Sunday, May 20, 2018

US oil exports at a record high again; Ohio drilling slows from a year ago; DUCs increase for 19th month running

US oil prices continued their relentless advance higher again this week, while the front month contract price for North Sea Brent, the international benchmark, topped $80 a barrel for the first time since before OPEC began its campaign to flood the global markets in November 2014...after running up to a 42 month high on Trump's withdrawal from the multilateral Iran pact last week, US crude for June delivery rose 26 cents to $70.96 a barrel on Monday as the monthly report from OPEC indicated the global glut of crude had nearly been eliminated...then, after hitting a multi-year high of $71.92 a barrel early in the day on Tuesday on Iran concerns, oil prices pulled back to close just 35 cents higher at $71.31 a barrel, after the American Petroleum Institute report said U.S. crude supplies had unexpectedly increased...oil prices slipped as low as $70.66 a barrel on Wednesday, but then rallied to close another 18 cents higher at $71.48 a barrel, after the EIA report showed that rather than increasing, US oil supplies actually fell more than was expected...US crude then rose to yet another three and a half year high of $72.30 on Thursday morning, but then fell back to close unchanged, after Brent, the international benchmark for oil prices, hit a session high of $80.50 a barrel but failed to hold above $80, closing at $79.19...US crude then gave up 21 cents of the week's gain in less volatile trading on Friday, as the Saudis discussed oil-price concerns with Russia and other OPEC members, but still logged their 3rd weekly increase in a row in closing the week with a gain of 58 cents at $71.28 a barrel....

since we in the US are still a net importer of several million barrels of oil per day, each dollar of these oil price increases represents several million dollars that will be flowing from American oil consumers to oil producers abroad every day, with countries such as Saudi Arabia, Iran, Iraq, and Russia the prime beneficiaries, even if we're not importing our oil directly from each of them...while Trump blames OPEC for higher oil prices in his tweets and speeches, it's actually been Trump's own policies that have been responsible for the last $10 of this recent rise, and it's his administration that should get the blame for any economic damage...however, we should point out that higher gasoline prices won't affect all the US states equally, as higher oil prices favor the oil producing states such as Texas, Louisiana, Oklahoma, North Dakota, and Alaska, all of which went heavily for Trump, while it's the "blue states" such as New York, Massachusetts, Maryland, Illinois, California and Hawaii that are being made to suffer...

natural gas prices also rose this week, breaking out of their narrow trading range and closing above $2.85 per mmBTU for the first time since early February...gas prices got their first boost on Monday, rising 3.4 cents to $2.859 per mmBTU, when building heat across major portions of the US increased power-burn demand...then, after falling half a cent on Tuesday and 1.7 cents on Wednesday, natural gas for July delivery rose 4.9 cents to $2.886 per mmBTU on Thursday, even though the EIA reported a higher-than-expected addition to storage, because the the National Weather Service forecast warmer-than-average temperatures for much of the country in their 6 to 10 day outlook...meanwhile, the natural gas storage report from the EIA indicated that natural gas in storage in the US rose by 106 billion cubic feet to 1,538 billion cubic feet over the week ending May 11th, which still left our gas supplies 821 billion cubic feet, or 34.8% below the 2,359 billion cubic feet that were in storage on May 12th of last year, and 501 billion cubic feet, or 24.6% below the five-year average of 2,039 billion cubic feet of natural gas that are typically in storage on the second weekend in May...analysts had forecast a 104 billion cubic foot addition to storage, so while this 106 billion cubic foot addition was in line with expectations, it was still well above the 64 billion cubic feet of gas that were added to storage over the week ending May 12th last year, and above the average 87 billion cubic foot surplus of natural gas typically added to storage during the second week in May...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering the week ending May 11th, indicated that due to a big jump to a record level in our oil exports and a modest increase in refining, we had to pull oil out of our commercial crude supplies to meet refinery needs for the seventh time in the past sixteen weeks...our imports of crude oil rose by an average of 278,000 barrels per day to an average of 7,601,000 barrels per day during the week, after falling by 1,226,000 barrels per day over the prior week, while our exports of crude oil rose by an average of 689,000 barrels per day to a record average of 2,566,000 barrels per day during the week, which meant that our effective trade in oil over the week ending the 11th worked out to a net import average of 5,035,000 barrels of per day during the week, 411,000 barrels per day less than the net of our imports minus exports during the prior the same time, field production of crude oil from US wells rose by 20,000 barrels per day to a record high of 10,723,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 15,758,000 barrels per day during the reporting week...

meanwhile, US oil refineries were using 16,635,000 barrels of crude per day during the week ending May 11th, 149,000 barrels per day more than they used during the prior week, while at the same time 418,000 barrels of oil per day were reportedly pulled out of oil storage in the US....consequently, this week's crude oil figures from the EIA seem to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 459,000 fewer barrels per day than what refineries reported they used during the account for that disparity, the EIA needed to insert a (+459,000) 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, essentially a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"... (for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)...

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports fell to an average of 7,986,000 barrels per day, which was 4.3% less than the 8,347,000 barrel per day average we imported over the same four-week period last year...the 418,000 barrel per day reduction in our total crude inventories included a 201,000 barrel per day withdrawal from our commercially available stocks of crude oil, and a 217,000 barrel per day decrease of the oil in our Strategic Petroleum Reserve, possibly a sale of oil mandated by this year's federal budget...this week's 20,000 barrel per day increase in our crude oil production was all from wells in the lower 48 states, as output from Alaska was unchanged...the 10,723,000 barrels of crude per day that were produced by US wells during the week ending May 11th were once again the highest on record, 15.2% more than the 9,305,000 barrels per day that US wells were producing during the week ending May 5th of last year, and up by 27.2% from the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June, 2016...

US oil refineries were operating at 91.1% of their capacity in using 16,635,000 barrels of crude per day during the week ending May 11th, up from 90.4% of capacity the prior week, but down from the seasonal high of 93.5% of capacity during the first week of April....the 16,635,000 barrels of oil that were refined this week were still down 5.5% from the off-season record of 17,608,000 barrels per day that were being refined during the last week of December 2017, and 2.8% less than the 17,122,000 barrels of crude per day that were being processed during the week ending May 12th, 2017, when refineries were operating at 93..4% of capacity....

with the increase in the amount of oil that was refined this week, gasoline output from our refineries saw a substantial jump, increasing by 488,000 barrels per day to 10,462,000 barrels per day during the week ending May 11th, after our refineries' gasoline output had decreased by 71,000 barrels per day during the week ending May 4th.... with that increase, our gasoline production was 4.4% higher during the week than the 10,020,000 barrels of gasoline that were being produced daily during the week ending May 12th of last the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 38,000 barrels per day to 5,031,000 barrels per day, after falling by 2,000 barrels per day the prior week....that still left the week's distillates production fractionally lower than the 5,042,000 barrels of distillates per day than were being produced during the week ending May 12th, 2017....      

however, even with the sizable increase in our gasoline production, our supply of gasoline in storage at the end of the week fell by 3,790,000 barrels to  232,014,000 barrels by May 11th, the eighth decrease in 11 weeks, but just the 9th decrease in 27 weeks, as gasoline inventories, as usual, were being built up over the winter months...our gasoline supplies fell this week because our exports of gasoline rose by 344,000 barrels per day to 925,000 barrels per day, and because our imports of gasoline fell by 82,000 barrels per day to 721,000 barrels per day, even as our domestic consumption of gasoline fell by 244,000 barrels per day to 9,531,000 barrels per day...after this week's decrease, our gasoline inventories finished the week 3.6% lower than last May 12th's level of 240,669,000 barrels, even as they were still roughly 9.7% above the 10 year average of gasoline supplies for this time of the year...         

meanwhile, with this week's distillates production again little changed, our supplies of distillate fuels fell by 92,000 barrels to 114,946,000 barrels over the week ending May 11th, the 9th decrease in ten weeks, after falling by 13,219,000 barrels over the prior four weeks...our distillate inventories were thus comparatively little changed because our exports of distillates fell by 457,000 barrels per day to 899,000 barrels per day, and because the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 85,000 barrels per day to 4,222,000 barrels per day, while our imports of distillates fell by 51,000 barrels per day to 77,000 barrels per day...after this week’s inventory decrease, our distillate supplies ended the week 21.7% below the 146,824,000 barrels that we had stored on May 5th, 2017, and roughly 15.4% lower than the 10 year average of distillates stocks for this time of the year

finally, because we were exporting our crude at a record pace, our commercial supplies of crude oil decreased for the 9th time in 2018 and for the 35th time in the past year, as our commercial crude supplies fell by 1,404,000 barrels during the week, from 433,758,000 barrels on May 4th to 432,354,000 barrels on May 11th ...hence, after falling most of the past year, our oil inventories as of May 11th were 17.0% below the 520,772,000 barrels of oil we had stored on May 12th of 2017, 15.2% lower than the 509,797,000 barrels of oil that we had in storage on May 13th of 2016, and 3.8% below the 449,214,000 barrels of oil we had in storage on May 15th of 2015, during a period when the US glut of oil had already begun to build from the nearly stable supply levels of the prior years...  

since our record level of crude oil exports have the major reason for our falling crude supplies, and since this week saw the record of three weeks ago beat by more than 10%, we'll include here a graph of those oil exports over the past 20 months.. 

May 17 2018 crude oil exports as of May 11

the above graph came from the weekly package of oil graphs that John Kemp of Reuters emailed out on Wednesday, which is also accessible online as a pdf here, and it shows weekly US crude oil exports in thousands of barrels per day from September 2016 to the current week, and also highlights the exact amount of our crude exports in thousands of barrels per day over a few select weeks going back to September 1st 2017, the week when our exports had been choked off because Gulf Coast ports were shut down by Hurricane you can see, our oil exports had only topped a million barrels per day a few times prior to that date...however, after the price of US crude fell to a 10% discount to the comparable international grade in the wake of the hurricanes, US crude suppliers began to sell as much oil overseas as they could, and as a result our oil exports have stayed above a million barrels per day since, and with those elevated exports, our crude oil supplies have also been falling we've noted over the past couple of weeks, the price of North Sea Brent, the international benchmark, has been again rising faster than the price of US crude, and as of Friday's close was at $78.51 a barrel for July, $7.14 or 10% above the $71.37 a barrel US July crude contract price...hence we can expect that US oil traders will continue to sell as much US crude into international markets this summer as our port capacity will allow, all the while pulling down large windfall profits even after paying the roughly $2 a barrel trans oceanic transport costs... 

This Week's Rig Count

US drilling activity increased for the 12th time in the past thirteen weeks and for 21st time in the past 28 weeks during the week ending May 18th, a period of higher oil prices that has consequentially seen the rig increases far exceed the few decreases...Baker Hughes reported that the total count of active rotary rigs running in the US increased by just one rig to 1046 rigs over the week ending on Friday, which was 145 more rigs than the 901 rigs that were in use as of the May 19th report of 2017, while it was still down from the recent high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC officially began their attempt to flood the global oil market... 

the number of rigs drilling for oil was unchanged at 844 rigs this week, which was still 124 more oil rigs than were running a year ago, while it was still well below the recent high of 1609 rigs that were drilling for oil on October 10, the same time, the number of drilling rigs targeting natural gas formations increased by 1 rig to 200 rigs this week, which was only 20 more gas rigs than the 180 natural gas rigs that were drilling a year ago, and way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, addition, there are also two active rigs that are listed as "miscellaneous", compared to the 1 "miscellaneous" rig that was operating a year ago....

drilling activity in the Gulf of Mexico decreased by two rigs to 18 rigs rig this week, which was 5 fewer rigs that were drilling in the Gulf of Mexico a year ago...however, there was also a rig drilling offshore from Alaska this week, so the total offshore count of 19 rigs was down by 4 from last year's offshore total of 23 the same time, another rig began drilling through an inland lake in southern Louisiana this week, where there are now four such inland waters rigs working, the same number of rigs that were deployed on inland waters a year ago..

the count of active horizontal drilling rigs increased by 1 rig to 919 horizontal rigs this week, which was 160 more horizontal rigs than the 759 horizontal rigs that were in use in the US on May 19th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of addition, the vertical rig count increased by 6 rigs to 61 vertical rigs this week, which was still down from the 76 vertical rigs that were in use during the same week of last year... on the other hand, the directional rig count was down by 6 rigs to 66 directional rigs this week, which was the same number of directional rigs that were deployed on May 19th 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 both tables, the first column shows the active rig count as of May 18th, the second column shows the change in the number of working rigs between last week's count (May 11th) and this week's (May 18th) count, the third column shows last week's May 11th active rig count, the 4th column shows the change between the number of rigs running on Friday and as of the equivalent weekend report of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was on Friday the 19th of May, 2017...        

May 18 2018 rig count summary

with the horizontal rig count only up by a single rig, the basin counts should reflect that; however, as we can see, there were three more rigs added in the major basins shown in the table above than were shut down; hence there were two horizontal rigs shut down in other basins not tracked separately by Baker Hughes; without further digging, it's hard to say where those might have been, since all the state changes are accounted for above; the 4 rig increase in the Permian includes 3 rigs in New Mexico and just one in Texas, as there was surprisingly little movement of rigs within that state this week...for rigs targeting natural gas, we can see that one of those was shut down in Ohio's Utica shale, which at 23 rigs in now down by 1 rig from a year ago...still, natural gas drilling increased by 1 rig nationally with the addition of two gas rigs in "other" basins not tracked separately by Baker Hughes...

DUC well report for April

Monday of this week saw the release of the EIA's Drilling Productivity Report for May, which includes the EIA's April data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...once again this report showed an increase in uncompleted wells nationally, almost entirely because there were dozens of newly drilled but uncompleted wells (DUCs) in the Permian basin of west Texas, while all other basins except for the Eagle Ford of south Texas saw more completions than new wells...for all 7 sedimentary regions covered by this report, the total count of DUC wells increased by 55, from 7,622 wells in March to 7677 in April, the nineteenth consecutive monthly increase in uncompleted wells nationally, and hence again the highest number of such unfracked wells in the history of this report....that was as 1297 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during April and 1142 wells were completed and brought into production by fracking...hence, at the April completion rate, the 7,677 drilled but uncompleted wells left at the end of April represent a 6.2 month backlog of wells that have been drilled but not yet fracked...

as has been the case for most of the past two years, the April DUC well increases were predominantly oil wells, with most of those in the Permian basin...the Permian saw its total count of uncompleted wells rise by 111, from 2,975 DUC wells in March to 3,086 DUCs in April, as 569 new wells were drilled into the Permian but only 458 wells in the region were the same time, DUC wells in the Eagle Ford of south Texas rose by 18, from 1,476 DUC wells in March to 1,494 DUCs in April, as 185 wells were drilled in the Eagle Ford during April, while 167 Eagle Ford wells were completed...meanwhile, the number of DUC wells in the Bakken of North Dakota remained unchanged 719, as 105 wells were drilled into the Bakken while 105 Bakken wells were fracked...on the other hand, the drilled but uncompleted well count in the Niobrara chalk of the Rockies front range decreased by 44 to 488, as just 139 Niobrara wells were drilled while 183 Niobrara wells were being fracked...similarly, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 20 wells, from 784 DUCs in March to 764 DUCs in April, as 104 wells were drilled into the Marcellus and Utica shales, while 124 of the already drilled wells in the region were fracked...meanwhile, DUC wells in the Anadarko region fell by 7 from 967 DUC wells in March to 960 DUCs in April, as 141 wells were drilled in the Anadarko region in April while 148 drilled wells in the basin were completed...lastly, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory decrease by three to 166, as 54 wells were drilled into the Haynesville, while 57 Haynesville wells were fracked during the same period...

thus, for the month of April, DUCs in the 5 oil basins tracked by in this report (ie., Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) increased by 78 wells to 6,747 wells, while the DUC count in the natural gas regions (the Marcellus, Utica, and the Haynesville) decreased by 23 wells to 930 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both oil and gas... 


United States : Dangerous Bill Allowing Sale of Fracking Waste Passes Committee in OH State House - A bill that would allow oil and gas waste, including fracking fluids, to be sold as a commodity passed through the Ohio House Energy & Natural Resources Committee. The bill -- HB 393 -- would allow fracking waste to be sold in local stores without meeting any safety standards or requirements to protect public health, and would expand the use of this hazardous waste as a road deicer by the Ohio Department of Transportation.  The bill passed without any Democratic support in the committee, which also rejected an amendment that would have required the states Department of Natural Resources to test for radioactive materials in the waste. The bill is expected to come for a full vote in the House in the coming weeks.  In response, Sierra Club Beyond Dirty Fuels Organizer Cheryl Johncox released the following statement: Every Ohioan should be concerned that this dangerous idea is one step closer to reality. Fracking waste contains hundreds of toxic pollutants and high levels of radioactivity. The idea that it should be sold in stores and sprayed onto more of our roadways is shockingly misguided. We should be stopping this dangerous practice altogether, not expanding it across our state. We urge our representatives to protect Ohioans health and reject this toxic legislation.

Steubenville Kiwanis Club welcomes Hess Corp. representative as speaker - — James W. Wilson, Utica operations area lead for Hess Corp., with a Steubenville presence at 4525 Sunset Blvd., was the May 8 guest speaker at the Steubenville Kiwanis Club’s noon luncheon meeting held at the YWCA of Steubenville. Wilson, who was introduced by Kiwanian George Pugh, May program chair, is a native of North Dakota who has spent most of his career with a small independent oil company engaged in the drilling of small exploration projects and the acquisition of existing producing properties mostly in North Dakota, Montana, Wyoming and Utah. He has been with Hess Corp. since 2010 and recently transferred to Ohio to manage Ohio operations.  Hess is a Fortune 500 company, Wilson explained, with safety as its No. 1 priority; the environment as No. 2; and production as No. 3.“In production we make about in the mid 300,000 barrels of oil equivalent a day throughout the world,” Williams said. “We are an international company. We’ve got significant operations in Ohio, North Dakota’s Bakken, the Gulf of Mexico and Malaysia and more recently Guyana in South America, which represents a major world class discovery.”Worldwide, Hess has about 2,075 employees and “lots of contractors.” In Ohio, there are 15 employees, two full-time contractors and other contractors in the field handling maintenance and service work. Of the three engineers, two are regional, he said. “In Ohio we operate 59 producing wells, and we’re currently fracking five additional wells so that will give us 64 here in the next month or so producing,” he told the club members. “Most of our wells are in Harrison, Belmont and Guernsey County.”

Appalachia’s Toxic Dumping Ground -Ohio residents speak out about the state’s influx of fracking waste- Twenty-four hours a day, seven days a week the trucks stream through eastern Ohio’s rolling landscape along Highway 50. Most come from West Virginia and Pennsylvania. All bear a placard with the designation “BRINE,” which doesn’t begin to describe the toxic, radioactive liquid slipping past motorists.  Felicia Mettler, a local resident, counted 108 brine trucks in one 24-hour period in 2016 at the K&H fracking waste injection well site in Torch, Ohio. The town is so small it doesn’t have a grocery store, but it’s home to one of the largest injection well sites in the state.  The underground injection wells store waste produced during the process of fracking, a shale gas extraction technique that forces fluid laden with heavy metals and other contaminants underground to fracture rock and free trapped oil or natural gas. The K&H site’s three wells received 2.16 million barrels of frack waste in 2016. That figure more than doubled to 4.42 million barrels in 2017. Each barrel contains 42 gallons, making a staggering 185.57 million gallons injected last year at the K&H site alone. In total, Ohio dumped 36.26 million barrels in 2017, the equivalent of 2,307 Olympic-sized swimming pools. Roughly half of that was shipped from Pennsylvania and West Virginia.  “Ohio has become [Appalachia’s] dumping ground for toxic waste,” Mettler says. “Most of the [fracking] waste comes from out of state. West Virginia and Pennsylvania are where we get most of the waste from. It’s just sad that you hear people say, ‘Oh, Ohio, that’s the new toxic toilet bowl.”

Study Finds No Groundwater Contamination from Fracking - Editor’s Note: Story submitted by Jackie Stewart from Energy in Depth, an industry trade group.YOUNGSTOWN, Ohio — The first ever and award winning Utica Shale study to examine the root source of methane linked to fracking has finally been published in a scientific journal. The long awaited multi-year University of Cincinnati groundwater study that found no impacts from fracking was finally published last week in the peer-reviewed journal Environmental Monitoring Assessment – more than two years after researchers first announced its findings. The study was also blessed by the Ohio Environmental Council in 2014 as its recipient for the “Science and Community Award.” Notably, the study’s topline conclusions echo comments made by the report’s lead researcher and a master thesis that was uncovered by Energy in Depth two years ago  stating: “We found no relationship between methane concentration or source in groundwater and proximity to active gas well sites.” “… our data do not indicate any intrusion of high conductivity fracking fluids as the number of fracking wells increased in the region.” “We hypothesized that CH4 [methane] concentration would increase as the number of shale gas wells in the area increased, with the isotopic composition of CH4 reflecting an increasingly fossil fuel derived natural gas source, and that pH of groundwater would decrease and electrical conductivity would increase due to the presence of acidic, salty hydraulic fracturing fluids in groundwater. We also predicted that groundwater wells located within 1 km of active shale gas wells would have elevated levels of dissolved CH4 with isotopic ratios reflecting a natural gas source, and that groundwater within this ‘active zone’ would have decreased pH and increased electrical conductivity.” But the data collected from 25 water wells in Carroll, Harrison, Stark, Belmont and Columbiana counties between 2012 and 2015 simply did not support that hypothesis, the study found.

Appalachian boom: Potholes, landslides and shattered peace - As in so many other communities in the rocky hills where West Virginia, Ohio and Pennsylvania come together over the intersection of the Marcellus and Utica shale formations, the area around Mobley turned out to be rich with shale gas. The first wells were drilled nearly a decade ago, and the three states now pump more natural gas than Texas. That production surge has been followed with a build-out of pipelines and other infrastructure. Trucks have taken over the narrow two-lane roads as production companies and pipelines have moved in. Faced with an unprecedented workload, the local, state and federal agencies that oversee pipeline construction in the region are already struggling to keep up. Critics say the regulators in charge of policing pipelines' environmental and public safety aspects are understaffed and unfocused. Some residents are already frustrated by what they see as state laws that are slanted to favor the gas industry, and they are worried about the current wave of pipeline work. Wetzel County is home to dozens of shale gas wells, and in Mobley, the homes have been emptied and demolished to make way for a facility that strips byproducts and impurities out of natural gas to prepare it for the national pipeline network. Lee Martin, who lives nearby on 104 acres with her husband, Chuck, said her young grandchildren used to have free rein of the fields near the house. Now, heavy trucks rumble up the rural driveway throughout the day en route to a well pad up the hill from the house; she keeps the kids inside or under close watch. The Martins had limited input on the placement of a well pad on their property thanks to the severance more than 100 years ago of the plot's mineral rights, which they said are now owned by a lawyer in town. The installation also includes a 1,025-foot run of pipeline that required clearing a 50-foot-wide swath through their back woods.   Two major pipelines, the Ohio Valley Connector and the Mountain Valley pipelines, both have their "milepost zero" just up the road from Mobley. They're among at least 11 pipelines worth about $25 billion that will carry gas from the Marcellus and Utica shales to market. Each of those projects will require a network of connectors, compressor stations, gathering lines and other equipment that will add to the natural gas industry's impact.

