bibi's speech gave them every incentive to stay home. All that the regime had to say at that point was, "see, you are in league with enemies of the nation!" And that is exactly what Tehran did. It was on the very Monday of Netanyahu's speech that Iran's elite Islamic Revolutionary Guard Corps (IRGC) announced it would be taking charge of the security situation in Tehran, though likely they were mobilized earlier.

Iran could greatly increase uranium enrichment, says spokesman (Reuters) - Iran’s atomic energy agency said on Wednesday a reimposition of sanctions by the United States would be a violation of Tehran’s nuclear deal with world powers, adding that the Islamic Republic had the capacity to greatly increase its enrichment of uranium. U.S. President Donald Trump must decide by mid-January whether to continue the suspension of U.S. sanctions on Iran’s oil exports under the pact, which eased economic pressure on Tehran in exchange for limits on its nuclear programme. “If the suspension is not continued it’s a violation of the (nuclear deal) and the Islamic Republic of Iran will, of course, take the necessary actions,” Behrouz Kamalvandi, spokesman for the Atomic Energy Organization of Iran, said in an interview with state TV. He did not specify what such actions might be. Later in the interview, he said: “The capacity exists within the atomic energy agency to speed up nuclear work in various fields, particularly in the field of enrichment, which can be increased several times more than in the period before the nuclear agreement.” Enrichment, a process which can produce weapons-grade uranium, is restricted under the terms of the deal. Supporters of the pact insist that strong international monitoring will prevent Iran from developing nuclear bombs. Iran has denied that it wants to acquire nuclear weapons. “The American government should think wisely,” Kamalvandi said in the interview. “Even though they have shown until now unfortunately that they are not thinking or acting wisely.” The head of the Atomic Energy Organization of Iran, Ali Akbar Salehi, said on Monday Tehran might reconsider its cooperation with the International Atomic Energy Agency (IAEA) if the United States failed to respect its commitments in the deal. The IAEA, the UN’s nuclear watchdog, seeks to promote the peaceful use of nuclear energy. It is scrutinising Iran’s compliance with the agreement. 

Russia presses EU to pay up for rebuilding Syria - A top Russian diplomat has urged the EU to launch reconstruction efforts in Syria within months, escalating a row over who should foot the bill for rebuilding the nation as President Bashar al-Assad reasserts his control. Vladimir Chizhov, Russia’s representative to the EU, told the Financial Times that European states would “bear the responsibility” if they failed to recognise that it was “high time” to back a programme likely to cost “dozens of billions” of euros. His comments are part of Moscow’s efforts to exploit Europe’s growing dilemma over how it can spend money to stem the flow of Syrian refugees without appearing to boost the regime in Damascus. The tensions over the issue have been rising as Moscow, which backs the Syrian government, has gained increasing sway over the peace process to end the near seven-year conflict.  European diplomats  cknowledge the potential for divisions in the bloc over Syria. Countries hosting millions of Syrians, such as Turkey and Lebanon, have been pressing the EU to help ease their refugee burdens. But European officials bristle at what they see as attempts by Moscow to force Europe to pick up the tab for Russia, whose fighter jets took part in the bombardment of rebel-held areas such as Aleppo. Syrian activists said last week that Russian warplanes were involved in bombing Eastern Ghouta, a besieged rebel-controlled area near Damascus, where recent fighting has killed dozens of people. Russia intervened militarily in the conflict in 2015 and tilted the balance of the war in the Syrian government’s favour as the rebels were driven from their urban strongholds. Moscow is now keen to secure a political process and halt its military operations in the Arab nation.

US-backed Forces In Syria Release Hundreds Of ISIS Members - The US-backed Syrian Democratic Forces (SDF) released 400 former ISIS fighters a mere few weeks after they had been captured, the opposition media outlet Syrian Observatory for Human Rights (SOHR) reported on Tuesday. The report added that the released ISIS fighters include dozens of well-known ISIS members and commanders. Moreover, the SOHR said that the SDF even allowed 120 former ISIS fighters from Deir Ezzor and al-Hasakah governorates to join its ranks. The former ISIS fighters who joined the SDF are all related to SDF leaders, according to the report. The release of these former ISIS fighters has led to new tensions in eastern Syria, as the locals who were victims of these fighters clashed with them in many villages, according to the SOHR. The media outlet even said that weapons were used by the new “SDF members” against the locals; however, the US-backed forces didn’t step in to end the clashes, according to the source. Significantly, SOHR is a well-known pro-rebel opposition source which has served as a go-to prime outlet for the mainstream media over the course of the war in Syria.