Kentucky Regulators Agree Illegal Radioactive Waste Should Stay In Blue Ridge Landfill -  Radioactive waste illegally dumped in an Estill County landfill will likely stay in the ground after state regulators approved a corrective action plan last week.The plan laid out two options: enclose the low-level radioactive material in the landfill, or excavate it and dump it somewhere else.Environmental advocates say the only safe long-term plan is to remove the waste, but state regulators agreed with landfill operators.Keeping the radioactive waste in the ground provides the greatest short-term and long-term protectiveness to human health and the environment, said John Mura, a spokesman for the Energy and Environment Cabinet.“The Cabinet carefully considered all of the responses to the [Corrective Action Plan] and truly believes that this alternative is the best way forward,” Mura said. The fallout comes three years after radioactive waste from natural gas drilling operations in West Virginia ended up in the Blue Ridge Landfill near Irvine, Kentucky.The landfill operator, Advanced Disposal Services, said it didn’t knowingly accept the illegal material. And now, it’s not clear where the radioactive waste is buried in the landfill, according to Energy and Environment Cabinet comments on the corrective action plan.The Cabinet said it would be “difficult if not impossible” to find the radioactive waste because it’s mixed and spread throughout the seven-acre site.And the contractor who performed the risk assessment didn’t test the landfill core, citing health risks to workers and the public, records show. State regulators concluded the results would “likely not improve the characterization of the waste,” according to state records. Instead, the contractor collected samples from a similarly processed oil and gas waste and made conservative estimates. That worst case scenario — which assumed the landfill has no cap and no liner — estimates the radioactive waste could contaminate groundwater next to the landfill for the next 2,700 years. In practice, the landfill does have a liner. But the current liner has an estimated service half-life of less than 450 years, far less than that of the radioactive isotopes likely found in the waste.

Rex Energy will file for bankruptcy - Pittsburgh Post-Gazette - After months of trying to find another way, Rex Energy Corp. is filing for bankruptcy.The State College-based oil and gas company whose major holdings are leases and shale wells in Butler County, disclosed in its quarterly report with the Securities & Exchange Commission that it could not come to an agreement with its lenders after missing a debt payment in late April.  Rex said it would be seeking protection under Chapter 11 of the bankruptcy code imminently.As of the end of last year, the company had 105 full-time employees. Only 17 of them work in the field as Rex uses independent contractors and consultants to do a lot of the drilling, fracking and associated work. Founded in 2007, Rex has been shedding assets and looking for capital for some time now. Last year, it sold a substantial portion of its Ohio acreage to Antero Resources Corp. Earlier this year, it sold its interest in wells in Westmoreland, Centre and Clearfield counties.Last month, the company’s stock was delisted from the Nasdaq. In its quarterly report, Rex disclosed that it defaulted on its loan not just by skipping an interest payment, but also by failing to provide its lenders with timely financial statements and other information. The company still plans to drill and complete several wells for the remainder of the year, it said.

Church with $2K in gas driller’s stock wins methane vote - A church with a minuscule stake in Range Resources has won shareholder approval of a resolution to force Pennsylvania’s largest natural gas driller to produce a report on its effort to scale back methane emissions. The Unitarian Universalist Association, which owns Range stock valued at about $2,000, sought to force the energy giant to produce a report that “reviews the company’s policies, actions and plans related to methane emissions management.” Range’s board opposed the measure, saying the Fort Worth, Texas-based company already discloses that information to stockholders as well as to federal and state environmental regulators. A board statement that urged shareholders to reject the proposal archly noted that it was “submitted on behalf of a stockholder who holds 130 shares.” Shareholders at the company’s annual meeting on Wednesday approved the activist church’s resolution by the slimmest of margins, giving it just over 50 percent of the vote. A similar measure offered by the church in 2014 was withdrawn after getting just 8 percent. Environmentalists hailed shareholders’ change of heart. “This vote provides further proof that the public is increasingly concerned about the impact of oil and gas pollution,” said Andrew Williams, director of legislative and regulatory affairs at the Environmental Defense Fund. The Boston-based Unitarian Universalist Association wants Range and other drillers to limit emissions from methane, a powerful greenhouse gas that contributes to global warming. It said Range had not provided “adequate disclosure” of its mitigation strategy. The resolution approved by shareholders demands that Range produce a report by September on its efforts to stop methane leaks. 

Northeast region slated for record natural gas pipeline capacity buildout in 2018 - EIA expects construction of new natural gas pipeline capacity in the United States to continue in 2018, in particular in the northeastern United States. By the end of 2018, if all projects come online by their scheduled service dates, more than 23 billion cubic feet per day (Bcf/d) of takeaway capacity will be online out of the Northeast, up from an estimated 16.7 Bcf/d at the end of 2017 and more than three times the takeaway capacity at the end of 2014.Currently, the growth of natural gas production in the Marcellus and Utica basins in Pennsylvania, Ohio, and West Virginia is constrained by the lack of available takeaway pipeline capacity to move it to new markets. As new pipeline projects come online, they will create an outlet for increased production, providing natural gas to demand markets in the Midwest, the Southeast, eastern Canada, and the Gulf Coast. Currently, no major pipeline capacity expansions in advanced development are slated to come online in New England because of stakeholder concerns raised in the development process.Of the projects scheduled to be in service by the end of 2018, most are associated with four major interstate pipelines: Columbia Pipeline Group (TCO), which includes both Columbia Gas and Columbia Gulf Transmission; Transcontinental Gas Pipeline (Transco); Rover Pipeline; and NEXUS Pipeline.   The Columbia Pipeline Group (TCO) has two expansion projects intended to add 4.2 Bcf/d of takeaway capacity out of the Northeast: Leach Xpress and Mountaineer Xpress. The Leach Xpress project, which entered service on January 1, 2018, supplies an additional 1.5 Bcf/d of capacity out of West Virginia and Ohio, and the Mountaineer Xpress project, which is scheduled to enter service in late 2018, will increase takeaway out of West Virginia by an additional 2.7 Bcf/d.  Three projects associated with the Transcontinental Gas Pipeline (Transco) are intended to add more than 3 Bcf/d of capacity out of Pennsylvania and West Virginia: Atlantic Sunrise, Mountain Valley Pipeline, and Equitrans Expansion. Atlantic Sunrise, the first phase of which was completed in 2017, is a nearly $3 billion project that will provide 1.7 Bcf/d of bidirectional capacity on the Transco System.  The Mountain Valley Pipeline (2.0 Bcf/d), a new pipeline from West Virginia to the Transco system in southern Virginia, and the Equitrans Expansion Project (0.6 Bcf/d), which brings natural gas from northwest Pennsylvania to an interconnection with the Mountain Valley Pipeline, are also scheduled to come online in 2018.  The first phase of Rover Pipeline was completed in late 2017, and Phase 2 is expected to come online in mid-2018. Phase 2 includes 3.25 Bcf/d of new capacity into Midwestern markets and the Dawn hub in Ontario, Canada. NEXUS Pipeline, which follows a similar route to Rover, will add 1.5 Bcf/d of new capacity. Natural gas from the Marcellus and Utica basins will be delivered to this pipeline by the 950 MMcf/d Appalachian Lease Project, also scheduled to come online in 2018.

Mountain Valley Pipeline cited for failing to control sediment, erosion -- The Mountain Valley Pipeline has been cited for environmental violations that critics repeatedly warned might occur. The 300-mile pipeline also received a noncompliance report from an inspection company that works for the U.S. Forest Service. The Notice of Violation from the West Virginia Department of Environmental Protection and the noncompliance report say Mountain Valley Pipeline failed to control erosion and allowed sediment into water, among other things — problems that critics and residents along the pipeline’s route have expressed concern about. “The genesis of this issue was when the state decided not to evaluate every crossing and didn’t do a thorough enough evaluation of the project in the first place,” said Bill Price, organizing manager for the Sierra Club in the Appalachian region. Last year, West Virginia regulators waived the project’s Section 401 certificate, a permit issued under the Clean Water Act that gives states the authority to make sure proposed projects, like the Mountain Valley Pipeline, comply with state water quality standards. The state had previously issued it, but remanded it when it was challenged by a citizen group. “Things are happening, and we told you we had concerns about it in the first place,” Price said. The Notice of Violation stems from a partial inspection on April 3 in Wetzel County, where the buried pipeline begins before transporting natural gas to Pittsylvania County, Virginia. The week before the inspection, the county got at least 4 inches of rain, and someone reported a slip to the pipeline’s hotline, according to documents filed with the Federal Energy Regulatory Commission.

NLG Condemns Forest Service For Blocking Food & Water To Pipeline Protester –The Environmental Justice Committee of the National Lawyers Guild stated it condemns the actions of the United States Forest Service in denying basic necessities to a Virginia protester in violation of international law and 18 USC §2340(2)(b).  The protester, a pod-sitter, with the forest name of “Nutty,” has sat in a pod since March 28, 2018, on a 50-foot pole in the Giles county section of Jefferson National Forest challenging the construction of the Mountain Valley Pipeline (MVP). The 50-foot pole is attached by guy wires to a gate on a road. MVP, having already started the construction of a 300-mile pipeline scheduled to carry fracked liquid natural gas, has commenced tree-cutting in the county in preparation for pipeline construction. The US Forest Service has closed off areas near Nutty and her pod, denying access to water protectors who support her, but more importantly, denying her food and water and subjecting her to smoke, bright lights and noise in an attempt to force her down from her perch atop of the pod. A pod-sitter has a civil and human right to life. A police duty to protect has been created. By preventing others from providing food and water, the Forest Service has created a situation where the pod-sitter’s safety and well-being are at risk under the Deshaney Standard. See Deshaney v. Winnebago County Dept. of Social Services, 489 U.S. 189 (1989). The Forest Service in conjunction with the State Police has exhibited deliberate indifference to the protector’s serious medical needs, violating the 8th Amendment under Deshaney. Denial of food and water is also a violation of both domestic and International Law, including The Rome Statute, Article 7. 18 USC §2340(2)(b) expressly forbids citizens of the United States from “the administration and application of procedures calculated to disrupt profoundly the senses or the personality” and section (c) of the same forbids threats of imminent death or bodily harm. The denial of food and water and the continuing use of smoke, bright lights and excessive noise is both a threat and perpetration of bodily harm. Similarly, the denial of food and drinking water, and subjecting the pod sitter to smoke, bright lights and excessive noise has been calculated to disrupt the senses of this pod-sitter.

Lawsuit aims to give medical care to tree-sitter - As a woman calling herself simply “Nutty” is in her 50th day of a tree-sit in Giles County, there’s a new lawsuit filed Wednesday on her behalf. Lawyers have brought a suit against the Forest Service demanding that the government allow a physician to give Nutty medical care at her position in the Jefferson National Forest. The woman protesting construction of the Mountain Valley Pipeline hasn’t had access to supplies, as Forest Service workers blocked off the area around her so-called monopod more than a month ago. She said earlier this month she still has water and some food with her.   People close to the protester have said workers have blocked medical personnel from accessing Nutty.   Additionally, the lawsuit alleges Forest Service workers have directed smoke at her, shined bright lights on her and placed noisy generators near her location in the way of pipeline workers.  “The actions of the Forest Service are tantamount to torture at this point. I’m not exaggerating. I’m not using hyperbole,” said Alan Graf, a lawyer based in Floyd.   The Rutherford Institute filed the lawsuit arguing that Forest Service agents have violated the rights of a physician. The lawsuit says Dr. Greg Gelburd wants to examine the 28-year-old protester and has legal access under the Religious Freedom Restoration Act and First Amendment.   Supporters have set up a camp with tents just outside of the blocked-off zone. As many as 100 people have come through the area to show support. Just to get to the location, a 10 News crew hiked with supporters for more than an hour, because the Forest Service has closed a nearby road.  One other tree-sitter is still protesting in the natural gas pipeline’s route in Virginia. While the person’s identity is unknown, he or she is positioned in the middle of a Franklin County family’s farm. A judge ruled Tuesday that two landowners will face a total of $2,000 in fines for allowing tree-sitters to take three positions in the pipeline’s path, blocking construction workers.

Pipeline protesters take to the trees -  . Generators are flicked on and prison-style floodlights blast the campers, as well as the protester they are guarding, a young woman in a tree who goes by “Nutty.”  On March 28th, "Nutty" planted herself atop a fifty-foot pole – the timber of a tulip poplar tree – in Virginia's Jefferson National Forest to block the path of a proposed natural gas pipeline. She has now been living in a makeshift tent rigged to the pole for an astonishing 49 days, surviving on an assortment of initial supplies, catching her drinking water straight from the clouds and going to the bathroom in a bucket. To give her food or water, the U.S. Forest Service has determined, is illegal. At least three people have been arrested trying to do so, including one man that, according to was "handcuffed and put in leg shackles." Last Saturday, when two Charlottesville physicians hiked the steep two-mile path to a support camp that had been established near Nutty's "monopole" to perform a wellness check they were denied access. "It was shocking," says pediatrician Paige Periello, one of the two physicians. "That just doesn't seem like the way we want to treat people in Virginia, or anywhere in this country."  Nutty has positioned herself at a particularly strategic location – it's here that a pipeline backed by Con Ed and Pittsburg-based EQT, among other partners, and carrying fracked gas 300 miles from an especially gas-rich quadrant of the Marcellus Shale in northwestern West Virginia, will bore six-hundred feet beneath the Appalachian Trail.  Across the ridge, in Monroe County, West Virginia, a man named Deckard is living in a tree-sit that has been occupied since February 26th. About 80 miles east, in Franklin County, Virginia, a three-person tree-sit was established in April to block the Mountain Valley Pipeline. On Bent Mountain, outside of Roanoke, Theresa "Red" Terry and her daughter "Minor," who own a 1,700-acre rural homestead that was partially snatched by pipeline companies using eminent domain, gained national attention for camping out in trees on their own land for 34 days before court-imposed-fines and the threat of forced removal brought them down. In central Pennsylvania, 62-year-old Ellen Gerhart faces six months in prison for her part in establishing a series of tree sits to block the Mariner East 2 and 2X pipelines from crossing part of her family farm. A resistance camp known as the Three Sisters Camp has sprung up on a plot of lush woods adjacent to the James River, in Central Virginia, to block the Atlantic Coast Pipeline. In North Carolina, where an arm of the Atlantic Coast Pipeline ends, farmer Tom Clark recently told a local paper that, if pipeline construction commences, he will climb a deer stand and stay for, "as far as I can go."

Blocking the pipeline path: Tree sitter continues vigil on Peters Mountain; Caravan shows support - At the top of Peters Mountain in Monroe County, a tree sitter continues his vigil in the path of a natural gas pipeline.For 76 days, the anonymous man has lived in a makeshift treehouse, less than a stone’s throw from where the work clearing trees for the pipeline had to stop in order not to cut down the tree he is living in.The plan is to run the pipeline through the mountain near his perch to avoid disturbing the nearby Appalachian Trail, which runs along the top of Peters Mountain between Monroe and Giles County in Virginia. From the tree sitter’s vantage point, he can look down over a valley near Lindside, where narrow roads snake through farmland. During his stay about 30 feet up the tree, once a week one of those roads has been the scene of a caravan of vehicles.They drive just as night is falling, showing the tree sitter a string of lights, and an act of support. “All of these people care about this place and care about the land and what is going on,” the tree sitter said in a recent interview.  On Monday night last week, about 20 cars and trucks, driven mostly by Monroe County residents, gathered at the Lindside United Methodist Church to leave for the trip.   The 303-mile, 42-inch diameter line, which is slated to run from north central West Virginia to Chatham, Va., is a $3.5 billion project that will cut a swath through National Forest as well as private land about 125 feet wide as it is being buried through Monroe County and Giles County in Virginia. But many of the property owners have been forced through the courts to allow the energy companies, headed by EQT of Pittsburgh, an easement through their land. The tree sitter is on National Forest land through which an easement has been granted.

FERC lets Atlantic Coast Pipeline construction begin in West Virginia - Atlantic Coast Pipeline LLC can begin actual construction of the up to $6.5 billion project in specific parts of West Virginia, according to a “notice to proceed” from the Federal Energy Regulatory Commission. The notice issued Friday involves just sections where the company — a partnership of Dominion Energy Inc., Duke Energy Corp. and The Southern Co. — has obtained right of way and where tree clearing has been completed or is unnecessary. It does not as yet include any lands controlled by the National Forest Service. ACP and the Dominion division that is in charge of construction applied for the permit in April. The notice covers about 50 miles through Harrison, Lewis, Randolph, Upsher and Pochantas counties in West Virginia, says Dominion spokeswoman Jen Kostyniuk. The application says it includes a 300-foot-wide survey corridor for the pipeline. ‘Full construction’ Dominion has done some tree-felling and reconstruction work in Virginia and North Carolina. But the notice issued by the Office of Energy Projects is the first order that allows Dominion “to commence full construction” of any section of the pipeline. The Atlantic Coast Pipeline is designed to transport shale gas mined by fracking from the Marcellus and Utica fields in New York, Pennsylvania, Ohio and West Virginia southeast to coastal Virginia and along the Interstate 95 corridor in North Carolina as far south as Lumberton. Dominion is the dominant partner, owning 48% of the project. Charlotte-based Duke owns 47%, including a portion owned by subsidiary Piedmont Natural Gas, and Southern owns 5% of the project. The project was initially forecast to cost $4.5 billion to $5 billion, when it was first proposed in 2014. It has met stiff opposition from environmental and community heritage groups, particular in the mountains of Virginia. There has been environmental opposition in eastern North Carolina as well. The project is slated to be completed at the end of next year. 

Atlantic Coast Pipeline opponents file civil rights complaint vs. DEQ -- Thirteen environmental justice groups and their affiliates allege the state Department of Environmental Quality discriminated against communities of color when it approved permits for the Atlantic Coast Pipeline.The organizations, including Clean Water for North Carolina, the Blue Ridge Environmental Defense League, NC WARN, and many of the groups’ chapters, filed the Title VI civil rights complaint today against DEQ with the Environmental Protection Agency.Title VI complaints can be filed only against entities that receive federal funding.  DEQ spokesperson Megan Thorpe issued a statement, saying the agency “conducted extensive public outreach in communities along the ACP route. The public input we received allowed us to strengthen our decisions within the scope of our authority.”“The failure to assess the environmental justice impacts of the proposed ACP on communities of color along the route led to the improper actions taken by DEQ,” the complaint reads. The procedures for issuing the permit “were not fair and impartial.”

Atlantic Coast Pipeline opponents say state ignored minorities' civil rights -- A coalition of environmental organizations opposed to the Atlantic Coast Pipeline filed a complaint Tuesday claiming Gov. Roy Cooper's administration failed to protect residents' civil rights when it issued permits for the project. The environmentalists are calling on the U.S. Environmental Protection Agency's civil rights division to require the N.C. Department of Environmental Quality to rescind the permits and conduct a more thorough analysis. Duke Energy, which is one of the partners in the pipeline project, disputes the allegations.The complaint is "rife with misinformation and reflects basic misinterpretation of complex and thoughtful federal and state processes," Duke spokeswoman Tammie McGee said in an email.  Megan Thorpe, communications director for the state environmental agency, defended state regulators."DEQ conducted an extensive public outreach in communities along the ACP route," Thorpe emailed. "The public input we received allowed us to strengthen our decisions within the scope of our authority."The complaint is the latest legal tactic environmental groups have used to stop or delay the interstate pipeline. It comes in the form of a letter to the EPA by an attorney for 13 groups from seven counties where the natural gas pipeline is planned. The public-interest groups allege the state failed to consider the disproportionate impact the pipeline will have on communities where a large number of people of color live.

Federal appeals court nullifies key permit for Atlantic Coast Pipeline; construction could be halted - A federal appeals court on Tuesday invalidated a key U.S. Fish and Wildlife Service review of the Dominion Energy-led Atlantic Coast Pipeline, a decision environmental lawyers who argued the case say should halt construction of the contentious natural gas project. Dominion vowed to continue to press forward on the project, asserting Tuesday night that the ruling covers only portions of the proposed route for the 600-mile pipeline. A three-judge panel of the Richmond-based 4th U.S. Circuit Court of Appeals sided with pipeline opponents, who argued that the federal review known as an incidental take statement — meant to set limits on killing threatened or endangered species during construction and operation — was so vague as to be unenforceable. “We conclude, for reasons to be more fully explained in a forthcoming opinion, that the limits set by the agency are so indeterminate that they undermine the incidental take statement’s enforcement and monitoring function under the Endangered Species Act,” the judges wrote in an order Tuesday. “Accordingly, we vacate the Fish and Wildlife Service’s incidental take statement.” The Southern Environmental Law Center argued the case on behalf of the Sierra Club, the Defenders of Wildlife and the Virginia Wilderness Committee. “This puts a stop to any work that could threaten rare and endangered species and that’s much of the pipeline route,” said D.J. Gerken, an attorney with the center who argued the case before Chief Judge Roger L. Gregory and Judges Stephanie D. Thacker and James A. Wynn Jr.

BREAKING: Fourth Circuit Court of Appeals Ruling Deals Dominion Huge Blow In Its Efforts to Build Risky, Unnecessary, Destructive Atlantic Coast Pipeline -- — Yesterday, the U.S. Court of Appeals for the Fourth Circuit threw out a key permit granted to Dominion Energy’s Atlantic Coast Pipeline, finding that the U.S. Fish and Wildlife Service’s “Incidental Take Statement,” meant to protect threatened and endangered species, was inadequate. The court found that the limits set by the agency were “so indeterminate that they undermine the [permit’s] enforcement monitoring function under the Endangered Species Act.” Without this permit, all on-the-ground construction must stop in North Carolina, Virginia, and West Virginia because other federal permits are contingent on the FWS permit. The Southern Environmental Law Center argued the case on behalf of the Sierra Club, Defenders of Wildlife, and Virginia Wilderness Committee.  Anne Havemann, General Counsel at the Chesapeake Climate Action Network, stated in response: “This decision is a validation of what we’ve been saying for years: The environmental impacts of the Atlantic Coast Pipeline are huge and unacceptable. The only way we know we can protect our environment and our climate is to stop the pipeline from being built. “The impacts of Dominion’s aggressive push to get regulators to approve this unwanted and unnecessary pipeline without the proper reviews are finally catching up to the company. In addition to yesterday’s court decision, state regulators in Virginia who were pushed to approve the Atlantic Coast Pipeline without complete environmental plans from Dominion have opened up yet another public comment period on stream crossings. Yesterday’s decision is just one in what we expect will be a long line of setbacks for Dominion’s reckless pipeline plans.”

Enbridge: damaged oil pipeline was dented less than 1 inch  (AP) — The company that operates twin oil pipelines in the Straits of Mackinac says one of the lines suspected of being struck by a tugboat anchor was dented more than three-fourths of an inch. Enbridge Inc. official Peter Holran told the Michigan Pipeline Advisory Board in Lansing Monday about the April 1 damage to the pipelines running between Lake Michigan and Lake Huron.Company spokesman Ryan Duffy says each pipeline is about 20 inches in diameter with walls nearly an inch thick — but the thickness of the walls did not decrease. Holran says the other pipe suffered two dents of just under three-quarters of an inch and less than a half-inch.The suspected anchor strike also caused about 600 gallons (2,270 liters) of mineral oil insulation fluid to leak from two electric cables.  A previous version of the story stated the thickness of the pipelines' walls decreased from the dents, with the first dent being two-hundredths of an inch from rupturing. The dents did not decrease the wall thickness; they only pushed the walls in.

Haynesville Shale making major production comeback - The Haynesville Shale is back. Natural gas production in the dry gas shale play jumped in both 2017 and 2018. The U.S. Energy Information Administration is projecting Haynesville gas production in May 2018 to reach 8.54 billion cubic feet per day (Bcf/d), up from April’s 8.33 Bcf/d. Production was roughly 6.00 Bcf/d in January 2017. If the May projection is reached, that would be a 42.3% increase in Haynesville dry gas production in just the last 17 months, a feat that has been quietly achieved, Kallanish Energy reports. The Haynesville is again one of the top shale gas plays in the U.S., behind only the Appalachian and Permian basins. The Haynesville Shale is producing roughly 13% of U.S. shale gas production, according to EIA. That production is comparable to the Haynesville production five years ago in the play that covers 9,000 square miles in western Louisiana, eastern Texas and southwestern Arkansas, where nearly 30 drilling companies are at work.  The Haynesville rig count has jumped from 16 in April 2016, to 39 a year ago, to 54 as of May 11. Houston-based Tellurian has reportedly had discussions with Chesapeake Energy, one of the biggest players in the Haynesville Shale. Tellurian is interested in acquiring Haynesville gas assets for its planned Driftwood liquefied natural gas export facility at Lake Charles, La. Chesapeake gets 25% of its natural gas production from the Haynesville, 833 million cubic feet per day (MMcf/d), or 139,000 barrels of oil-equivalent per day (BOE/d), the Oklahoma-based company recently reported. That production has jumped 22.1%, from 682 MMcf/d in Q1 2017. It has three rigs at work in the Haynesville and expects to complete up to new 25 wells in full-year 2018. Production in the Haynesville has jumped 25% from early 2016 to early 2018. That is more than the production increase of 20% in the same timeframe in the Marcellus Shale in Pennsylvania and West Virginia, according to EIA.  

Fracking is Coming Back in a Big Way - The price of crude oil is rapidly on the rise. Oil recently broke past $70 per barrel for the first time since 2014 after President Trump pulled out of the Iran deal. And many believe the black stuff is set to top $100 per barrel again shortly. Here's a long-term look at oil prices: The obvious winners in a $100 oil environment are the crude producers, refiners, transporters... pretty much the entire global energy industry. But there's one specific sector that I believe is going to grab headlines and investor interest again with higher oil prices this summer: fracking. Between 2013 and 2015, fracking was a big deal. It was everywhere. And everyone was talking about it... financial media, Twitter, and protesters. . High oil prices, as well as a continuing push for American energy independence, made fracking both profitable and politically possible. And there was a big rush into the fracking business back then. What most people recall about fracking, however, is probably the controversy surrounding the whole thing.   Yet the benefits of fracking seemed to end up outweighing the costs. The fracking boom between 2013 and 2015 helped lessen oil prices and increased America's energy independence. By that measure, fracking worked. After falling for decades, U.S. oil production now stands near a 50-year high. Since 2014, the price of oil has fallen quite a bit. Back in early 2016, oil price were under $30 a barrel. (Again, take a look at that first chart.) In a bit of an ironic twist, lower prices all but killed profitability for frackers, as well as investor interest. And since then, fracking has mostly fallen by the wayside. But with crude prices back on the rise to $100 a barrel, fracking is coming back into the spotlight. 

As oil prices surge, U.S. service providers eye growing labor shortage (Reuters) - Finding roughnecks remains a challenge for oil drillers as rising crude prices increase demand for their services, oilfield executives said on Thursday at a conference in Houston. Oilfield service suppliers cut tens of thousands of workers following the 2014 oil-price collapse, and skilled employees have moved to other industries or are no longer interested. A worker shortage is helping drive up service costs for oil producers, especially in the hottest shale fields. “Recruitment and staffing is a big challenge. We’re aggressively focused on recruiting people,” said Kevin Neveu, chief executive at Precision Drilling Corp. The Calgary, Alberta-based company added about 2,000 workers last year. U.S. oil prices CLc1 have rebounded to over $70 a barrel from lows of around $26 a barrel in 2016, aided by rising global demand and supply cuts from OPEC-member countries and other exporters. That has spurred a rush to drill new wells in the Permian Basin of West Texas and New Mexico and the Bakken Shale of North Dakota. In Texas, the unemployment rate was 4 percent in March, near its historic low, versus 4.6 percent a year ago, according to the Bureau of Labor Statistics. “I was quite shocked at how fast we ran out of people from our recall list,” said Mike Nuss, an executive vice president at driller Ensign Energy Services Inc. “We’ve had to scramble and resurrect our training,” he said in an interview at the International Association of Drilling Contractors’ conference. A study led last year by the University of Houston found 25 percent of dismissed workers had moved to another industry and 55 percent were considering it. While drillers hustle to secure more workers, they also need employees with high-tech skills. Noble Corp and General Electric, for example, recently announced plans for a fully digitized drilling vessel. “We’re moving to an era where the machines do the work. They run the analysis and they ultimately do the learning,” 

How Trump’s EPA Is Moving to Undo Fracking Wastewater Protections - Back in 2008, residents of Pittsburgh, Pennsylvania, and surrounding areas received a notice in the mail advising them to drink bottled water instead of tap water—a move that U.S. Environmental Protection Agency ( EPA ) internal memos at the time described as "one of the largest failures in U.S. history to supply clean drinking water to the public." The culprit: wastewater from oil and gas drilling and coal mines. This included fracking wastewater that state officials had allowed to be dumped at local sewer plants—facilities incapable of removing the complex mix of chemicals, corrosive salts and radioactive materials from that kind of industrial waste before they piped the "treated" water back into Pennsylvania's rivers.The levels of corrosive salt in some of the oil and gas wastewater was so high that at some sewage plants , it was suspected of killing off the "good bacteria" that removes fecal coliform and other dangerous bacteria from raw sewage. State and federal regulators responded with a mix of voluntary requests and, eventually, rules designed to stop drillers from bringing their wastewater to ill-equipped water treatment plants.  Eight years after the Pittsburgh incident, in 2016, the EPA finished writing the rules that would stop that kind of failure from reoccurring, specifically forbidding sewage treatment plans from accepting untreated wastewater from fracked wells.  Now, the Trump administration's EPA is announcing that it wants to study the industry's wastewater all over again. The Trump-era study will examine oil and gas wastewater, asking, in the administration's words, "whether any potential federal regulations that may allow for broader discharge of treated produced water to surface waters are supported." In other words, Trump's EPA is questioning whether the rules should be changed, allowing wastewater from oil and gas wells, including fracked wells, to make its way into America's rivers, streams, lakes and reservoirs after some treatment.

BLOG: Poor Mental Health in Oil, Gas Industry 'At All-Time High' - - Poor mental health in the oil and gas industry is at an all-time high.That is the opinion of David Steward, an ex-oil and gas recruitment boss and current managing director at wellbeing provider The Sober Advantage.“Over the last three and a half years, the oil industry has experienced its deepest downturn since at least the 1990s. This means less investment into new projects and a squeeze on available jobs in the sector,” Steward told Rigzone.“With new opportunities scarcely available some oil workers have felt forced to accept work in less favorable territories, taken a step down or reduced their rates considerably just to ensure they are on the project,” he added.Steward said the impact these actions can have on the mental health of an individual should not be underestimated.“Behind these decisions there remains concern, anxiety, stress, feelings of being overwhelmed by circumstances larger than you, lack of control and potentially isolation and loneliness,” he stated.“Some are feeling forced to work in countries which follow alternative cultural or religious beliefs to them. This internal struggle can be an exhausting daily experience for someone to endure, all the while maintaining a perceived ‘strong’ and ‘all together’ demeanor,” he added.Offering potential solutions to anyone in the industry struggling with their mental health, Steward suggested that people with these afflictions should not focus on things that were out of their control. Instead, they should focus on themselves and the way in which they respond to challenging circumstances.

From the folks that brought us Dakota Access: Another fraught pipeline battle -- It’s a familiar scenario: Locals fight back against a pipeline permitting process that they say ignores their health and right to a clean environment. The courts intervene, throwing the future of the community and the pipeline into question. In this case, Energy Transfer Partners, the company behind the hotly contested Dakota Access Pipeline, wants to finish building a pipeline from Louisiana to the Gulf Coast. The company owns a majority stake in the Bayou Bridge Pipeline, a 162-mile addition to the oil infrastructure it’s building across the nation. Currently there are two major cases challenging the pipeline. Late last month, a local judge found that a permit didn’t evaluate potential negative impacts of the pipeline on coastal residents. Another legal battle surrounds the U.S. Army Corps of Engineers’ permit to allow the pipeline to go through the Atchafalaya Basin, where crawfishermen say a spill could destroy their livelihoods. In the April decision, Judge Alvin Turner Jr. found the Louisiana Department of Natural Resources broke state law*. Among other offenses, the permit proposal didn’t have an emergency response plan in the case of an accident, according to the decision. The pipeline is set to go through St. James Parish, an area with a mostly African-American community that’s part of “Cancer Alley,” a highly industrialized area stretching between Baton Rouge and New Orleans. There, residents worry about high rates of cancer due to rampant pollution. In one town in the area, Desmog reports that the wealthy have sold property to industry, leaving mostly lower-income black residents behind to deal with cancer and respiratory illnesses.  Anti-pipeline groups saw a temporary victory against the pipeline in February, too. A district judge ordered construction in the Atchafalaya Basin to stop until a lawsuit over the pipeline’s Army Corps permit concludes. But construction resumed after a decision in an appeals court. The groups recently made their arguments in a federal appeals court and are waiting on a decision.

Judge's order expected to halt Bayou Bridge Pipeline construction -- A state district court judge signed an order Thursday (May 17) that's expected to halt construction of the controversial Bayou Bridge Pipeline through the Atchafalaya Basin. Judge Alvin Turner Jr., of the 23rd Judicial District Court in Ascension Parish, had ruled last month that the state Department of Natural Resources violated a law designed to protect the public and environment when it issued a permit for the pipeline. The order effectively halts the work underway on the 162-mile pipeline, said Elizabeth Livingston de Calderon, an attorney representing environmental and community groups that filed suit challenging the permit. "We expect (the pipeline company) to immediately stop construction and to start working on an emergency and evacuation plan that will resolve the dangerous situation this community is in," she said in a statement. The Gulf Restoration Network, Atchafalaya Basinkeeper and other environmental groups say the pipeline will permanently harm ancient cypress forests and disrupt water flows through the Atchafalaya River Basin. The groups also claim that the potential for oil spills is significant. Bayou Bridge Pipeline is jointly owned by Energy Transfer Partners and Phillips 66. Its route runs from Lake Charles to St. James Parish, including a long segment that crosses the Atchafalaya Basin.

Rising USGC sour prices prompt more imports: In the LOOP - US crude imports into the Louisiana Offshore Oil Port appear to be on an upswing in May alongside the recent increase in regional sour crude prices. About 3.95 million barrels of crude was imported into LOOP in the first decade of May, or roughly 395,000 b/d, according to the most-recent US Customs Bureau and S&P Global Platts Analytics data, compared with an average of 327,000 b/d in the first four months of 2018. Roughly half of those barrels were Basrah Light and Basrah Heavy imported from Iraq while the balance comprised Argentinian Escalante, Kuwait Export Crude and Mexican Maya barrels. Marathon imported 2.4 million barrels of that amount while ExxonMobil and Trafigura imported about 975,000 barrels and 545,000 barrels, respectively. The uptick in crude imports at LOOP coincides with a recent increase in regional sour crude prices. By midday Monday, the US Gulf of Mexico offshore grade Mars was heard bid-ask at a 65 cents/b-$1/b premium to cash West Texas Intermediate at Cushing, Oklahoma. That put its value somewhere around plus 70 cents/b to cash WTI compared with plus 45 cents/b at the beginning of May and minus 60 cents/b at the beginning of March. The increases have been due in part to scheduled maintenance on Shell’s US Gulf of Mexico Mars and Ursa platforms, which began in late March and continued into at least mid-April. Other regional sour grades similarly have risen. The medium sour blend LOOP Sour ended last week 75 cents/b above its value at the beginning of March while Southern Green Canyon is up $1.35/b over the same time period, S&P Global Platts data show. The hike in prices and increasing refinery runs ahead of the driving season are likely boosting regional imports, particularly of heavy and medium sour grades, favored by regional refiners despite booming production of light sweet crude in the US. 

U.S. Gulf Coast port limitations impose additional costs on rising U.S. crude oil exports --U.S. crude oil exports averaged 1.1 million barrels per day (b/d) in 2017 and 1.6 million b/d so far in 2018, up from less than 0.5 million b/d in 2016. This growth in U.S. crude oil exports happened despite the fact that U.S. Gulf Coast onshore ports cannot fully load Very Large Crude Carriers (VLCC), the largest and most economic vessels used for crude oil transportation. Instead, export growth was achieved using smaller and less cost-effective ships. Each VLCC is designed to carry approximately 2 million barrels of crude oil. Because of their large size, VLCCs require ports with waterways of sufficient width and depth for safe navigation. All onshore U.S. ports in the Gulf Coast that actively trade petroleum are located in inland harbors and are connected to the open ocean through shipping channels or navigable rivers. Although these channels and rivers are regularly dredged to maintain depth and enable safe navigation for most ships, they are not deep enough for deep-draft vessels such as fully loaded VLCCs. To circumvent depth restrictions, VLCCs transporting crude oil to or from the U.S. Gulf Coast have typically used partial loadings and ship-to-ship transfers. The ship-to-ship transfer process known as lightering refers to a larger vessel partially unloading onto a smaller vessel. Reverse lightering occurs when smaller vessels load onto a larger vessel. These transfers take place in designated lightering zones and points that exist outside many of the largest U.S. petroleum ports.  Data from the U.S. Maritime Administration (MARAD) for 2015, the latest year for which data are available, indicate that the two largest ports of call for tankers carrying crude oil and petroleum products in the United States are lightering zones. The South Sabine Point and Southtex lightering zones each had nearly 250 million deadweight tons of tanker traffic volume in 2015. Deadweight tons are a measure of a vessel’s capacity to carry cargo by weight. The number of barrels per ton varies based on the density of the petroleum product or crude oil cargo.

Steps toward making Louisiana a crude-exporting powerhouse - U.S. crude oil exports have averaged a staggering 1.6 MMb/d so far in 2018, up from 1.1 MMb/d in 2017, and the vast majority of these export volumes — 85% in 2017 — have been shipped out of Texas ports, with Louisiana a distant runner-up. The Pelican State has a number of positive attributes for crude exporting, though, including the Louisiana Offshore Oil Port (LOOP), the only port in the Lower 48 that can fully load the 2-MMbbl Very Large Crude Carriers (VLCCs) that many international shippers favor. It also has mammoth crude storage, blending and distribution hubs at Clovelly (near the coast and connected to LOOP) and St. James (up the Mississippi). In addition, St. James is the trading center for benchmark Light Louisiana Sweet (LLS), a desirable blend for refiners. The catch is that almost all of the existing pipelines at Clovelly flow inland — away from LOOP — many of them north to St. James. That means infrastructure development is needed to reverse these flows southbound from St. James before LOOP can really take off as an export center. Today, we consider Louisiana's changing focus toward the crude export market and the future of regional benchmark LLS.

U.S. oil shipments to Asia may hit new high in July, cool Mideast crude prices (Reuters) - The volume of U.S. crude oil arriving in Asia is expected to hit a new high in July as Asian refiners sought arbitrage supplies to replace Middle Eastern crude after prices for Gulf grades rose, traders said on Wednesday. U.S. crude arriving in Asia hit an all-time high of close to 25 million barrels in May with cargoes discharging in China, South Korea, Singapore, India and Malaysia, according to trade flows data on Eikon. The volume dips to about 19 million barrels in June, but is set to rebound again in July after U.S. crude futures slipped to the widest discount in three years against Brent this week, according to traders and Eikon data. CL-LCO1=R The drop in U.S. crude prices coincides with rising values for Middle East oil in Asia and has opened the arbitrage window, traders said. Close to 10 supertankers, each carrying 2 million barrels of crude, have been lined up to load oil in the U.S. Gulf Coast for Asia, two of the traders said. These are expected to arrive in July, they said. “WTI Midland is coming across,” a third trader said, adding that refiners such as JXTG Nippon, SK Energy and Cosmo Oil have bought U.S. crude. Last week, Indian state-refiner Indian Oil Corp (IOC) bought 3 million barrels of U.S. crude for loading in June. Some of the popular U.S. grades in Asia such as WTI Midland, Mars and Southern Green Canyon can now compete with Middle East grades such as Murban and Oman in Asia, traders said. WTI Midland crude delivered to North Asia are priced at a premium of close to $5 a barrel to Dubai quotes, comparable with Abu Dhabi’s Murban, while Mars crude cargoes are being offered at $1.50 a barrel above Dubai quotes, competitive with Oman, they said. Light sweet WTI Midland comes from the Permian basin, a region which was a key contributor to record shale oil production in June. The grade’s cash discount WTC-WTM hit the lowest in four years earlier this month. 

Most of America’s propane exports go to countries in Asia -- In 2017, the United States exported 905,000 barrels per day (b/d) of propane, with the largest volumes going to supply petrochemical feedstock demand in Asian countries. Four of the top five countries receiving U.S. propane exports are in Asia—Japan, China, South Korea, and Singapore. They collectively imported 452,000 b/d of U.S. propane in 2017, or approximately half of total U.S. propane exports. Overall, propane accounted for 17% of all U.S. petroleum product exports in 2017.  U.S. propane exports to these four countries doubled between 2015 and 2017, displacing some of the region’s propane supplies from the Middle East as well as regional production of propane from refineries and natural gas processing plants.  Investments in petrochemical facilities that use propane as a feedstock in Asia have created an export outlet for U.S. propane supplies. This source of demand, combined with a large and sustained U.S. price discount to the international market, encouraged large investments in U.S. propane export capacity. Propane exports tend to be shipped from ports in the Gulf Coast region. This area (defined by Petroleum Administration for Defense District, or PADD 3) accounted for 90% of all U.S. propane exports in 2017.

The Panama Canal Expansion Has Helped U.S. Exports, But Will It Be Enough? -- The new, larger locks along the Panama Canal have been in operation for almost two years now, enabling the passage of larger vessels between the Atlantic and the Pacific. The timing couldn’t have been better — when the expanded canal locks came online in June 2016, exports of U.S. LPG, crude oil, gasoline and diesel were about to take off, and Cheniere Energy had only recently started shipping out LNG from its Sabine Pass export terminal in Louisiana, with Asian markets in its sights. Hydrocarbon-related transits through the canal soared through the second half of 2016, in 2017 and so far in 2018.As we said in our Run Through the Jungle blog series a couple of years back, the “old” Panama Canal was off-limits to vessels larger than 965 feet long and 106 feet wide; and ship drafts (or depth below water level) were capped at just under 40 feet. (Ships up to this size and draft are known as “Panamax” vessels — see Figure 1.) When the new canal locks opened for business, the dimensional limits of ships using the canal increased to 1,200 feet in length, 160 feet in width, and nearly 50 feet of draft. (These larger vessels are classified as “Neopanamax.”)   But the gains are mostly tied to LPG and LNG — even the expanded canal isn’t big enough for the Suezmax-class vessels and Very Large Crude Carriers (VLCCs) favored for Gulf Coast-to-Asia crude shipments. And there already are indications that the canal’s capacity may not be sufficient to meet future LNG needs. Today, we consider the expanded canal’s current and future role in facilitating U.S. hydrocarbon exports.

All clear given after pipeline leak creates chemical fog in St. Mary Parish - A tractor collision Monday morning resulted in a chemical pipeline leak that produced a dangerous vapor cloud over the Baldwin-Franklin area. The collision occurred in a field in the vicinity of Yokley Road. About 45 residents in the area were evacuated, according to the St. Mary Parish Sheriff's Office and State Police. Emergency crews closed a valve in the pipeline and an all clear was given shortly before noon, allowing evacuees to return to their homes. The plume, which contained a mixture of propane and butane, was gone when the all clear was given, and there was no remaining risk to public health, said Traci Landry, spokeswoman for the Sheriff's Office. "We got everybody out pretty quickly. (We) started going door to door immediately," Landry said. The leak did not result in any injuries or hospitalizations, she said. The tractor hit an above-ground valve connected to an underground pipeline, said Rick Rainey, spokesman for Enterprise Products Co., the pipeline owner. The valve was surrounded by a fence, Rainey said. “It’s not like there was a situation where they ran over a buried pipeline," Rainey said. “This will all be part of the investigation, but obviously this guy would have had to have gone through the fence to get to the valve.” The pipeline was carrying a mixture of ethane, propane and butane that had been separated from liquid natural gas, Rainey said, adding that the potential for an explosion was the biggest threat to public safety. 

The efficiency of US shale oil drilling and production - In my recent Oil Production Vital Statistics post, commenter rjsigmund posted a link to this EIA update on shale oil production efficiency which in my opinion contains some astonishing data on how the industry has drilled better and better wells, year on year, for a decade. US production is heading higher. At the same time turbulence has gripped the global oil market sending Brent above $77 / barrel as fresh sanctions loom for Iran and Venezuelan production continues to free fall. The charts in Figure 3 show that over the past 5 years peak initial production has grown significantly in each area apart from the Niobrara. The fall in production over time reflects natural production decline where decline rates are notoriously high in shale oil plays. Other key observations include:

  • The Bakken has the highest initial flow rates
  • The Eagle Ford is a close second for initial flow but suffers from more rapid declines that will result in a lot less oil produced per well
  • The Permian comes third but notably has lower decline rates that will probably result in higher ultimate production per well which explains why it is The Permian that is currently the drillers’ favourite play.

Figure 4 shows how drilling and production efficiency has risen year on year for a decade. When the frackers first drilled The Bakken wells produced 150 barrels per day initially. By 2017 that had grown to near 700 barrels per day. Following the 2014 oil price crash, the number of active rigs declined (Figure 5). The slowdown in drilling was compensated by this improved efficiency and did not produce the reversal in US oil production that many had expected. The improved efficiency comes down to a number of “technology improvements” some of which are as mundane as drilling longer wells, increasing the number of frack intervals and pumping in greater quantities of proppants.  At the end of last year the respected Rystad Energy forecast rampant US production. At the time I was sceptical saying: The Rystad view on US oil production and future oil price is very different to my own. They see US oil production up 2 Mbpd and a virtually static oil price from 2017 to 2018. Rystad has a vast data base of relevant data and so I would not bet against them being right. It’s just that I cannot see any evidence for their forecast in the data I review. Today, Brent was above $69/bbl and the Rystad view is mean $55 / bbl in 2018. So they are forecasting another oil price crash. My forecast for December 2018 was >$80 / barrel for Brent. While Rystad may turn out to be right on US production I remain confident of being more correct on price.

A lesson from the Permian Basin: Infrastructure investment or bust --U.S. energy markets are beginning to experience the flip side of the past two decades’ remarkable shale development. After years of growth that exceeded the most optimistic forecasts, and which has almost entirely revised our country’s energy outlook, infrastructure shortages are beginning to cap production capabilities.Energy developers in the Permian Basin in West Texas, the largest continuous oil and gas deposit in America, report that insufficient pipeline options are creating bottlenecks between production fields and consumers. As a result, a glut of supply has begun to accumulate despite plenty of demand from all across the country, including from nearby markets.  This buildup at the source has depressed prices, which in turn is discouraging speculators from investing resources that are necessary to sustain continued energy production and transportation. The Wall Street Journal reported last fall that natural gas prices at West Texas’s trading hub fell 20 percent below the national benchmark. Regrettably, aside from a few refiners in the immediate vicinity, most consumers aren’t reaping the benefits of those cheap prices because the products are trapped in the region.   Consumers across the country shouldn’t be fooled into thinking that midstream infrastructure shortages in Texas won’t affect them. The Permian Basin is the biggest source of oil and natural gas in the United States, and the region’s output could single-handedly rival that of Iran or Iraq. Its supplies have largely propelled America’s transformation onto a path of energy independence, which has brought down consumer costs and helped to mitigate fluctuations on the global stage.

Shale Drillers Look Beyond Texas as Prices Rise – WSJ -  Shale drillers are ramping up production in the U.S. as oil prices rise, moving beyond the West Texas oil field that became the country’s drilling center.From Oklahoma to North Dakota, companies are increasing investment in oil fields that fell out of favor several years ago, as $70-a-barrel crude prices make fracking and horizontal drilling economical in more places again.While the Permian Basin in Texas and New Mexico remains the fastest-growing shale spot, congested pipelines and shortages of labor and materials there are crimping profits, making other fields attractive alternatives. EOG Resources Inc., one of the shale sector’s leaders, is active in the Permian but also in Colorado, North Dakota and Oklahoma. In Wyoming, the company has built up larger lease holdings and expanded production over the past two years. Some of the oil fields that are growing, notably the Bakken and Eagle Ford, had been popular among shale drillers and experienced their own bottleneck problems before prices started dropping in 2014. After topping out at more than $100 a barrel in June 2014, oil prices plunged, falling below $30 in early 2016 before slowly recovering. The current prices above $70 are the highest in more than three years. Continental Resources Inc., which is focused in North Dakota and Oklahoma, is benefiting from improved pipeline capacity in those areas. It sold crude produced in North Dakota at a discount to the main U.S. oil benchmark, West Texas Intermediate, of just $4.31 a barrel, executives told investors this month. In parts of Oklahoma, that figure was less than $2.  Price differentials in the Bakken had become as wide as $28 a barrel six years ago, according to the EIA, as production outstripped pipeline capacity. “We are having infrastructure catch up with development in North Dakota and in Oklahoma,”

Boulder City Council extends fracking moratorium by 2 years via emergency vote - It was a rare sight in Boulder: Council chambers were nearly empty as members unanimously passed an emergency ordinance to extend the city's moratorium on oil and gas applications for an additional two years.The room had emptied out earlier Tuesday evening after the council voted lock-step to implement a ban on assault weapons, high-capacity magazines and bump stocks. Fewer than a dozen attendees remained for the decision on the temporary moratorium, in place since 2013. It was first instituted by the council; voters overwhelmingly supported an extension the same year.Mayor Suzanne Jones cited that voter support as motivation for the council to act rather than waiting for a ballot measure. No companies have publicly expressed interest in drilling here — an application hasn't been received in a decade. But city staff has recommended an extension to the moratorium, which was set to expire June 3, as a "cautionary step.""There are reserves/mineral interests," said Scott Prestidge, spokesperson for industry group Colorado Oil and Gas Association (COGA).Prestidge said he couldn't speak to any potential operator plans for Boulder; "I don't have that information." But, in an emailed statement, COGA President and CEO Dan Haley noted the failure of similar measures in surrounding communities. "In 2016, Colorado's Supreme Court ruled unanimously against bans and moratoria in cases involving Longmont and Fort Collins. Those bans, unfortunately, cost local taxpayers thousands of hard-earned tax dollars," he wrote. "Boulder's resources would be much better spent by working with stakeholders and mineral property owners in advance of any potential development, so that a thoughtful plan may be put in place ahead of any activity."

Powder River Basin sees 10,000 permit drilling battle -  The volume of applications for permits to drill at the Wyoming Oil and Gas Conservation Commission over the last year — about 10,000 — has eclipsed even the coal-bed methane days. The agency can't process that many permits even if it was the sole job of the 44 people working for the commission, and Watson doesn't want to hire a slew of new engineers to do the job, he said. For one, there is a hiring freeze in the state. For another, the prospect of laying off state employees after the blaze dies down is not appealing. For Watson, now the supervisor of the state agency that regulates oil and gas development, this too shall pass. What's happening in Wyoming is that operators are jockeying for position, particularly in the Powder River Basin. The play started to attract this kind of activity in 2013 and 2014, but the bust in oil prices slowed down what was happening in the basin. With oil prices steadily improving, operators are back at it — not because they are all ready to drill, but because they want to get control. Wyoming has a first-come, first-served approach to "drilling and spacing units." "We've always had the attitude in the state, whoever wants to drill, whether you have 5 percent or 95 percent (ownership), you should be able to drill," Watson told the Casper Star-Tribune. That means the company that gets drilling permits first controls a drilling and spacing unit that may have a handful of other owners. That can allow a minority owner to subsidize his drilling plan with the majority owner's money, simply because his application to drill a well was approved first. 

Lawsuit contends energy lease sales will affect environment (AP) — Environmental groups and three Montana landowners sued Tuesday to cancel hundreds of recent oil and gas lease sales, saying the U.S. government's leasing of public lands is skyrocketing without understanding how all that drilling will affect water quality and climate change.WildEarth Guardians, Montana Environmental Information Center and the three landowners filed their lawsuit in U.S. District Court in Great Falls over the 287 leases sold in December and March that cover nearly 234 square miles (606 square kilometers) across central and eastern Montana.Those leases and others the U.S. government has sold and plans to sell in Montana, North Dakota, Colorado, Wyoming and other western states together "will have significant cumulative environmental impacts," according to the lawsuit.The environmental organizations said the U.S. Bureau of Land Management within the Interior Department has sold energy leases on public lands nationwide this year totaling more than 1,562 square miles (4,045 square kilometers), which is nearly double last year's pace of lease sales. "The American West is currently under attack from corporate oil and gas interests set on committing us to another 40 years of dirty fossil fuels," said Becca Fischer of WildEarth Guardians. "We need to take action now to protect our climate and keep federal fossil fuels in the ground."

1,400 Tons of Contaminated Soil Hauled From Montana Reservation Oil Spill Site - Trucks have removed more than 1,400 tons of contaminated soil following a large oil spill on the Fort Peck Reservation in Montana, The Billings Gazette reported.Cleanup is still ongoing. So far, more than 50 large dump trucks full of soil have been removed with more to come, the publication noted.An estimated 600 barrels of oil and 90,000 barrels of brine (production water) leaked from an Anadarko Minerals Inc. wellhead that was shut in and last inspected in December. It is believed that the wellhead might have frozen and cracked over the winter, leading to the spill.The spill was discovered on April 27 by a farmer doing a flyover in the area. The exact date of the release is unclear.The wellhead is located near Lustre, in the central region of the Fort Peck Reservation. Oil and brine from the leak traveled roughly 200 yards downhill to a stock pond used by tribal entities to water livestock. About three to six inches of oil sat on top of the water.

EIA: US Shale Output To Rise To Record 7.18MMpd In June (Reuters) - U.S. shale production is expected to rise by about 145,000 barrels per day to a record 7.18 million bpd in June, the U.S. Energy Information Administration said on Monday.A majority of the increase is expected to come from the Permian basin, the biggest U.S. oil patch, where output is expected to climb 78,000 bpd to a fresh record of 3.28 million bpd, the EIA said in its monthly drilling productivity report.Soaring Permian crude production has already outpaced pipeline takeaway capacity, depressing prices in the region and leaving traders scrambling for alternatives to get crude to market.Bakken output is expected to rise 20,000 bpd to 1.24 million bpd, the highest since June 2015, while Eagle Ford production is set to rise 33,000 bpd to 1.39 million bpd, the highest since February 2016.Production in the United States has surged thanks to the shale boom, helping send U.S. crude futures' discount to international benchmark Brent crude futures to the widest in six months.Meanwhile, U.S. natural gas production was projected to increase to a record 68.1 billion cubic feet per day (bcfd) in June. That would be up almost 1.1 bcfd over the May forecast and would be the fifth monthly increase in a row.A year ago in June output was just 56.4 bcfd.The EIA projected gas output would increase in all of the big shale basins in June.Output in the Appalachia region, the biggest shale gas play, was set to rise almost 0.4 bcfd to a record high of 28.1 bcfd in June. Production in Appalachia was 23.5 bcfd in the same month a year ago. EIA said producers drilled 1,297 wells and completed 1,242 in the biggest shale basins in April, leaving total drilled but uncompleted wells up 55 at a record high 7,677, according to data going back to December 2013.

US unconventional oil output estimated to jump to 7.178 million b/d in June --The US Energy Information Administration estimates US unconventional oil output will increase by a record 144,000 b/d in June. In its Drilling Productivity Report released Monday, the EIA forecasts production to increase to 7.178 million b/d in the biggest month-on-month increase in the four-and-a-half years since the agency has published the report. The Permian Basin of West Texas and New Mexico is slated for the largest increase by far at 78,000 b/d, for a total 3.277 million b/d of oil output, EIA said. Trailing the Permian by less than half is the Eagle Ford Shale in South Texas at 33,000 b/d of projected oil production growth next month, for a total 1.387 million b/d. Following the two big plays is the Bakken Shale of North Dakota and Montana, which is expected to show 20,000 b/d higher oil output in June, for a total 1.238 million b/d. The Permian is by far the largest oil play in the US and is also the most active drilling basin with 463 rigs as of Friday, out of a total 844 oil rigs working last week. In addition, the number of drilled but uncompleted wells in US unconventional plays appears to be slowing down. Those so-called DUCs rose by 55 to 7,677 in April, half the increase of 110 seen in March. Domestic DUCs have risen gradually, but steadily, by more than 2,100 wells since November 2016 when they numbered 5,495. Permian DUCs increased by 111 in April to 3,086 against a jump of 122 in March. One reason why there is a build of DUCs is timing, James Williams, president of WTRG Economics, said. Operators drill more wells per pad, all in a batch, and similarly batch-complete them. That delays completions because none will occur until all wells are drilled. 

Oil Is Above $70, but Frackers Still Struggle to Make Money - WSJ  - American shale drillers are still spending more money than they are making, even as oil prices rise. Of the top 20 U.S. oil companies that focus mostly on fracking, only five managed to generate more cash than they spent in the first quarter, according to a Wall Street Journal analysis of FactSet data. Shale companies have helped propel U.S. oil output to all-time highs, surpassing 10 million barrels a day and rivaling Russia and Saudi Arabia. But the top 20 companies by market capitalization collectively spent almost $2 billion more in the quarter than they took in from operations, largely due to bad bets hedging crude prices, as well as transportation bottlenecks, labor and material shortages that raised costs. Many of the producers did better to start this year than at any point since 2014, when oil prices began a crash that the industry is fully recovering from only now. Still, the companies spent about $1.13 for every $1 they took in. Oasis Petroleum Inc. spent $3.27 for every $1 it made in cash, while Parsley Energy Inc . spent almost $2 for every $1 it made in cash, according to FactSet. While many shale operators have positive net income this year, many shareholders have begun paying closer attention to how much the companies are spending, as they seek to compel them to live within their means and begin to produce stronger returns. Some companies are already adjusting their strategies because of higher oil prices. Parsley Energy, which is focused on the Permian Basin, the oil field in Texas and New Mexico that is currently the center of U.S. shale-drilling activity, hedged most of its 2018 production. It plans to change that going forward, and expects to generate more cash relative to spending in coming quarters. Continental Resources Inc., which is primarily active in shale formations in North Dakota and Oklahoma, didn’t hedge its oil production for 2018. It raked in almost $258 million in cash after expenses in the first quarter, best among its peers. If U.S. crude prices stay at about $70 a barrel for the rest of 2018, energy consultant Wood Mackenzie estimates that hedging strategies would reduce annual revenue by an average of 7% for six companies focused on the Permian basin. 

For Big Oil, reserve size matters less than ever - (Reuters) - A decade ago, the news that the world’s top oil and gas companies had less than 12 years of production left in their reserves might have caused a panicked sell-off in their shares. But as consumers try to move away from fossil fuels to cleaner and cheaper energy sources, investors and executives say reserve size is no longer the gold standard for measuring the value and health of a company. The cost of developing existing reserves and the amount of carbon those reserves produce has now become more important, they say. This is leading to a profound shift in company strategies. The sector is emerging from one of its longest and deepest downturns after an oil price slump that started in 2014. The largest publicly-traded oil companies — Exxon Mobil, Royal Dutch Shell, Chevron, ConocoPhillips, France’s Total, BP, Equinor (formerly Statoil) and Italy’s Eni — have adapted. They saved money by cutting jobs and increasing technology spending and now make more money with oil at $60 a barrel than they did at $100. But they also cut spending on exploration for new resources and development of new fields. This led to a decline in reserves. An analysis by Reuters and Guinness Asset Management of the annual reports of those eight companies shows that the size of their oil and gas reserves, when added together, fell to 91 billion barrels in 2017. That was the lowest since the same amount in 2005. The reserves of Exxon Mobil, the largest company, shrank by 16 percent since the slump began in 2014. Shell’s reserves fell 6.5 percent since then despite the $54 billion acquisition of BG Group in 2016. BP and Chevron’s oil and gas reserves increased by a small 5 percent since 2014. Eni was the only one to significantly boost its reserves by over 20 percent thanks to the discovery of the giant Zohr gas field off the coast of Egypt. The cumulative reserve life - the number of years a company can sustain its current production levels with existing reserves - of the eight companies fell to 11.7 years in 2017. That was the lowest level in at least 20 years although that drop is also the result of a sharp increase in production. Reuters does have access to data going back beyond 1998.  To view a graphic on Oil majors' reserves life, click:

Canada is divided over expanded oil pipeline from tar sands to Pacific (AP) — A pipeline project that would vastly expand Canadian oil exports to Asia is dividing the country, pitting indigenous groups and people who fear damage to the scenic coastline near Vancouver against the central government and the influential energy industry. The Trans Mountain pipeline expansion would triple the capacity of an existing pipeline to ship oil extracted from the inky black tar sands north of Alberta across the snow-capped peaks of the Canadian Rockies. It would end at a terminal outside Vancouver, resulting in a seven-fold increase in the number of tankers in an environmentally sensitive area dependent on tourism and fishing. “It just boggles my mind that people are willing to risk Vancouver to a catastrophic oil spill,” said Stewart Phillip, the grand chief of the Union of British Columbia Indian Chiefs, which represents 115 aboriginal groups that oppose the expansion. Many indigenous people see the 620 miles of new pipeline as a threat to their land, echoing concerns raised by the Keystone XL project in the U.S. Many in Canada say it also raises broader environmental concerns . The project also has strong support in a country where energy production has become a key part of the economy. Prime Minister Justin Trudeau’s government approved the expansion, arguing that it was “economically necessary” and enabling him to overcome opposition to a carbon tax plan that will help Canada cut its greenhouse emissions.   Facing legal challenges filed by the government of British Columbia, the company that would build the pipeline, U.S.-based Kinder Morgan Inc., halted essential spending on the project last month and said it would cancel it altogether if Ottawa and British Columbia could not ensure that they would be able to go forward. Those who make an economic case for the project point out that Canada has the world’s third largest oil reserves but is overwhelmingly dependent on refiners in the U.S., where a barrel of Canada’s heavy oil is sold at a discount of between $15 and $30 per barrel. Canada wants to diversify oil exports to Asia, where oil commands a higher price. 

Canada ready to compensate Kinder Morgan for pipeline losses —In a bid to protect Canada’s reputation as an attractive destination for energy investment, the Liberal government pledged Wednesday to cover Kinder Morgan Inc.’s losses on the Trans Mountain pipeline expansion caused by British Columbia’s efforts to delay and potentially kill the project. The extraordinary promise from Canada’s Finance Minister, Bill Morneau, underlines the importance the project represents for the government, the economy and the country’s energy sector. The Trans Mountain expansion, with a price tag of 7.4 billion Canadian dollars (US$5.75 billion), marks a last chance to significantly increase the amount of crude oil Canada’s energy producers can get to faster-growing Asian markets via the Pacific Coast. Canada houses the third-largest proven oil reserves in the world after Venezuela and Saudi Arabia, but most of it is trapped in landlocked Alberta. Canadian Prime Minister Justin Trudeau approved the project in late 2016, after going through additional oversight to ensure it posed limited environmental risk and the appropriate indigenous groups were consulted. Yet the province of British Columbia has vowed to use policy and legal levers to block the project until its own worries over environmental risk are addressed, and municipalities within the province have appealed to Canada’s top court to overturn regulatory decisions in favor of the pipeline. In response, Kinder Morgan has threatened to walk away from the project on May 31 unless the political and legal uncertainty the project faces is removed. Mr. Morneau said during a news conference in Ottawa the delays faced by Kinder Morgan marked an “exceptional” situation, and British Columbia was acting in an “unconstitutional” way. He said it isn’t reasonable to expect companies like Kinder Morgan to deal with disputes between governments. He didn’t address how much in losses the government is willing to cover, or whether Canada is considering an equity stake in the project.

The B.C. pipeline project you've never heard of — and why it may succeed - You've likely never heard of the Eagle Spirit Energy pipeline, but for the past five years the project's leader has been quietly working on the plan to build the next pipeline across northern B.C. "We are now putting together a very solid commercial plan for how we are going to do this," said CEO Calvin Helin earlier this week. Helin is a member of the Lax Kw'alaams First Nation located on the north coast near Prince Rupert. That's where the proposed pipeline linking Alberta's oil sands with the West Coast would terminate. At 1,500 kilometres in length, the pipeline would carry up to two million barrels of medium to heavy crude oil a day from Fort McMurray to tide water on the West Coast.Estimates put the cost of the project, which has the backing of the Vancouver's Aquilini Investment Group, at $16 billion.While such a proposal might seem foolhardy given the current politics in B.C., Helin is confident his proposal will succeed where others have stumbled or failed of late.One obstacle any northern pipeline would face is the federal Liberals' oil tanker ban. Bill C-48 is expected to pass final reading in the House of Commons next week.That ban was first announced in November 2016, when the Liberal government halted Enbridge's proposed Northern Gateway pipeline across northwestern B.C. The Eagle Spirit project has been framed as an alternative to Northern Gateway. If the tanker ban becomes law sometime later this year, it would seemingly render pointless any future crude oil pipelines with terminals on the North Coast.But Helin says he has two possible solutions to bypass the ban.First, his brother John Helin, who is the elected leader of the Lax Kw'alaams Band, has already launched a constitutional challenge in B.C. Supreme CourtThat lawsuit claims First Nations were not properly consulted on the tanker ban, which he claims is discriminatory and infringes on their Aboriginal title. If the court challenge fails, Eagle Spirit Energy has a plan to avoid the tanker moratorium entirely, Calvin Helin says.He said the group has signed a memorandum of understanding (MOU) with a landowner across the U.S. border in Hyder, Alaska. The tiny town wants to host the pipeline as an alternative location for the port terminal, Helin said. That landowner is Walter Moa, the president of Roanan Corp, who confirmed he's ready to do a deal to put the terminal on his land if necessary.

Like it or not, crude oil is the biggest reason for Canada’s prosperity | Financial Post: The oil industry looms large in the Canadian economy and, in many ways, pays the rent in Canada. Yet many Canadians appear unaware of how critically important the oil industry is to the national economy, a fact often lost in the debate over the Trans Mountain pipeline expansion. Canada is a trading nation. We owe our economic prosperity and relatively high per-capita income to trade — and crude oil dominates that trade. In 2014, before the oil-price downturn, crude oil alone generated a $70-billion trade surplus for Canada — excluding smaller surpluses in refined petroleum products and natural gas — far outstripping any other export category (the closest is metals and minerals) and helping to offset large, chronic deficits in autos and parts, industrial machinery, electronic goods and consumer products. Even at the bottom of the oil-price correction in 2016, crude oil remained the largest positive contributor to Canada’s merchandise trade, generating a $33-billion surplus. In 2017, net oil exports increased again to $46 billion and will likely climb to over $50 billion this year, alongside the recent recovery in West Texas Intermediate (WTI) oil prices to the $70 mark. We owe our economic prosperity and relatively high per-capita income to trade — and crude oil dominates that trade.

Arctic oil 'undrillable' amid global warming: U.N.'s ex-climate chief (Reuters) - An architect of the Paris climate agreement urged governments on Tuesday to halt oil exploration in the Arctic, saying drilling was not economical and warming threatened the environmentally fragile region. Christiana Figueres, formerly head of the U.N. Climate Change Secretariat when the Paris accord was reached by almost 200 nations in 2015, told Reuters by telephone “the Arctic has been rendered undrillable.” The past three years have been the hottest since records began in the 19th century, and Figueres said the heat was a threat to everything from Australia’s Great Barrier Reef to ice in Antarctica. The former Costa Rican diplomat who campaigns for a peak in global emissions by 2020 said it made no economic sense to explore in the Arctic, partly because it was likely to take years to develop any finds. Capital investment would be better used developing renewable energies such as solar and wind to cut emissions, she said. “The stakes are visibly higher than they were just a few years ago,” she said. Many governments and companies favor Arctic drilling. Last month, Trump’s administration began environmental reviews for oil and gas drilling in a section of the Arctic national Wildlife Refuge. In Norway, Statoil and other companies plan to keep up exploration in the Arctic Barents Sea, which is ice-free further north than other parts of the Arctic thanks to the warm Gulf Stream.. “This area is actually less challenging in terms of weather and waves than many other parts of Norway ... We have drilled more than 100 wells, and never had any significant accidents or discharges to sea,” 

Investors urge fossil fuel firms to shun Trump's Arctic drilling plans - Investors managing more than $2.5tn have warned oil firms and banks to shun moves by the US president, Donald Trump, to open the Arctic national wildlife refuge (ANWR) to drilling. Companies extracting oil and gas from the wilderness area in Alaska would face “enormous reputational risk and public backlash”, the investors say in a letter sent on Monday to 100 fossil fuel companies and the banks that finance them. Exploiting the area would also be an “irresponsible business decision”, the group argues, as global action on climate change will reduce oil demand and mean such projects have a high risk of losing money. An accompanying letter from the indigenous Gwich’in people say it would be “deeply unethical” to destroy their homelands. The 19m-acre refuge is one of wildest places left on Earth and the largest area of publicly owned land in the US. It is home to a huge range of animals, including polar bears, snowy owls and the porcupine caribou on which the Gwich’in rely for food. In April, the Trump administration began the process of opening the ANWR for oil and gas drilling, the first such move since 1980. Significant oil and gas reserves are thought to lie under the ANWR coastal plain and Prudhoe Bay, a major oil centre, lies close to the refuge’s western boundary. The Gwich’in name for the coastal plain is “Sacred place where life begins”, as it is the breeding ground of the caribou. “Drilling in the ANWR is an exceedingly high-risk gamble that companies and investors should avoid,” said New York state comptroller, Thomas P DiNapoli, trustee of the New York State Common Retirement Fund, one of the investors that signed the letter. “A global low-carbon economy is emerging, driven by the growing opportunities for cleaner energy. We want the companies [we invest in] to help build that future, not destroy one of America’s last truly wild places.” 

NYMEX June natural gas futures up 1.5 cents at $2.821/MMBtu on higher power burn -- NYMEX June natural gas moved higher in overnight US trading as building heat across major portions of the US is likely to boost power-burn demand. At 7:15 am EDT (1115 GMT) the contract was 1.5 cents higher at $2.821/MMBtu after trading a tight $2.810-$2.830/MMBtu range. The latest forecasts from the National Weather Service show above-average temperatures across most of the Eastern and Western US in the six-to-10-day period, leaving normal temperatures across portions of the central and Southwest and below-average temperatures confined to an area of southern California and Arizona in the West, as well as Nebraska. Above-average temperatures overtake all but small areas of the Northeast and north central US in the eight-to-14-day period. The US Energy Information Administration said higher temperatures in the week to May 9 meant power burn was up 14% week on week. 

NYMEX June natural gas futures slip to $2.835/MMBtu in profit-taking amid mixed outlook -- NYMEX June natural gas futures slipped in profit-taking in the US overnight ahead of Tuesday's open. After ending the week's opening session with a 3.6 cent gain, the contract was 0.7 cent lower at $2.835/MMBtu at 6:45 am ET (1045 GMT). Natural gas inventories continue to rebuild, as the US Energy Information Administration's latest storage data outlined a robust 89 Bcf injection for the week ended May 4 that bested both the 75 Bcf five-year-average addition and the 49 Bcf prior-year build. Total working gas stocks currently sit at 1,432 Bcf, still 863 Bcf below the year-ago level and 520 Bcf below the five-year average of 1,952 Bcf. Lingering storage deficits are feeding bullish sentiments in the market, but a steadily rising rig count implying growth in production has kept downside risks viable. Adding to the uncertainty, recent and projected warm weather suggests destruction of heating demand but also the building of cooling load, which should have a mixed impact on the rate of subsequent storage injections. Warmer weather during week ended May 9 drove a 14% increase in power burn week on week but also a 37% drop in residential/commercial-sector demand, according to the EIA's latest Natural Gas Weekly Update. Total US gas consumption was down 4% on the week. Additional warm weather is in store in the coming weeks and months. Midrange National Weather Service outlooks reflect above-average temperatures over nearly the entire country through both the upcoming six-to-10-day and eight-to-14-day periods, while the longer-range projection from AccuWeather call for warmer-than-normal weather over a large part of the US for April through June.

June NYMEX gas edges lower to $2.818/MMBtu on warm weather and robust production - NYMEX June natural gas futures edged lower overnight in US trading ahead of Wednesday's open, as warmer weather and robust production are keeping inventories on track to a healthy level ahead of the next major demand period. At 6:40 am ET (1040 GMT) the contract was 1.8 cents lower at $2.818/MMBtu. Recent and anticipated warm weather looks to encourage additional large builds to storage, as an early uptick in cooling demand meets a sharp decline in heating demand. During the week ended May 9, warmer weather triggered a 14% increase in power burn week on week but also a 37% drop in residential/commercial sector demand, according to the EIA's latest Natural Gas Weekly Update. Total US gas consumption was down 4% on the week. Warmer weather is in store further out, as the latest National Weather Service projections for both the six-to-10-day and eight-to-14-day periods continue to reflect above-average temperatures across nearly the entire country.

NYMEX June gas rises to $2.838/MMBtu as EIA reports higher-than-expected injection - The NYMEX June natural gas futures contract climbed in US morning trading Thursday, as the US Energy Information Administration reported a higher-than-expected storage build for the week ended May 11. As of 11:22 EDT (1522 GMT), the front-month contract was up 2.3 cents to $2.838/MMBtu, trading in a range of $2.780/MMBtu-$2.840/MMBtu. The EIA announced an estimated 106 Bcf injection into national storage stocks Thursday, for the week ended May 11, just above the 104 Bcf build expected by a consensus of analysts surveyed by S&P Global Platts, and well above the 87 Bcf build averaged over the past five years during that time. Currently, national gas stocks sit at an estimated 1.538 Tcf, down 34.8% from the year prior and a 24.6% deficit to the five-year average of 2.039 Tcf, according to EIA data.  Though stocks currently sit at a large deficit to the five-year average, near record level production could begin to produce above average injections.  Year to date, US dry gas production has averaged 77.2 Bcf/d, a 5.9 Bcf/d increase from the 71.3 Bcf/d averaged this time last year, based on S&P Global Platts Analytics data. Total US demand is expected to fall 600 MMcf day on day to 69.5 Bcf, as nominal gains in Texas and the Northeast were offset by reduced demand in the Southeast and the Midcon Market. According to Platts Analytics, much of the demand drop was due to decreased power burn in the Southeast. Looking ahead, demand is expected to climb over the coming weeks, with Platts Analytics projecting total demand to average 70.5 Bcf/d over the next seven days and 71.2 Bcf/d over the next eight to 14 days. The most recent six-to-10-day weather outlook from the National Weather Service calls for a likelihood of warmer-than-average temperatures for much of the country, which could give support to power demand.

Fracking planning laws should be relaxed say ministers - BBC News: The government has proposed a relaxation in the planning laws which apply to fracking. Under the plans, preliminary drilling could be classed as permitted development - the same law that allows people to build a small conservatory. Ministers are also proposing a shale environmental regulator and a new planning brokerage service. Opponents of fracking say it shows the government is desperate to encourage fracking. They call the proposed relaxation of planning law an outrageous subversion of the planning process. Energy Minister Claire Perry said: "This package of measures delivers on our manifesto promise to support shale and it will ensure exploration happens in the most environmentally responsible way while making it easier for companies and local communities to work together." She said shale gas had the potential to lower energy prices, although opponents of the technology say there is no evidence this will happen in the UK.The proposed changes were applauded by the shale gas firm Cuadrilla. Its chief executive Francis Egan said: "We welcome the measures the government has introduced on making the planning process faster and fairer and providing additional resources to help local authorities. "Our permission to drill and test just four shale gas exploratory wells in Lancashire was granted after a lengthy and costly three year process. These timelines must improve if the country is to benefit from its own, much needed, indigenous source of gas." Since test fracking triggered a small earthquake in Blackpool seven years ago, no commercial fracking has been started. Ministers hope to make fracking easier by allowing the early stages under permitted development. A government spokesman confirmed that this would include drilling but not fracturing the rock. 

UK Government unveils support package for fracking industry - - The UK Government today unveiled a new package of support measures for shale gas developments, including the creation of a £1.6million fund. The move, announced as part of the government’s modern industrial strategy, was praised by trade unions and natural resource developers, but condemned by environmentalists. The Scottish Government imposed an “effective ban” on fracking last year, having placed a moratorium on the extraction technique in 2015. The UK Government vowed to “streamline and improve” the regulation process for shale applications.A shale environmental regulator and a planning brokerage service will be established to focus on the planning process. And the shale support fund will have £1.6million at its disposal over the next 2 years to build capacity and capability in local authorities dealing with shale applications. Energy and Clean Growth Minister Claire Perry said: “British shale gas has the potential to help lower bills and increase the security of the UK’s energy supply while creating high quality jobs in a cutting-edge sector. “This package of measures delivers on our manifesto promise to support shale and it will ensure exploration happens in the most environmentally responsible way while making it easier for companies and local communities to work together. GMB national office Stuart Fegan said: “We welcome the written ministerial statement which confirmed the Government’s commitment to exploring the potential of shale gas.” “Shale gas production should be permitted, alongside the development of the UK’s renewable and nuclear capacity, benefiting the security of our energy, the economy and the environment.” 

Fracking mogul Jim Ratcliffe becomes UK’s richest person - Fracking and chemicals billionaire Jim Ratcliffe increased his wealth by more than £15bn last year to take the crown as Britain’s richest person, with a £21bn fortune. Ratcliffe, 65, has overtaken the Hinduja brothers, to take the Sunday Times Rich List title thanks to a huge increase in value of his petrochemical company Ineos, the UK’s biggest fracking firm. Ratcliffe, who was brought up in a council house near Manchester, the son of a joiner and office manager, founded Ineos in 1998 and still owns 60% of the firm that made profits of more than £2.2bn last year and employs 18,500 people. Ratcliffe, who lives in a mansion near Beaulieu in the New Forest and owns two superyachts called Hampshire and Hampshire II, jumped from 18th to first place in the rich list. Ratcliffe is among a record 145 billionaires in the list – 11 more than recorded in the 2017 edition. The 1,000 richest people in the UK now share a record total wealth of £724bn, up 10% on last year’s figure. It now takes £115m to join even the richest 1,000 people. 

Back to the Future with Empire Oil -- As Britain heads for an uncertain post-Brexit future, the prospect of a deregulated corporate global free-for-all operating from offshore accounts with damaging environmental impact is the nightmare envisaged by many. But that future may be closer than people realise.DeSmog UK has identified a hub of a dozen companies based around Mayfair, drilling for oil in Africa, and making use of tax-havens in British overseas territories and crown dependencies such as the British Virgin Islands, the Cayman Islands and Jersey.This is Empire Oil, a neocolonial snapshot of the future simultaneously revisiting Britain’s Imperial past in countries such as Somaliland, Kenya, Zambia, Tanzania, Nigeria and South Africa – and forging a new path for Global Britain. At the centre of it is the Alternative Investment Market (AIM), London’s junior stock exchange. AIM operates ‘light touch regulation’, leading it to be described as a ‘casino’. It’s a system where nominee advisors – or ‘nomads’ – can act as both regulators of the system and brokers, potentially creating serious conflicts of interest.Companies are using London’s reputation as a financial powerhouse to raise funds, while taking advantage of rules that allow them to keep ownership details hidden in offshore accounts. This makes public scrutiny challenging and once again demonstrates the value of independent media. With no corporate-backing, DeSmog UK is free to pursue stories the mainstream press often shy away from.

Statoil to become Equinor, dropping 'oil' to attract young talent   (Reuters) - Shareholders in Norway’s largest company, Statoil STL.OL, will approve on Tuesday the board’s proposal to drop “oil” from its name as its seeks to diversify its business and attract young talent concerned about fossil fuels’ impact on climate change. From Wednesday, the majority state-owned company will change its 46-year-old name to Equinor and trade on the Oslo Exchange under the new ticker EQNR. The Norwegian government, which has a 67 percent stake in the firm, has said it will back the move. The oil and gas company said the name change was a natural step after it decided last year to become a “broad energy” firm, investing up to 15-20 percent of annual capital expenditure in “new energy solutions” by 2030, mostly in offshore wind. “The key reason for a company to change its name is when it wants to widen the scope of its activity or direction. Another reason would be because it is in trouble, and it has a reputational problem,” 

EU Wants to Boost LNG Imports From US in Exchange of Lifting US Aluminum Tariffs - - The European Commission proposes to boost the EU imports of the liquefied natural gas (LNG) from the United States in exchange for scrapping the US tariffs on steel and aluminum imported from the EU member states, a diplomatic source told Sputnik.“The European Commission proposed a number of measures to settle the situation, including the increase in volume of the LNG supplies to the European Union by the US companies and expansion of relevant infrastructure,” the source said.The United States has been increasing its LNG deliveries to European Union countries and has become the sixth largest LNG supplier of the 28-nation bloc in the first quarter of 2017. According to the International Energy Agency, the United States will become one of the leading LNG exporters in five years.  In late March, the United States imposed 25-percent and 10-percent tariffs on imported steel and aluminum, respectively. US President Donald Trump decided to postpone the talks on the tariff issue earlier this month. The move provoked a backlash from China, which has introduced its own tariffs on goods produced in the United States. Both countries have suggested they might implement further mutual restrictions.

US warns of sanctions risk to Germany-Russia gas pipeline - The Nord Stream 2 project will double the amount of natural gas Russia can funnel directly to the heart of Europe from newly tapped reserves in Siberia, intentionally skirting Eastern European nations like Poland and Ukraine. It also promises much-needed jobs in this poor German backwater, some three hours' drive north of Berlin.The United States and some other German allies have bristled at the project, warning that it could give Moscow greater leverage over Western Europe.Energy-poor Germany already relies heavily on Russian gas and so far Chancellor Angela Merkel has deftly kept the new $11 billion pipeline off the table while imposing sanctions against Russia for its actions in Ukraine.But as plans become closer to reality, the pressure has increased on her, and last month after meetings with Ukrainian President Petro Poroshenko she acknowledged that Nord Stream 2 was more than just a business project, saying that "political factors have to be taken into account."With Merkel heading to Sochi on Friday for talks with Russian President Vladimir Putin, a senior U.S. diplomat warned that proceeding with the project could result in sanctions for those involved."We would be delighted if the project did not take place," U.S. Deputy Assistant Secretary Sandra Oudkirk, an energy policy expert in the State Department, told reporters in Berlin on Thursday.She said Washington is concerned Nord Stream 2 could increase Russia's "malign influence" in Europe. Oudkirk said the new pipeline would divert gas flows away from Ukraine, which depends heavily on transit fees, and could become a pathway for Russia to install surveillance equipment in the Baltic Sea, a sensitive military region.She said the U.S. is "exerting as much persuasive power" as it can to stop the project, and noted that Congress has given the U.S. administration explicit authority to impose sanctions in connection with Russian pipeline projects if necessary.

Trump Gives Merkel An Ultimatum: Drop Russian Gas Pipeline Or Trade War Begins - It became clear just how important it is to the US for Russia's Nord Stream 2 gas pipeline project to fail two months ago when, as we described in "US Threatens Sanctions For European Firms Participating In Russian Gas Pipeline Project", the U.S. State Department warned European corporations that they will likely face penalties and sanctions if they participate in the construction of Russia's Nord Stream 2 on the grounds that "the project undermines energy security in Europe", when in reality Russia has for decades been a quasi-monopolist on European energy supplies and thus has unprecedented leverage over European politics, at least behind the scenes.  “As many people know, we oppose the Nord Stream 2 project, the US government does,” State Department spokeswoman, Heather Nauert said during a late March press briefing adding that "the Nord Stream 2 project would undermine Europe's overall energy security and stability. It would provide Russia [with] another tool to pressure European countries, especially countries such as Ukraine." Nauert also said that Washington may introduce punitive measures against participants in the pipeline project - which could be implemented using a provision in the Countering America's Adversaries Through Sanctions Act (CAATSA). Fast forward to today, when the dreadfully named CAATSA act just made a repeat appearance; around the time Europe made it clear it would openly defy Trump's Iran sanctions, the WSJ reported that Trump told Merkel that if she wants to avoid a trans-Atlantic trade war, the price would be to pull the break on Nord Stream 2, according to German, U.S. and European sources. The officials said Mr. Trump told German Chancellor Angela Merkel in April that Germany should drop support for Nord Stream 2, an offshore pipeline that would bring gas directly from Russia via the Baltic Sea. This would be in exchange for the U.S. starting talks with the European Union on a new trade deal. While it had long been suspected that Trump would push hard to dismantle Nord Stream 2 just so US nat gas exporters could grab a slice of the European market pie, the aggressive push comes as a surprise, and as the WSJ notes, "the White House pressure reflects its hard ball tactics on trade, moves that have contributed to rising tensions between Europe and the U.S. and raised fears in export-dependent Germany of a tit-for-tat on tariffs that could engulf its car industry."

Expected LNG surplus evaporates, scramble for new projects looms (Reuters) - Liquefied natural gas (LNG) producers around the globe are once again considering new investments as expectations of a glut in supply wither away in the face of strong, China-led demand growth in Asia.  Given it takes several years to go from a Final Investment Decision (FID) to producing cargoes of the super-chilled fuel, however, the industry may be acting too late to prevent a supply shortfall by the middle of next decade. Much of the focus this week at an annual oil and gas conference in Australia - which is about to become the world’s top exporter of LNG - was on what projects are viable and how quickly can they be developed.   The forecasts for a global glut were based on the market being swamped by eight new Australian LNG projects, plus at least four in the United States, as well a handful of others in frontier countries such as Mozambique. But the narrative of industry over-investment in capacity has been turned on its head by the spectacular growth of Chinese demand, which leapt 46 percent last year to 38.1 million tonnes. China is now the world’s second-biggest LNG buyer, behind Japan, and its demand has continued to grow rapidly, with first-quarter imports up 59 percent from a year ago to 12.4 million tonnes.

Australia looks to brownfield projects as LNG boom peaks - Australia is unlikely see any new greenfield liquefied natural gas projects in coming years due to low global LNG prices and no discoveries of major gas fields, but the next wave of brownfield expansions could easily dwarf existing projects. The last of Australia's initial wave of LNG export projects were set t to start operations by end-2018, making it the world's largest LNG exporter by the end of the decade, surpassing Qatar, in a feat set for the record books. A spike in Chinese gas demand due to fuel switching and growing domestic gas shortages in Australia have tightened the market earlier than expected, prompting calls for exploration and production companies to seek new capacity. However, it is unlikely that Australian E&P companies will see any new projects built from scratch, and they are focused instead on expansion of existing facilities, which include backfilling declining capacity as well as tapping into known reserves. "There's no other accumulation out there in my view that supports a greenfield project," Woodside Energy's managing director and chief executive officer Peter Coleman said. "There's discovered gas that supports what we are doing but there is not enough discovered gas to support a greenfield project," 

Europe Keeps Buying Iran Oil, But Banks May Hinder Trade - In the days following the U.S. withdrawal from the Iran nuclear deal, Iran’s European customers continue to buy Iranian oil and are in no immediate rush to replace volumes, but some refiners and traders have flagged financing issues as having the potential stop to crude trade with Iran. After the U.S. walked out of the Iran deal, the U.S. will be targeting Iran’s crude oil sales, and sanctions previously lifted under the deal will be re-imposed following a 180-day wind-down period, the U.S. Treasury said.  European buyers are not in an immediate rush to replace Iranian supplies due to that wind-down period, with sanctions expected to kick in in November. All buyers report that they are complying and will comply with any sanctions imposed on Iranian trade, and some of them expect that banking issues will arise from the sanctions, such as the availability of trade finance.Marta Llorente, a spokeswoman for Spanish oil company Cepsa, one of Iran’s customers in Europe, told Reuters:“At this moment, our trading activity is business as usual.”  Italy’s Eni also continues to buy Iranian oil and it is buying 2 million barrels of oil per month from Iran under a deal that expires at the end of the year. “We’re doing nothing,” said the head of trading at another European customer of Iran’s. “It’s wait and see. If we’re forced to reduce, we will. Iranian is not the only crude,” the manager told Reuters.Sources at trading companies tell Reuters that “It looks like you can still go on for six months,” but traders expect the banks to be the key in determining whether Iran’s customers in Europe can buy oil, and even if the U.S. grants waivers to European buyers, whether they will need to reduce their volumes during the wind-down period.

Total Stops Iran Gas Project as Risk From Sanctions Too High - Total SA said it will not risk investing in Iran following the return of U.S. sanctions, unless it can secure a waiver. Continuing to do business in Iran would be too great a risk as the company has large operations in the U.S. and depends on the country’s banks for financing its operations, Total said in a statement Wednesday. So the French energy giant won’t commit any more funds to Iran’s South Pars 11 project, in which it took a controlling stake last year. The comments from Total -- the first Western oil company to sign binding agreements to develop Iran’s oil and gas fields following the end of a previous round of sanctions in 2015 -- illustrate the challenge posed by renewed U.S. restrictions. While the French company was speaking about a natural gas project, its reluctance to continue operating there could equally apply to others that rushed back into sectors from automobiles to aviation and engineering to the oil trade. “The risks of being on the wrong side of the U.S. government are not worth the benefits of trading with Iran once the sanctions are in place,” said Jason Gammel, a London-based analyst at Jefferies LLC. “Oil companies are not going to be able to invest in the upstream sector, traders and purchasers of Iranian crude are going to have to find other sources, or seek an exemption from the U.S. government to be able to continue buying.”

Total's Iran Halt Shows Oil Buyers Will Face Sanctions Trouble - Total SA’s decision to stop investing in Iran shows that international companies are going to have trouble doing any business with the Persian Gulf nation, including buying its oil. Continuing to do business in Iran would be too great a risk as Total has large operations in the U.S. and depends on the country’s banks for financing, it said in a statement Wednesday. The comments from Total -- the first Western oil company to sign binding agreements to develop Iran’s oil and gas fields following the end of a previous round of sanctions in 2015 -- illustrate the challenge posed by renewed American restrictions. The French energy giant, which also buys crude oil for its refineries from the Islamic Republic, won’t commit any more funds to Iran’s South Pars 11 project, in which it took a controlling stake last year. While it is planning to seek a waiver for the Iran project, the company also said it has much more to lose should it be penalized for breaching sanctions. “The risks of being on the wrong side of the U.S. government are not worth the benefits of trading with Iran once the sanctions are in place,”   “Oil companies are not going to be able to invest in the upstream sector, traders and purchasers of Iranian crude are going to have to find other sources, or seek an exemption from the U.S. government to be able to continue buying.”  Total could be exposed to so-called secondary sanctions if it continues to do business with Iran, it said. That could affect, among other things, the company’s funding in dollars. U.S. banks are involved in more than 90 percent of Total’s financing operations, American shareholders represent upward of 30 percent of its investors and the company has more than $10 billion of capital employed in the country, according to the statement.

Iran Sanctions Fallout: China Set To Replace Total In Giant Iran Gas Project, As Beijing Launches New Iran Train Route - Last week, when commenting on the world's response to Trump's decision to pull out of the Iran nuclear deal, we said that while Europe still remains in no-man's land - after all Putin still remains the biggest supplier of Europe's energy needs, especially in the winter, Trump's decision to withdraw has officially pitted the US, Israel and Saudi Arabia against not only both Russia, but also China, whose interests in the region were until now, mostly dormant. And, as a next step, we said that "we now look forward to China deploying troops and military equipment to Syria and Iran as the inevitable next step in this escalating global proxy war."But first, China will deploy a far more nuanced Iranian invasion force consisting of... its mega corporations. According to Iran's PressTV, China’s state-owned CNPC - the world's third largest oil and gas company by revenue behind Saudi Aramco and the National Iranian Oil Company - is set to take over a leading role held by Total in a huge gas project in Iran should the French energy giant decide to quit amid US sanctions against the Islamic Republic.Industry sources quoted by Reuters siad that while it was not clear if CNPC had received approvals from Beijing to take over from Total, they said chances that the move could strain relations between the US and China were already high."The possibility of Total's pullout is quite high now, and in that scenario CNPC will be ready to take it over fully," Reuters quoted a senior state oil official with knowledge of the contract as saying. The news wire also quoted an executive with direct knowledge of the project as adding that planning began "the day the  investment was approved.""CNPC foresaw a high probability of a reimposition of (US) sanctions," the executive said. Last December, Reuters reported that CNPC had already started talks with Iran over replacing Total in South Pars. Under the alleged terms of the agreement to develop Phase 11 of South Pars, CNPC could take over Total's 50.1% stake and become operator of the project. CNPC already holds a 30% stake in the field, while Iranian national oil company subsidiary Petropars holds the remaining 19.9%.  So far, Reuters said, the Chinese oil giant, which already operates two oil fields in Iran, has spent about $20 million on planning to develop the field.

China's crude oil futures boom amid looming Iran sanctions (Reuters) - A U.S. decision to reimpose sanctions on Iran is supporting China’s newly established crude oil futures, and may spur efforts to start trading oil in yuan rather than dollars, traders and analysts said. Since launching in March, Shanghai crude oil futures ISCc1 have seen a steady pick-up in daily trading, while open interest - the number of outstanding longer-term positions and a gauge of institutional interest - has also surged. Traded daily volumes hit a record 250,000 lots last Wednesday, more than double the day before, spurred by news of the Iran sanctions. The jump helped the front-month Shanghai futures contract account for 12 percent of the global oil market last week, up from just 8 percent in week one. “The contract is thundering into action,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore. The world’s biggest importer of crude oil, China hopes the Shanghai contract will eventually rival international benchmarks Brent LCOc1 and benchmark WTI CLc1. The ascent of Shanghai crude is aided by China’s voracious demand for oil, with imports hitting a record in April of 9.6 million barrels per day. China is also the biggest buyer of Iranian crude oil, and the recent boost in trading volume at least in part flowed from the sanctions decision, said Barry White, senior vice president for derivatives in Singapore at financial services firm INTL FCStone. “The sanctions... can potentially accelerate this process of establishing a 3rd (oil) benchmark,” 

China data: Apr crude stocks rise 38 mil barrels from end-Mar - China saw a build of 37.84 million barrels in crude oil stocks over April, from end-March, which was 65.3% higher than the previous month due to heavy crude imports and lower throughput, S&P Global Platts' calculations based on latest official data showed Wednesday. Crude stocks are likely to continue to rise in May as imports are likely to remain strong. China does not release official data on stock. Platts calculates the country's net build or draw on crude stocks by subtracting the official refinery throughput data from the country's crude supply data. The latter takes into account net crude imports and domestic production. The General Administration of Customs data showed that crude imports hit a record high of 9.64 million b/d in April, jumping 14.7% from a year ago, and rising 4.1% month on month. Last month, the heavy inflow pushed the country's crude supply up by 5.4% from March to 13.38 million b/d. The country's refinery throughput in April, however, edged down 0.5% month on month to 12.11 million b/d, the National Bureau of Statistics' data showed. The decline was driven mainly by scheduled maintenance at PetroChina's Sichuan refinery, Sinopec's Gaoqiao and Zhenhai refinery last month, while independent refiners had cut their average run by about one percentage point. With the decline in refinery throughput and the strong growth in supply, the stockbuild of 37.84 million barrels in April was more than the 22.88 million barrels of crude that ended up in storage in March. However, on a year on year basis, the 11.5% increase in crude throughput last month, was 5.1% lower compared with April 2017. 

Iran asks Chinese oil buyers to maintain imports after U.S. sanctions - sources (Reuters) - A senior official at Iran’s state-owned oil supplier met Chinese buyers this week to ask them to maintain imports after U.S. sanctions kick in, three people familiar with the matter said, but failed to secure guarantees from the world’s biggest consumer of Iranian oil.  The sources told Reuters Saeed Khoshrou, director of international affairs at the National Iranian Oil Company (NIOC), held separate meetings in Beijing on Monday with top executives at Chinese oil giant Sinopec’s trading unit and state oil trader Zhuhai Zhenrong Corp to discuss oil supplies and seek assurances from the Chinese buyers. Khoshrou was accompanying Iran’s foreign minister Javad Zarif in the first stop of a tour of world powers before traveling on to Europe. Tehran is mounting a last-ditch effort to save a 2015 nuclear deal that Washington has abandoned, with plans to impose unilateral sanctions including strict curbs on Iran’s oil exports. “During the meeting, Mr. Khoshrou conveyed Mr. Zarif’s message that Iran hopes China will maintain the levels of imports,” said one person briefed on the meetings. China, the world’s top crude oil buyer, imported around 655,000 barrels a day on average from Iran in the first quarter of this year, according to official Chinese customs data - equivalent to more than a quarter of Iran’s total exports. Chinese executives did not make firm commitments but said as state oil companies they will fall in line with Beijing’s wishes, the person said. The visit was the NIOC marketing chief’s second to Beijing this year - he also met with Chinese customers about a month ago. A second person with direct knowledge of the discussion, said Chinese firms “shared the same hope to maintain purchases”, adding companies are still assessing the possible impact of the new sanctions. 

S Korea data: Iranian crude imports fall 25% on year to 9.09 mil barrels in Apr - South Korea's crude oil imports from Iran fell 24.9% year on year to 1.24 million mt (9.09 million barrels or 303,000 b/d) in April, from 12.11 million barrels in the year-ago month, according to preliminary data released by the Korea Customs Service Tuesday. This marks the sixth consecutive decline since November last year when imports fell 26.8% year on year to 10.37 million barrels. The April imports were also down 21.6% from 11.6 million barrels in March. For the first four months, Iranian crude imports fell 36.1% year on year to 37.59 million barrels, from 58.84 million barrels in same period last year. In 2017, Iranian crude oil imports increased 32.1% to 147.87 million barrels. The country's monthly imports of Iranian crude had increased since January 2016 when the US and EU lifted sanctions on Iran. The sharp decrease in crude imports from Iran was largely attributable to fewer condensate shipments following the startup of new condensate splitters in the Persian Gulf nation. In order to fill the gap, South Korean importers have increased light sweet crude imports from alternative sources such as Russia, the US and Kazakhstan. Imports of Iranian crude are expected to further slide in the wake of the reimposition of US sanctions on Iran. South Korea's crude oil imports from its biggest supplier Saudi Arabia also fell 7.6% year on year to 3.317 million mt, or 24.31 million barrels, last month, from 26.3 million barrels a year earlier. It marks the second consecutive decline following rises for three months in a row. But the April imports were up 11.4% from 21.82 million barrels in March. 

Iran sanctions and the showdown in East Asia  - Platts Capitol Crude podcast -- US sanctions against Iranian oil buyers go back into force in early November, and the Treasury Department has instructed countries to make significant cuts to their imports in the next six months to be considered for potential sanctions relief. But much is unknown about how the Trump administration will review those requests, especially at a time of rising oil prices going into the peak summer driving season in the US.  Elizabeth Rosenberg, director of the energy program at Centerfor a New American Security and a former senior sanctions adviser at the Treasury Department, talks with Meghan Gordon to sort out those uncertainties.

UAE state oil giant ADNOC plans to invest $45 bln in downstream expansion (Reuters) - Abu Dhabi National Oil Company (ADNOC) plans to invest $45 billion over the next five years to expand its refining and petrochemicals operations, it said on Sunday. Striving to become a global player in the downstream sector, the state oil giant wants to double its refining capacity and triple petrochemicals output potential by 2025 as it looks to capture new growth markets, ADNOC’s Chief Executive Sultan al-Jaber told Reuters on Saturday. On Sunday al-Jaber presented ADNOC’s downstream expansion strategy at an industry conference in Abu Dhabi, alongside CEOs of oil majors such as BP, Total and Eni , which have secured long-term oil production deals in the United Arab Emirates, a key Gulf OPEC member. The centrepiece of ADNOC’s strategy is the Ruwais industrial complex, which ADNOC wants to turn into the largest integrated refining and petrochemicals complex in the world, al-Jaber said at the conference. ADNOC plans to expand refining and petrochemical operations at Ruwais by adding a third refinery to boost capacity by 600,000 barrels per day (bpd) by 2025, lifting total refining potential to 1.5 million bpd. “We are extending an invitation to existing and new partners to join with us in building a world-leading refining and petrochemicals complex and manufacturing ecosystem here in Ruwais,” al-Jaber said. The company, a major Middle East producer that pumps about 3 million bpd, will also make overseas investments to secure access to growth markets, it said on Sunday. 

UAE expects next OPEC meeting to focus on inventory not sanctions (Reuters) - OPEC is more focused on identifying the right level of oil inventory at its next meeting than the impact on supplies of new U.S. sanctions on Iran, the United Arab Emirates said. President Donald Trump said last week that the United States was exiting an international nuclear deal with Iran and would impose new sanctions on OPEC’s third-largest producer. Asked on Sunday about oil supply worries as a result of the sanctions UAE energy minister Suhail bin Mohammed al-Mazroui told reporters: “That’s not what we are concerned about now”. “What we are concerned about in the next (OPEC) meeting is what is the right level of inventory that we should see, and (how) can we put this group together for longer,” he said. OPEC has a self-imposed goal of bringing inventories in industrialized countries down to their five-year average. The exporting group needs to identify that inventory target in June to gauge the success of the deal, OPEC officials have said. A decline in Iranian oil exports would add upward pressure on prices, which have already gained this year due to a global supply cut deal between OPEC and non-OPEC producers. Brent crude rose further after Trump’s announcement on Tuesday and settled at $77.12 on Friday. OPEC is set to meet in June to set oil policy together with non-OPEC producers participating in the supply cut deal. Mazroui said there was no reason to worry about supply, adding that this was not the first time an OPEC member had been in such a situation. “We managed to solve the supply issue but we still believe we have the buffer (in oil supplies)... We will meet in June to discuss it,” he said. “If history tells us, (when) this happens the whole organization will get together and they can find a solution.” 

With glut almost gone, OPEC still cuts more than oil pact demands(Reuters) - A global oil glut has been virtually eliminated, figures published by OPEC showed on Monday, thanks to an OPEC-led pact to cut supplies that has been in place since January 2017 and due to rising global demand. Despite this, OPEC’s latest report said producers were cutting more than required under the deal, while producers not party to the agreement, such as U.S. shale companies, were starting to face constraints on future output. Saudi Arabia, the world’s biggest oil exporter and de facto leader of the Organization of the Petroleum Exporting Countries, told OPEC it cut output in April to its lowest level since the supply deal began in January 2017. The OPEC report said oil inventories in OECD industrialized nations in March fell to 9 million barrels above the five-year average, down from 340 million barrels above the average in January 2017. “The oil market was underpinned in April by renewed geopolitical issues, tightening product inventories and robust global demand,” OPEC said in its report. The deal between OPEC, Russia and other non-OPEC producers has helped oil prices LCOc1 rise 40 percent since it took effect. Oil reached $78.28 a barrel on Monday, the highest since November 2014, after the OPEC report was published. The main goal of the supply deal was to reduce excess oil stocks to the five-year average. But oil ministers have since said other metrics should be considered such as oil industry investment, suggesting they are in no hurry to end supply cuts. Indeed, the report showed OPEC for now is cutting more supply than the group has pledged under the pact. OPEC output rose by just 12,000 barrels per day (bpd) to 31.93 million bpd in April, according to figures OPEC collects from secondary sources. That is roughly 800,000 bpd less than the amount OPEC says the world needs from the group this year. Figures reported directly from OPEC members showed even deeper declines in production. Venezuela, whose output has plunged due to an economic crisis, told OPEC its production fell to 1.505 million bpd in April, believed to be the lowest in decades. Top exporter Saudi Arabia told OPEC it cut output by 39,000 bpd to 9.868 million bpd, which is the lowest since the supply cut deal began, based on figures Riyadh reports to the group.

Analysts: Risk of OPEC, NOPEC Output Deal Compliance Slippage Increases - The OPEC, non-OPEC production cut deal will hold in its current form until December 2018, but the risk of compliance slippage has materially increased with U.S. President Trump's decision to withdraw from the Iranian nuclear accord.That is the view of oil and gas analysts at BMI Research, who said that the US’ decision to end all nuclear-related sanctions waivers for Iran would smooth the re-entry of cut OPEC, non-OPEC barrels to market in 2019.“Crucially, it will allow OPEC and Russia to shift their narratives on production from restraint to growth, without derailing the global recovery in oil prices. Key producers can frame increases in their output as a response to any (perceived) gap in the market created by the barrels lost from Iran,” the analysts said in a brief report sent to Rigzone.BMI said it was unclear how far Iranian exports would be impacted by the withdrawal but said its current forecast is for a 500,000 barrel per day (bpd) year on year decline in crude and condensate exports for 2019. “The forecast 500,000 bpd drop in exports is dwarfed by the volumes currently being held out of the market by participants in the OPEC, non-OPEC production cut deal. The volume cut has averaged 1.32 million bpd over the life of the deal and stood at 1.92 million bpd as of March,” BMI analysts said.

If Saudi Arabia decides to increase oil production it could kill OPEC - As has been widely discussed in the aftermath of President Trump’s decision to withdraw from the Iran nuclear deal, the return of sanctions on Iran could disrupt oil shipments, with estimates ranging from essentially nothing to as much as 1 million barrels per day of Iranian supply going offline. But the decision also could put an end to the OPEC agreement. Saudi Arabia could be the biggest beneficiary of Trump’s decision, not just because from a geopolitical perspective (Saudi Arabia has long wanted the U.S. to confront Iran), but because any decline in Iranian supply will push up prices, dealing a financial windfall to Riyadh without any sacrifice. Saudi Arabia needs higher oil prices to fill budget gaps, and it also wants to ratchet up prices ahead of the Aramco IPO. Just as with Venezuela’s plunge in output, any unexpected outage in Iran will be a boon for Saudi Arabia.There seems to be some sort of agreement between the U.S. and Saudi Arabia that if Washington takes the fight to Iran, Saudi Arabia would step in to prevent a crude oil price spike, a perennial problem for U.S. politicians. U.S. Secretary of Treasury Steven Mnuchin said on Tuesday that he does not expect an increase in oil prices because "we have had conversations with various parties ... that would be willing to increase oil supply." He omitted which parties he was referring to, but it is safe to say that he was talking about Saudi Arabia.But if Saudi Arabia ramps up output, it would essentially have to back out of the OPEC agreement. Any unilateral increase in supply would violate the spirit of the pact, and would likely lead to less restraint from other members. Recognizing the risk here, a source told the FT on Wednesday that Saudi Arabia would not increase supply on its own, and would instead work with OPEC and Russia to coordinate their action.

OPEC says global upstream oil investment outside US needs to pick up --OPEC Monday said it is concerned about a lack of upstream investment in the oil industry outside of the US despite forecasting that the increase in 2018 non-OPEC crude supply would outpace global demand growth. In its closely watched monthly oil market report that largely kept its fundamental projections steady from April, OPEC said non-OPEC spending in 2017 to bring new projects online was down 42% from 2014. Related feature -- Iran Sanctions: Global Energy Implications It would have been lower without the contributions of US tight oil companies, who raised investment by more than 42% year-on-year in 2017, OPEC said. "Timely spending on project implementation is a key concern," OPEC said, which in recent weeks has indicated it will continue with its output cut agreement -- and maybe even extend it past its expiry at the end of 2018 -- to encourage more upstream spending despite tightening fundamentals. OPEC has said new projects will be needed to fill a potential supply gap in the coming years, with demand expected to be robust. The report comes just over a month from OPEC's next ministerial meeting, June 22, in Vienna. The output cut agreement, which went into force in January 2017 after more than two years of a bruising market share battle, commits OPEC and 10 non-OPEC producers, led by Russia, to slash 1.8 million b/d of supply to support prices and reduce the global overhang of oil in storage. In its report, OPEC forecast that non-OPEC investment would increase by just 3.5% year on year in 2018, rising to 8.1% in 2019. A major portion of that will come from US shale investment, which is projected to increase by 20% year on year in 2018 and then ease to 16% in 2019. US production will account for 89% of the projected 1.72 million b/d in non-OPEC output growth in 2018, OPEC said.

Hedge funds take profits after oil rally: Kemp (Reuters) - Hedge funds have continued to pare their bullish positions in petroleum despite the continued rise in prices and the prospect of renewed sanctions reducing exports from Iran. The net long position of hedge funds and other money managers in the six most important petroleum futures and options contracts was cut by a further 21 million barrels in the week to May 8. The combined net long has now been reduced by a total of 55 million barrels in the three most recent weeks, according to position reports published by regulators and exchanges. As in previous weeks, the liquidation last week was concentrated in crude, while funds' exposure to refined products was increased slightly ( ).  For all the bullish commentary around the outlook for oil prices, fund managers appear to be taking profits after a strong rally in crude oil rather than adding new positions.   The exception is middle distillates, such as diesel and heating oil, where global consumption is growing fast, inventories are declining and the market is looking increasingly tight. Fund positioning remains stretched, with longs outnumbering shorts by 12:1 across the whole petroleum complex and by as much as 14:1 in the case of Brent. While fundamentals still appear supportive, higher oil prices are likely to restrain consumption growth and stimulate more supply in the second half of 2018 and into 2019. Against this backdrop, the extremely lopsided positioning could become a significant source of downside risk if and when portfolio managers try to exit some of their positions. 

Brent oil reclaims 3 ½-year highs as Middle East violence feeds oil-flow concerns -- Global benchmark Brent crude jumped back Monday to its highest level in 3½ years, as violence in the Middle East fed concerns over the flow of oil in the region.The gain for U.S. benchmark oil prices weren’t quite as impressive with traders wary of OPEC’s ability to offset crude supply declines and growing U.S. production.On the New York Mercantile Exchange, June West Texas Intermediate crudeCLM8, +0.06%  tacked on 26 cents, or 0.4%, to settle at $70.96 a barrel after trading as high as $71.26. July Brent crude oil LCON8, +0.09% the European and global benchmark, surged by $1.11, or 1.4%, to end at $78.23 a barrel on ICE Futures Europe—the highest finish since late November 2014.Concerns over violence in the Middle East “are having overseas buyers bid up Brent as they are more reliant on the European Benchmark,” said Phil Flynn, senior market analyst at Price Futures Group. “Brent is on a tear.”Palestinians clashed Monday with the Israeli military at the fence dividing the Gaza Strip and Israel, reportedly leaving dozens of protesters dead as the U.S. opened its embassy in Jerusalem. Last week, futures prices for WTI rose by 1.4% and Brent added 3%, buoyed by the Trump administration’s move to abandon the 2015 international agreement aimed at curbing Iran’s nuclear program. The decision paved the way for the reimposition of the U.S. economic sanctions on Tehran after a six-month winddown period.“The bottom line for oil is that global supply will fall by some unknown amount as a result of the U.S. leaving the Iran deal, and that is bullish given the backdrop of high OPEC compliance, strong global demand expectations, geopolitical uncertainty and stabilizing U.S. production growth” in the second quarter, analysts at the Sevens Report said on Monday.

Oil Prices Turn Higher As Traders Digest OPEC Report - Oil prices shook off earlier weakness to trade higher on Monday, after OPEC said a global glut has been virtually eliminated thanks in part to ongoing OPEC-led supply cuts and fast-rising global demand. OPEC said in its monthly report published earlier that oil inventories in developed nations in March fell to 9 million barrels above the five-year average. That's down from 340 million barrels above the average in January 2017. "The oil market was underpinned in April by renewed geopolitical issues, tightening product inventories and robust global demand," OPEC said in the report. As well as OPEC's voluntary cuts, a plunge in Venezuelan oil output due to economic crisis and the United States' departure from a nuclear deal with OPEC member Iran have supported prices. OPEC signaled it was ready to step in should "geopolitical developments" impact supply. Brent crude futures, the global benchmark, tacked on 31 cents, or 0.4%, to $77.44 a barrel by 8:50AM ET (1250GMT). It fell to as low as $76.56 earlier. ,Meanwhile, New York-traded WTI crude futures inched up 10 cents to $70.81 a barrel, after hitting an intraday low of $70.28. Oil was on the backfoot earlier as a rise in U.S. drilling for new production dampened sentiment. U.S. drillers added 10 oil rigs in the week to May 11, bringing the total count to 844, the highest number since March 2015, General Electric's Baker Hughes energy services firm said in its closely followed report on Friday. That was the sixth consecutive weekly increase in the rig count, underscoring worries about rising U.S. output.

Oil gains while U.S. crude's discount to Brent deepens (Reuters) - Oil prices rose on Monday as OPEC reported that the global oil glut has been virtually eliminated, while U.S. crude's discount to global benchmark Brent widened to more than $7, its deepest in five months. Global benchmark Brent gained $1.11 to settle at $78.23 a barrel. West Texas Intermediate crude rose 26 cents to settle at $70.96. WTI's discount to Brent was as much as $7.28, its widest since Dec. 12 on surging U.S. output. U.S. shale production is expected to hit a record 7.18 million barrels per day (bpd), the Energy Information Administration said. The production growth may be far from over, contributing to U.S. crude's discount to Brent, analysts said. "You have the threat that a high enough price will start to activate the 7,700 drilled but uncompleted wells in the Lower 48 states," said Walter Zimmerman, chief technical analyst at ICAP TA. Contrastingly, OPEC's latest report was more bullish. "That absolute plunge in Venezuelan production ... just highlights how tenuous the market is in terms of the supply-and-demand balance," said John Kilduff, a partner at Again Capital LLC. Even so, OPEC and its allies were still trimming output more than their supply-cutting pact required. Meanwhile, output from third-largest OPEC producer Iran is uncertain on renewed U.S. sanctions. "If Iranian crude is really taken off the water, it's going to impact Brent much more than it's going to impact WTI," Zimmerman said. It is unclear how U.S. sanctions will affect Iranian oil. Much will depend on how other major oil consumers respond to Washington's action against Tehran, which will take effect in November. 

Rising oil prices boost U.S. economy: Kemp (Reuters) - U.S. net petroleum imports have fallen to the lowest level in more than half a century as a result of the shale revolution, which is profoundly changing the impact higher oil prices have on the economy. Since the 1860s, the United States has been the world’s largest producer and consumer of oil, which means it has a complicated relationship with oil prices. Rising oil prices benefit some businesses and workers at the expense of others, and the same has been true about a sharp price fall. Until after World War Two, the country was a net exporter to the rest of the world, the first era of U.S. energy dominance.  But from the late 1940s and especially the 1950s, the United States turned into an increasingly major oil importer. Since then, the principal effect of a rise in oil prices has been to transfer income from consumers and businesses in the United States to oil-producing countries in Latin America, the Middle East and Africa. Rising prices have put pressure on the U.S. balance of payments and the dollar’s value, contributing to an occasionally negative relationship between the price of oil and the exchange rate.But as net imports have declined in the last decade, the picture has changed again, and the main transfers of income are now occurring within the United States rather than with the rest of the world. The impact of oil prices on the U.S. trade deficit and the exchange rate is becoming much less significant than before.Instead, rising prices are transferring income from net consuming states such as California, Florida, New York and Illinois to net producing states including Texas, Oklahoma, New Mexico and North Dakota.

WTI/RBOB Drop After Surprise Crude Build After clinging to the green all day, despite a strong dollar, WTI/RBOB slipped into the red after API reported a much bigger than expected (and surprise) crude build (+4.854mm vs -1.75mm exp). API

  • Crude +4.845mm (-1.75mm exp)
  • Cushing +62k (+550k exp)
  • Gasoline -3.369mm
  • Distillates -768k

After drawing down last week, expectations were for crude draw this week but API reported a large surprise crude build... Crude inventories are 2.4% below the five-year norm, while Cushing stockpiles are about 30.5% below the average.WTI/RBOB managed gains today (RBOB highest since Oct 2014)  - despite the dollar strength - heading into API...but kneejerked notably lower on the print... As Bloomberg reports, a large number of drilled-but-uncompleted wells in shale plays and the potential for rising output have weighed on American prices, said Walter Zimmermann, chief technical analyst at ICAP-TA. “You are probably seeing some serious producer hedging into these lofty levels here, whereas I don’t see anybody keen to hedge against Brent given these geopolitical fears.” Notably, the Brent-WTI spread blew out to $8 today...

Get ready for $100 a barrel oil and the conflict it represents -- It's time to prepare for $100 oil. A price of $150, taking out the 2008 high, may also be a real possibility if events in the Middle East continue to escalate, as we have witnessed in recent days.While I believe that oil, given the vast supplies available around the world, has an economic value of about $20 per barrel, it's becoming increasingly impossible to ignore a world that seems to want higher prices for crude.Through a production agreement, OPEC and Russia have successfully offset the glut of crude oil being pumped every single day in the United States. Rising demand for oil in a synchronized global economic recovery has also helped bring supply and demand in better balance over the last year-and-a-half.Having said that, U.S. oil output approaches 11 million barrels per day, and crude oil production exceeds that of Saudi Arabia and could surpass the world's largest producer, Russia, sometime next year.Despite that, the geopolitical risk premium in oil has driven crude prices to nearly four-year highs and shows no signs of abating. And so many interests benefit from higher oil prices; it appears there is a part of the world ready, and willing, to accept much more expensive energy.This array of developments comes just as the summer driving season begins in the U.S., meaning that consumers should expect higher prices at the pump, certainly in excess of $3 per gallon, on average, and possibly much higher. The U.S. exit from the Iranian nuclear deal, the unprecedented exchange of rocket attacks between Iranian and Israeli forces and the general belief among the U.S., Saudi Arabia and Israel that Iran's regional expansion needs to be stopped all argue for a continued rise in the price of crude.

WSJ Sounds The Alarm: "There's No Getting Over" Gas At $4 A Gallon - Consumers, who are already being squeezed by rising interest rates (even as the return on their cash deposits remains anchored near zero), are facing another potential constraint on their already limited purchasing power. And that constraint is  rising gasoline prices, which, as we pointed out last month, could erode the stimulative impact of President Trump's tax plan as they sop up what little money the middle class has been saving.As prices rise and banks scramble to update their forecasts, the Wall Street Journal has become the latest publication to sound the alarm over what is, in our view, one of the biggest threats facing the US economy in the ninth year of its post-crisis expansion. In its story warning about $3 a gallon oil (of course, we're already seeing $4 a gallon in parts of California and other high-tax states), WSJ cited Morgan Stanley's latest projection that rising gas prices could wipe out about a third of the annual take-home pay generated by the tax cuts Rising fuel costs can also feed inflation and pressure interest rates. Even though the Federal Reserve typically looks past volatile energy prices in the short term, higher energy costs help shape consumer confidence. And with the central bank poised to be more active this year, rising energy costs pose an additional risk to the economy. Morgan Stanley estimates that if gas averages $2.96 this year, it would take an annualized $38 billion from spending elsewhere, an upward revision from the bank’s $20 billion estimate in January. That would wipe out about a third of the additional take-home pay coming from tax cuts this year, the analysts said. .."Three dollars is like a small fence. You can get through it, you can get over it," said   "But $4 is like the electric fence in Jurassic Park. There’s no getting over that." And in a report published in April, Deutsche Bank illustrated how rising fuel costs will disproportionately squeeze the most vulnerable among us - a cohort of consumers who already shoulder an outsize share of the country's household debt.

Oil climbs on Middle East unrest, with Brent notching another multiyear high - Oil settled higher Tuesday, with supply concerns tied to political unrest in the Middle East lifting prices for the global crude benchmark to its highest finish in 3½ years.Growth in U.S. output, meanwhile, has tamed price moves for U.S. benchmark crude in recent sessions, preventing it from notching a fresh multiyear high. On the New York Mercantile Exchange, June West Texas Intermediate crude added 35 cents, or 0.5%, to settle at $71.31 a barrel. It had settled at $71.36 on Thursday, its highest since Nov. 26, 2014. July Brent crude oil the European and global benchmark, climbed by 20 cents, or 0.3%, to $78.43 a barrel, marking another finish on ICE Futures Europe at the highest since late November 2014. “European and Asian buyers of Brent are pricing in the risks and realities of the fallout from sanctions on Iran to increased tensions in the Gaza strip, as well as the inability of traditional Brent oil producers to fill that void,”  The price spread between U.S. benchmark WTI and Brent has widened to more than $7 a barrel. “The spread between the two contracts is basically Europe and Asia screaming for more oil from the United States to fill the potential void and feed their ravenous oil demand,” he said. “For WTI, while it is under performing at this point, it is not by any means bearish for the U.S. benchmark,” said Flynn. “The strong global demand for WTI will keep us supported, and even if some of the global risks get reduced, WTI will benefit from the unwinding of the Brent versus WTI spread that is reflecting most of the geopolitical risks.” The Organization of the Petroleum Exporting Countries reduced its forecast for global oil production in its most recent report. Although the group said its crude output inched up in the previous month, investors interpreted the minimal increase as a sign of OPEC’s continued commitment to rebalancing the market, especially from its de facto leader Saudi Arabia.

Oil Inches Closer To $80 - Brent topped $79 per barrel in early trading on Tuesday, closing in on the psychological threshold of $80 per barrel. However, benchmark prices posted modest losses by mid-morning. The oil market continues to tighten with OPEC keeping barrels off of the market and reducing inventories down to the five-year average. The near-term tension between bulls and bears will continue to be dominated by geopolitical risk, with fears of outages in Iran pushing prices up. . Oil prices at $100 per barrel would reduce U.S. GDP by 0.4 percent in 2020 compared to if oil was priced at $75 per barrel, according to Bloomberg. But that economic hit is not as strong as it used to be because the U.S. economy has become less energy intensive and the U.S. also exports more oil than ever before. “$100 oil won’t feel like it did in 2011,” and could end up feeling “more like $79” per barrel, economists Jamie Murray, Ziad Daoud, Carl Riccadonna and Tom Orlik concluded. “With the U.S. still firing on close to all cylinders, the rest of the world would suffer less as well – global output would be down by 0.2 percent in 2020.” As Venezuela’s oil production and exports continue to fall off a cliff, the case for higher oil prices is strong. A decline in Iranian oil exports, which will occur alongside plunging output from Venezuela, would create the “perfect cocktail” for oil to hit $100 per barrel this year or next, according to PVM. At that point, OPEC would be under a great deal of pressure to lift the production limits. ConocoPhillips’ (NYSE: COP) seizure of PDVSA assets in the Caribbean threatens to accelerate production declines in Venezuela.  OPEC said the oil supply surplus is virtually gone, with inventories standing just 9 million barrels above the five-year average in March, which means that by the time data is published for May, inventories will have already fallen below average levels. The OPEC report showed a slight increase in output, rising by 12,000 bpd, driven by higher output from Saudi Arabia but also revealing deep declines in Venezuela.    Oil prices are at three-year highs, and hedge funds and other money managers have pocketed some profits over the past week. For the week ending on May 8, investors cut their bullish bets. The positioning is still overwhelmingly on the long side, exposing the market to downside risk if sentiment sours.

Oil Market Report – IEA - OMR Public

  • Global oil demand growth for 2018 has been revised slightly downwards from 1.5 mb/d to 1.4 mb/d. While recent data confirms strong growth in 1Q18 and the start of 2Q18, we expect a slowdown in 2H18 largely attributable to higher oil prices. World oil demand is expected to average 99.2 mb/d in 2018.
  • Global oil supplies held steady in April at close to 98 mb/d. Robust non-OPEC output offset lower OPEC production. Strong non-OPEC growth, led by the US, pushed global supplies up 1.78 mb/d on a year ago. Non-OPEC output will grow by 1.87 mb/d in 2018, a slightly higher rate than seen in last month's Report.
  • OPEC crude production eased by 130 kb/d in April, to 31.65 mb/d, on further declines in Venezuela and lower output in Africa. Compliance with the Vienna Agreement reached a record 172%. The call on OPEC crude and stocks will average around 32.25 mb/d for the remainder of 2018, nearly 0.6 mb/d higher than April output.
  • OECD commercial stocks declined counter-seasonally by 26.8 mb in March to 2 819 mb, their lowest level since March 2015 and 214 mb below year-ago levels. In the process, they fell 1 mb below the five-year average.
  • ICE Brent and NYMEX WTI futures prices rose to multi-year highs in recent days, and both are up by more than $10/bbl since the start of the year. Solid oil demand, reduced OPEC output and geopolitical developments continue to underpin price gains.
  • Global refining throughput is on the rise with runs expected to hit a record 83 mb/d in July-August. Throughput growth, however, is not sufficient to cover all refined products demand, with stock draws expected to persist through 2Q18 and 3Q18.

IEA lowers 2018 oil demand growth estimate to 1.4 million b/d on higher prices The International Energy Agency warned Wednesday a potential supply shortfall from Iran and Venezuela could become a "major challenge" forother big oil producers if they are to fend off sharp price rises and fill the gap, and reiterated its readiness to act if needed to ensure adequate supplies. The IEA also said OECD oil stocks had fallen below the five-year average level in March for the first time since 2014, by 1 million barrels, representing the main benchmark for the success of OPEC/non-OPEC production cuts agreed in 2016 and raising pressure for a rethink by those behind the cuts, chiefly Russia and Saudi Arabia. The total OECD stock figure was down 26.8 million at 2.82 billion barrels, the lowest level since March 2015, the IEA said in its latest monthly report. Market reaction to the report was muted however, following indications earlier of rising US crude oil stocks from the American Petroleum Institute. Also mitigating the IEA's concern, it unusually lowered its estimate for growth in world oil demand this year, by 30,000 b/d to 1.44 million b/d, to reflect the effect of higher oil prices on consumption, although it said it was "confident" of underlying demand growth around the world, citing economic findings from the International Monetary Fund. Its new estimate included an upward revision for the first half of the year as a result of cold weather in the US and Europe and new petrochemical capacity in the US. Lower OPEC output and lower demand prospects were also accompanied by an upward revision to the IEA's US oil supply estimate, as shale drillers received a boost from higher prices. It raised its estimate of this year's increase in non-OPEC supply by 80,000 b/d to 1.87 million b/d.

Why IEA, OPEC and EIA have such different outlooks for energy consumption - Predicting future energy consumption trends is a hazardous science. It is plagued with guesswork related to ‘known unknowns’ and ‘unknown unknowns’.  An assessment of this troubled political and scientific landscape from UMS Group, a boutique energy and utilities management consulting firm, compares four major predictions of how energy consumption will change over the next 25 years. These four separate analyses of future energy trends have been developed by the planet’s leading organisations and institutions in the energy sector. Two distinct predictive models come from the International Energy Agency’s (IEA) World Energy Outlook 2018 report. One is a Sustainable Development Scenario (SDS), which is a ‘what if’ analysis based on the successful implementation of the Paris Climate Accord, the other a New Policies Scenario (NPS) which reflects a more realistic projection. Models from the US government’s Energy Information Administration (EIA), and OPEC – the Organization of Petroleum Exporting Countries – make up the other two projections assessed by UMS Group. Yet as noted by Mart Vos, a Consultant at UMS Group, they are a drop in the ocean compared to the thousands of other reports released by actors ranging from Shell and BP, to Bloomberg New Energy Finance and several climate change departments like the DECC. What unifies this web of conflicting reports, according to Vos’ analysis, is that they are all different from one another. . Consider the varied expectations for future consumption of the traditional fossil fuels – oil, gas and coal. The EIA expects oil demand to increase by 17% in 2040, almost identical to the 16% projected by OPEC. The IEA’s NPS model offers a slightly lower estimate of 10%. The idealistic SDS model projects a huge 25% drop in oil demand if dream policies are implemented. Main reasons for EIA’s more optimistic outlook on oil demand are the rapid industrial growth that will be witnessed in high population countries like India and China  and increased demand for transportation as upcoming nations continue their shift to urbanised living

Crude futures ease back after bearish IEA report; Brent at $77.97/b, WTI at $71.10/b - Crude oil futures edged down in European morning trading Wednesday in the wake of the International Energy Agency trimming its estimate for global oil demand growth in 2018. At 1005 GMT, ICE July Brent crude futures were trading at $77.97/b, down 46 cents from Tuesday's settle, while NYMEX June WTI crude futures were 21 cents lower at $71.10/b. In its monthly oil market report, released Wednesday morning, the IEA lowered its estimate for growth in world oil demand this year to 1.4 million b/d from 1.5 million b/d due to higher oil prices. "At the same time, non-OPEC supply is growing more strongly than previously anticipated, thereby reducing the call on OPEC to 32.25 million barrels per day (previously estimated at 32.5 million barrels per day). Thus the market is less tight than hitherto assumed," said Commerzbank analysts in a morning note. A downward movement in the demand estimate, combined with the American Petroleum Institute reporting Tuesday a 4.85 million barrel weekly increase in US crude oil inventories, when the market was expecting a drawdown, has brought a bearish sentiment to the market despite concerns over supply from Iran and Venezuela. The US Energy Information Administration publishes its more closely watched weekly numbers later today. The IEA warned Wednesday a potential supply shortfall from Iran and Venezuela could present a "major challenge" for oil producers if they are to fend off sharp price rises and fill the gap, and reiterated its readiness to act if necessary to ensure a well-supplied market.

U.S. crude stocks fall, exports hit a record high: EIA (Reuters) - U.S. crude oil stockpiles fell last week as exports hit a record high and refinery ramped up output, while gasoline inventories dropped more than expected ahead of the summer driving season, the Energy Information Administration said on Wednesday. Crude inventories fell 1.4 million barrels in the week to May 11, compared with analysts’ expectations for a decrease of 763,000 barrels. Net U.S. crude imports fell 411,000 barrels per day as exports rose to a record 2.6 million bpd, benefiting of late from the widening spread between U.S. crude oil and global benchmark Brent, which responds more to world supply outlook. Crude production continued to grow to record highs, rising 20,000 bpd to 10.72 million bpd last week, the EIA said, though weekly figures are considered less reliable than monthly data. The United States in February produced 10.3 million bpd, a record. Refining activity rose, particularly in the Midwest, as maintenance season ebbs as summer driving season heats up. Refinery crude runs rose by 149,000 bpd, while refinery utilization rates rose by 0.7 percentage points to 91.1 percent of overall capacity. U.S. Midwest refinery utilization rates increased last week to 96 percent of capacity, the highest since at least 2010 seasonally. Still, gasoline stocks were down sharply, falling by a surprise 3.8 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.4 million-barrel drop. Gasoline demand is up 0.7 percent from last year over the past four weeks to 9.4 million bpd. That demand is anticipated to increase as summer driving season kicks in. Prices were little changed after the data. U.S. crude fell 15 cents to $71.16 a barrel as of 10:45 a.m. EDT (1445 GMT), while Brent lost 20 cents to $78.22 a barrel. 

    US Crude Oil Inventories Decline By 1.4 Million Bbls -- Price Of WTI Unchanged - May 16, 2018 -- Link here.

    • US crude oil inventory: decreased by 1.4 million bbls (complete opposite of API data posted yesterday
    • US crude oil inventory: now at 432.5 million bbls; the EIA says this is in the lower half of the average range for this time of year
    • for newbies: I first stared paying close attention to this in November, 2016, when Saudi Arabia said it was going to cut production and start to drawdown global supplies. At that time, it certainly appeared to me that in modern times (i.e., the last 20 years) the US got along just fine with 350 million bbls of crude oil in storage. Even adjusting for increased demand over the past 20 years, it was hard for me to see a crude oil inventory of more than 400 million bbls as anything but "bearish" for those trading WTI.
    US crude oil inventories over the past year or so:
    • April 26, 2017: 529 million bbls (when I first started tracking this data and posting it on a weekly basis)
    • December 28, 2017, week 35: 432 million bbls
    • January 24, 2018, week 39: 412 million bbls -- this was the point; since then it has crept back up
    • April 11, 2018, week 50: 429 million bbls -- the last time I posted the data, and quit tracking on my spreadsheet; it was clear, the "drawdown" was over
    • today, May 16, 2018: 433 million bbls
    • price of WTI today: $71.10, down 29 cents from previous report;
    So, clearly, when we started this process, 530 million bbls in US crude oil inventory was "outta sight"; something needed to be done. Apparently, getting to 430 million bbls was just fine. Let's see how this plays out.

    WTI/RBOB Bounce After Crude Draw Despite New Record Production WTI/RBOB prices traded lower since last night's API-reported surprise crude draw but a 1.404mm draw (and bid gasoline draw) reported by DOE prompted a buying knee-jerk in prices. Production continued to rise to a new record high.  Ahead of the data, Bloomberg explained that the number to watch today will be gasoline exports, which can typically drift lower this time of year as more product goes to domestic customers in advance of the summer driving season. If growing U.S. production and high refinery runs churning out gasoline are met with clues that domestic demand isn't matching up to expectations, the crude price that has a lot of geopolitics baked in may falter still.  DOE:

    • Crude -1.404mm (-2.00mm exp.. BBG users +1.13mm exp)
    • Cushing +53k (+550k exp)
    • Gasoline -3.79mm
    • Distillates -92k

    DOE reports a draw - smaller than expected, but dramatically different from API's surprise build. Gasoline stocks continued to slide but distillates draw seems to have stalled..

    Oil prices rise as U.S. crude stockpiles drop - Xinhua | (Xinhua) -- Oil prices traded higher on Wednesday after a U.S. crude oil report showed the country's crude stocks continued to decline. U.S. crude oil inventories decreased in the week ending May 11, and the refining sector increased 149,000 barrels per day, the U.S. Energy Information Administration (EIA) said in its Weekly Petroleum Status Report on Wednesday. U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 1.4 million barrels during the week ending May 11. At 432.4 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year, the report said. Analysts said the EIA's latest weekly petroleum report has fueled the bullish sentiment on the oil market, adding that geopolitical concerns, tightening product inventories and robust demand would continue to provide support for prices. The West Texas Intermediate for June delivery rose 0.18 U.S. dollar to settle at 71.49 dollars a barrel on the New York Mercantile Exchange, while Brent crude for July delivery increased 0.85 dollar to close at 79.28 dollars a barrel on the London ICE Futures Exchange.

    Oil prices could rise to $85 a barrel by July, warns energy expert Dan Yergin -- Oil prices may continue to rally past 3½-year highs and all the way to $85 a barrel as soon as July, according to Pulitzer Prize-winning author and closely followed energy analyst Dan Yergin. Prices in the oil market have been steadily rising since last year, fueled by strong demand and output caps imposed by major producers aimed at draining a global crude glut. More recently, oil futures have rallied faster than expected as geopolitical tensions rattle the market. Brent crude, the international benchmark for oil prices, rose toward $80 a barrel on Tuesday after hitting its highest level since November 2014. Yergin said the cost could continue to climb due to the combined impact of falling output in crisis-stricken Venezuela, renewed U.S. sanctions on Iranian crude exports, and wars in Yemen and Syria that involve major oil-producing nations. "We could see oil prices in July when demand is high ... several dollars higher than it is. We could see it as high as $85 at least for a short period of time," Yergin, vice chairman of IHS Markit, told CNBC's "Squawk Box" on Wednesday. Yergin's remarks add an influential voice to a chorus of analysts warning about prices spikes. Goldman Sachs last week said Brent crude could spike above its $82.50 summer forecast, while Bank of America Merrill Lynch warned Brent could hit $100 a barrel by next year. Yergin said he is particularly concerned about Venezuela, where the fundamentals of the oil market and geopolitics are both at play. Venezuelan output has fallen from almost 2.5 million barrels a day a couple of years ago to roughly 1.4 million barrels a day today, and could drop to 800,000 barrels a day by next year, he said. "The screws are really tightening on Venezuela," said Yergin, who notes that ConocoPhillips is seeking to seize assets owned by state oil giant PDVSA and warns Sunday's presidential election threatens to draw fresh U.S. sanctions.

    IEA: High Oil Prices “Taking A Toll” On Demand -- Geopolitics has taken over the oil market, driving oil prices up to three-year highs. The inventory surplus hasvanished, and more outages could push oil prices up even higher. Yet, there are some signs that demand is starting to take a hit as oil closes in on $80 per barrel.In the IEA’s May Oil Market Report, the agency said that OPEC might be needed to step in and fill the supply gap if a significant portion of Iran oil goes offline. Saudi Arabia suggested shortly after the U.S. announced its withdrawal from the Iran nuclear deal that OPEC would act to mitigate any supply shortfall should it occur.But while geopolitical fears helped push Brent up to $79 per barrel in recent days, the underlying fundamentals are also mostly bullish. Venezuela’s production is plummeting, and output is 550,000 bpd below its agreed upon target as part of the OPEC deal. Conservative estimates suggest that the country could lose several hundred thousand barrels per day over the course of 2018, but there are several massive threats to PDVSA’s operations that could make that forecast look optimistic. The big question is if supply will be lost in Iran, which, coupled with the supply losses in Venezuela, could severely tighten the oil market. “The potential double supply shortfall represented by Iran and Venezuela could present a major challenge for producers to fend off sharp price rises and fill the gap, not just in terms of the number of barrels but also in terms of oil quality,” the IEA wrote in its report. However, the cure for higher oil prices tends to be higher oil prices. The IEA lowered its demand forecast for 2018 by 40,000 bpd – not a massive revision, but notable because it offers some signs that demand will slow as prices rise. Some other reports back up this notion. There are reportedly spot cargoes for oil from West Africa, Russia and Kazakhstan that are going unsold, forcing steep discounts. “While recent data continue to point to very strong demand in 1Q18 and the start of 2Q18, we expect a slowdown in growth in 2H18.” Up until now, demand growth looked strong, but “the recent jump in oil prices will take its toll.”

    Rising oil prices herald next phase in cycle: Kemp (Reuters) - Oil prices are now in the top half of the cycle, with benchmark Brent on Thursday trading above $80 per barrel for the first time since November 2014. In real terms, prices averaged $75 per barrel over the course of the last full cycle, which lasted from December 1998 to January 2016. The recent rise in prices sends a strong signal about the need for more production and slower growth in oil consumption. In the next few months, the narrative will increasingly turn to boosting supply and restraining demand in order to stabilise inventories and return the market to balance. Between 2014 and 2017, oil market “rebalancing” meant restricting production, stimulating demand and cutting excess inventories. For the rest of 2018 and 2019, rebalancing will mean precisely the opposite. The oil industry has always been subject to deep and prolonged cycles of boom and bust, and there is no reason to think the next few years will be any different. ( ) Cyclical behaviour is the single most important distinguishing characteristic of oil markets and prices, and is deeply rooted in the industry’s structure. The price cycle is driven by the low responsiveness of production and consumption to small changes in prices, at least in the short term. The behaviour of many oil producers and consumers exhibits a strong backward-looking component, so decisions tend to be based on where prices have been recently rather than where they are likely to go. But most importantly, the oil markets are a complex adaptive system which is subject to multiple feedback mechanisms operating at different speeds and timescales. The price cycle is driven by the interaction of positive feedback mechanisms (which magnify shocks) and negative feedback mechanisms (which dampen them).   In the short run, positive feedback mechanisms are more influential and tend to push the market even further away from balance following an initial disturbance. In the medium and long term, however, negative feedback mechanisms dominate and will eventually force production and consumption back into alignment.

    Oil Jumps Above $80 For The First Time Since Nov. 2014 - Two weeks after Saudi Arabia said it was targeting $80/bbl oil, this morning Riyadh got its wishes early when Brent hit the Saudi target, jumping as much as 1% to $80.18, following the latest drop in U.S. crude inventories and as traders continued to fret about the consequences of renewed sanctions on Iran.  This was the highest price since November 2014. Today's jump followed a reported from Goldman titled simply "The case for commodities strengthens " according to which America’s surging shale output won’t be able to replace the potential drop in Iranian oil shipments after the U.S. reimposed sanctions on OPEC’s third-largest producer. US shale cannot solve the current oil supply problems. Even if only 200-300 kb/d of Iran exports are at risk by year-end, OPEC is not likely to preempt this loss, only react to it. Further, any response will reduce spare capacity in an increasingly tighter market. The erosion in Venezuela and Angola oil output is accelerating at the same time ex-US growth is stalling. Only the US has seen supply surprises, but is facing growing pains with filled pipeline capacity, constraining US growth into 2019.  The paradox, of course, is that rising oil prices crush the benefit to the middle class of Trump's tax cuts; crude has rallied this month to the highest level in more than three years after U.S. President Donald Trump withdrew from a 2015 pact between Iran and world powers that had eased sanctions on the Islamic Republic in exchange for curbs on its nuclear program. As we noted yesterday, while the International Energy Agency said a global glut’s been eliminated thanks to output curbs by OPEC, it warned high prices may hurt consumption and cut forecasts for demand growth.

    OPEC sees oil rally towards $80 as short-term spike, not supply-driven (Reuters) - OPEC sees oil’s rally towards $80 a barrel as a short-term spike driven by geopolitics rather than any supply shortage, four OPEC delegates said, a sign the group is not rushing yet to rethink its supply-cutting agreement. The view of top exporter Saudi Arabia is that any brief, speculator-driven jump in oil prices is not sufficient grounds for producers to boost output, an OPEC source familiar with the kingdom’s thinking said. For such a decision to occur, the rally would need to be driven by data pointing to a supply impact, the source said. The four OPEC delegates said the latest rise in prices stemmed more from concern about U.S. sanctions on Iran and tension in the Middle East, rather than a suddenly tighter balance between oil supply and demand. “Prices are high just because of the tensions,” one of the OPEC delegates, who declined to be identified, said. Since last year, oil has been supported by a deal by the Organization of the Petroleum Exporting Countries, plus Russia and other non-members, to cut output. Prices have risen about 40 percent since the accord began in January 2017. Global benchmark Brent crude LCOc1 on Tuesday hit $79.47, the highest since November 2014, before easing below $78 on Wednesday and settling at $79.28 a barrel. Prices could rally further before declining, according to some in OPEC. “It may exceed $80 and then go down,” one of the sources said. In any case, the extent of the rally has yet to cause any real concern. “Not yet,” said another delegate, asked whether oil at $79 was too high. 

    U.S. oil rig count holds steady after six weeks of gains -Baker Hughes (Reuters) - The U.S. oil rig count held steady this week after rising for six weeks in a row even as crude prices soar to multi-year highs, prompting drillers to extract record amounts of oil, especially from shale. The total oil rig count held at 844 in the week to May 18, 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 720 rigs were active as energy companies have been ramping up production in tandem with OPEC’s efforts to cut global output in a bid to take advantage of rising prices. U.S. crude futures traded over $72 a barrel this week on concerns that Iranian exports could fall because of renewed U.S. sanctions, their highest since November 2014. Looking ahead, crude futures were trading around $70 for the balance of 2018 and $66 for calendar 2019. Shale production is expected rise to a record high 7.2 million barrels per day (bpd) in June, with the majority of the increase from the Permian basin, the biggest U.S. oil patch, where output is forecast to climb to a fresh high of 3.3 million bpd, the Energy Information Administration (EIA) this week projected. Earlier this month, the EIA forecast average annual U.S. production would rise to a record high 10.7 million bpd in 2018 and 11.9 million bpd in 2019 from 9.4 million bpd in 2017. In anticipation of higher prices, U.S. financial services firm Cowen & Co this week said the exploration and production (E&P) companies they track have provided guidance indicating a 13 percent increase this year in planned capital spending. Cowen said those E&Ps expect to spend a total of $81.2 billion in 2018, up from an estimated $72.1 billion in 2017. 

    US Oil Rig Count Flat As Prices Stabilize -  US drillers added 1 rig to the number of oil and gas rigs this week, according to Baker Hughes, with oil rigs holding steady and gas rigs adding one. The oil and gas rig count now stands at 1,046—up 145 from this time last year.Meanwhile, neighboring Canada gained 4 oil and gas rigs for the week—the first gain in weeks.Both the Brent and WTI benchmark were trading up on the day at 9:46am EST with Brent crude surpassing the $80 mark at one point on Thursday. The shaky geopolitical landscape in major oil-producing regions has sent oil prices to near four-year highs, as the market grows increasingly wary over possible supply crunches ala US sanctions on Iran, Venezuela’s colossal mess that has sent PDVSA production fall month after month with no end in sight, and OPEC’s almost too-good adherence to its production cut deal.In the wake of the higher oil prices, Saudi Arabia and the UAE have made public statements that promised to fill any supply gaps, should they in fact materialize, although this has done little to calm the market. WTI was trading up 0.06% at $71.53, with Brent trading up 0.39% at $79.60. Western Canada Select (WCS) was trading flat at $56.44—a massive discount to WTI.   Working the other side of the push/pull for oil prices, US oil production rose again in the week ending May 11, reaching 10.723 million bpd—the twelfth build in as many weeks—and less than 300,000 bpd shy of the 11.0 million bpd forecast that many are predicting for 2018.US production has steadily increased since OPEC engaged in a supply cut deal that sought to remove 1.8 million bpd from the market. At the time the deal was announced, the US was producing 8.6 million bpd. Today, the US is producing more than 2.0 million bpd over that figure, while OPEC/NOPEC continues to curb supply on its end. At 5 minutes after the hour, WTI was trading down 0.36% at $71.23, with Brent trading down 0.24% at $79.06.

    Oil Breaks $80 And Gasoline Prices Spike --Oil prices took a breather on Friday, with Brent sitting just shy of $80 per barrel. The Venezuelan election on Sunday could be the next near-term catalyst for the oil market. . Brent briefly breached $80 per barrel this week, although it is facing resistance at that level. Still, oil prices are at their highest in three and a half years. “There’s the Iran story which continues to develop and the general talk about a tighter market. It will be interesting to see if we make a clean break of $80 next week. It seems like that’s the direction we are going,” Jens Pedersen, a senior analyst at Danske Bank A/S, said in a Bloomberg interview. Average retail gasoline prices in the U.S. have climbed to $2.90 per gallon this week, but with Brent hitting $80 per barrel, more pain at the pump could be on the way. Peak summer demand unofficially begins during the Memorial Day holiday at the end of May, and this year motorists will see the highest gasoline prices in more than three years. The average motorist will pay an additional $100 for gasoline this summer compared to last year. . Costs for oilfield services are on the rise as companies struggle to find enough workers. “Recruitment and staffing is a big challenge. We’re aggressively focused on recruiting people,” Kevin Neveu, chief executive at Precision Drilling Corp., said at a conference in Houston. He said they hired about 2,000 people in 2017. A study last year estimated that about 25 percent of the workers laid off during the downturn have moved on to other industries. . Saudi oil minister Khalid al-Falih said that OPEC and Russia were discussing price volatility and the health of the oil market. Al-Falih has said that OPEC would step in to mitigate and supply losses, although for now, the preference seems to be to leave the production limits unchanged. OPEC officials have said the price rally is being driven by fear and not based on the fundamentals.

    Oil prices fall, Brent set for sixth week of gains (Reuters) - Oil prices fell on Friday, but Brent crude was on track for a sixth straight week of gains, boosted by plummeting Venezuelan production, strong global demand and looming U.S. sanctions on Iran. Brent futures for July delivery fell 26 cents, 0.3 percent, to $79.04 a barrel, by 1:08 p.m. EDT (1708 GMT). The global benchmark on Thursday broke through $80 for the first time since November 2014, and investors anticipate more gains due to supply concerns, at least in the short-term. Brent has gained about 20 percent since the start of the year. U.S. West Texas Intermediate (WTI) crude futures for June delivery dropped 21 cents to $71.28 a barrel, a 0.3 percent loss. The contract was on track for a third straight week of gains. “Oil prices are in overbought territory, which has prompted some profit taking in today’s trading session ahead of the weekend,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. Traders were looking ahead to Venezuela’s election on Sunday, which could then trigger additional U.S. sanctions if President Nicolas Maduro is re-elected for a six-year term, though the opposition party has largely boycotted and two of his most popular opponents have been banned from running. The process has been has been criticized by the United States, the European Union and major Latin America countries. Further sanctions could hurt Venezuelan oil supply further, already reeling from lack of maintenance and state-run PDVSA’s inability to pay its bills. Most recently, the company elected to close its refinery in Curacao after ConocoPhillips has seized oil as it seeks to collect on a $2 billion court award.  

    The Regulations That Could Push Oil Up To $90 - International regulations on the fuels used in shipping could tighten the oil market and push prices up to $90 per barrel in the next two years. The International Maritime Organization (IMO) has new rules coming into effect at the start of 2020 requiring shipowners to dramatically lower the concentration of sulfur used in their fuels. Ships plying the world’s oceans tend to use heavy fuel oil, a bottom-of-the-barrel fuel that is especially dirty. The IMO regulations are targeting this fuel because of its high sulfur content. Current rules allow sulfur concentrations of 3.5 percent, but by 2020 ships must slash that to just 0.5 percent.  Shipowners have several options to achieve this goal, and there probably won’t be a single approach. They could install scrubbers to remove sulfur from the fuel, switch to low-sulfur fuels, or switch to LNG. . LNG is also an expensive route. But a lot of shipowners will switch over to lower-sulfur fuels such as gasoil, a distillate similar to diesel. The IEA says that by 2020, demand for gasoil will shoot up to 1.74 million barrels per day (mb/d), an increase of over 1 mb/d relative to 2018. That will displace the heavy fuel oil that is currently widespread. The IEA says that high-sulfur fuel oil demand will crater from 3.2 mb/d in 2019 to just 1.3 mb/d in 2020. The switchover will have enormous ramifications for the oil market. The shipping industry represents about 5 percent of the global oil market, using about 5 million barrels of oil per day. Swapping out one form of oil for others will have ripple effects across the refining industry, awarding some and dealing losses to others. Refiners processing middle distillates – diesel and gasoil – will see a windfall. Meanwhile, refiners that churn out heavy fuel oil will be left with surplus product on their hands.  “We foresee a scramble for middle distillates that will drive crack spreads higher and drag oil prices with it,” Morgan Stanley analysts said in a note.

    Shiite cleric Sadr leads in Iraq’s initial election results (AP) — The political coalition of influential Shiite cleric Muqtada al-Sadr took an early lead in Iraq's national elections in partial returns announced late Sunday by the Iraqi electoral commission. An alliance of candidates linked to Iraq's powerful Shiite paramilitary groups was in second. The alliance is headed by Hadi al-Amiri, a former minister of transport with close ties to Iran who became a senior commander of paramilitary fighters in the fight against the Islamic State extremist group. Prime Minister Haider al-Abadi performed poorly across majority Shiite provinces that should have been his base of support. The announcement came just over 24 hours after polls closed across the country amid record low voter turnout. It included full returns from only 10 of the country's 19 provinces, including the provinces of Baghdad and Basra. Members of the national election commission read out vote tallies for each candidate list in each of the 10 provinces on national TV. By the end of the announcement, al-Sadr's list had the highest popular vote, followed by al-Amiri's. Seats in parliament will be allocated proportionately to coalitions once all votes are counted. The commission gave no indication on when further results would be announced. 

    Shi'ite cleric's election win puts Iran to the test in Iraq - (Reuters) - Already pressured by the U.S. withdrawal from the nuclear deal, Iran faces a major test in managing Shi’ite cleric Moqtada al-Sadr, a formidable opponent who beat Tehran’s longtime allies to achieve a shock victory in Iraq’s parliamentary election. But If Tehran overplays its hand by squeezing Sadr out of a coalition government dominated by its allies, it risks losing influence by provoking conflict between Iranian-backed Shi’ites and those loyal to Sadr. Populist Sadr all but won Iraq’s parliamentary election by tapping into growing public resentment directed at Iran and what some voters say is a corrupt political elite that has failed to help the poor. But Iran is unlikely to relinquish influence in Iraq, its most important ally in the Middle East, and will push for a coalition that will preserve its interests. “Iran will do everything in its power to remain strong in Iraq and to apply pressure,” said independent Iraqi analyst Wathiq al-Hashimi. “It’s a very critical situation.” Before the election, Iran publicly stated it would not allow Sadr’s bloc - an unlikely alliance of Shi’tes, communists and other secular groups - to govern. For his part, Sadr has made clear he is unwilling to compromise with Iran by forming a coalition with its main allies, Hadi al-Amiri, leader of the Badr paramilitary group and perhaps the most powerful man in Iraq, and former prime minister Nuri al-Maliki. After the election results were announced, he said he would only cooperate with Prime Minister Haider al-Abadi, Kurds and Sunnis.

    Is Russia About To Abandon The OPEC Deal? - OPEC and Russia are meeting in a little more than a month to discuss the progress of their oil production deal and what’s next. On the face of things, there will be no surprises: every country taking part in the deal is still committed to the cuts until the end of the year. But Russia pumped more than its quota in both March and April. But Energy Minister Alexander Novak hinted that Russia might like to see a gradual easing of the cuts following the June meeting. But Iran sanctions will remove a certain amount of Iranian crude from international markets, making space for more from other producers, and Russia may just surprise its partners in the deal.Citigroup commodity analysts this week estimated that Russia has 408,000 bpd in idled capacity, which constitutes 4 percent of its total, which stands at 11.3 million bpd. That’s a lot less than Saudi Arabia’s idle capacity, which stands at 2.12 million bpd, but is apparently still a significant enough portion of the total.Some of Russia’s biggest oil players made it clear long ago that they have ambitious production plans for the future, which the production cuts are restraining. Even with this restraint, however, some are actually expanding production, including Gazprom Neft, which last year produced 4.1 percent more oil than in 2016 despite the cuts. The increase came on the back of new fields in the Arctic and the company’s Iraqi ventures. Rosneft pumped 7.6 percent more oil last year despite the cuts. For the first quarter of this year it reported a 1.2-percent decline in production because of the cuts, but it has also said that it could return to pre-cut production levels within two months. An advisor to the company’s president told Russian media this week the cuts were implemented with a view to a quick return to production when cutting was no longer necessary, so Rosneft had taken care to ensure the return to pre-cut levels is indeed quick.

    Russia’s Sukhoi Plans to Supply SSJ100R Planes to Iran Despite US Sanctions -- Russia's Sukhoi Civil Aircraft said it would continue to cooperate with Iranian airlines in the framework of interim agreements on the delivery of SSJ100R passenger aircraft, despite the resumption of US sanctions on Iran."The Sukhoi Civil Aircraft will continue to work with Iranian airlines under the preliminary agreements signed at the Eurasia Air Show in April 2018. According to the agreements, the parties are studying in detail the possibility of supplying an updated version of the aircraft — SSJ100R, which is implemented under the program of import substitution of the SSJ100 components," the company's press service said.According to Sukhoi Civil Aircraft President Alexander Rubtsov, the SSJ100R modification will be built without US-made components to avoid contract obstacles posed by potential US sanctions. The Russian company has recently signed memorandums of understanding on deliveries of 40 Sukhoi SSJ100R passenger planes to two Iranian airlines until 2022.  Despite concerns about the US withdrawal from the Iran nuclear deal, which will probably lead to the loss of upwards of $40 billion in contracts for Boeing and Airbus, Russian airplane manufacturers have a historic opportunity to gain a new foreign market for its latest designs.

    Clear thinking required as sanctions loom for Iran - UAE National - The high oil price predictions have started re-emerging in response to the US’s abandonment of the Iran nuclear deal. Saudi Arabia has quietly sounded out $80 or $100 per barrel, Bank of America has put forward $100 for 2019, and hedge fund manager Pierre Andurand suggested $300. Opec needs a strategy to prevent the market running away. Iran exports about 2.5 million barrels per day (bpd) of crude oil and condensate (derived from natural gas), although April sales were higher as it sought to drain storage ahead of the sanctions announcement. The Obama-era sanctions, which did not include condensate, reduced its exports by about 1 million bpd. The current unilateral measures, not supported by the EU, China or Russia, should have less impact. The market has already been going through a supply shock more consequential, so far, than the constraints on Iran. Venezuela, producing 2.1 million bpd in January 2017, was down to 1.5 million bpd in April and is now pegged at 1.41 million bpd as its economy collapses and oil workers go hungry or walk off the job. In pursuit of a $2 billion arbitration award, ConocoPhillips has begun seizing Venezuelan oil storage and terminals in the Caribbean, further hampering its exports. The combination of Venezuela’s travails with a so-far strong global economy, Saudi Arabia’s voluntarily under-producing its allocation and Angola’s falling below target as its fields mature has pushed up prices sharply. Now, the American abandonment of the Joint Comprehensive Plan of Action nuclear deal clouds the current accord between the “Vienna Group” of Opec, Russia and some other leading non-Opec producers. Political opinion in the amalgamation is divided between Tehran allies, notably Russia; those without a dog in the fight, such as Nigeria; those that have sought to steer a middle course, including Iraq, Oman and Kuwait; and those, led by Saudi Arabia and the UAE, that have been pushing the US for tougher action against Tehran. Iran will probably consider itself no longer bound by the deal if sanctions begin to bite, although that doesn’t matter practically if its exports are hampered below its allocated level of production.

    In the Middle East right now, all sides in this complex battle are staring at each other with increasing concern - Robert Fisk - In the West, it’s easy to concentrate on each daily drama about the Middle East and forget the world in which the real people of the region live. The latest ravings of the American president on the Iran nuclear agreement – mercifully, at last, firmly opposed by the EU – obscure the lands of mass graves and tunnels in which the Muslim Middle East now exists. Even inside the area, there has now arisen an almost macabre disinterest in the suffering that has been inflicted here over the past six years. It’s Israel’s air strikes in Syria that now takes away the attention span.  Yet take the discovery of dozens of corpses in a mass grave in Raqqa, Isis’s Syrian “capital”. It garnered scarcely three paragraphs in Arab papers last month, yet the 50 bodies recovered were real enough and there may be another 150 to be recovered. The corpses lay under a football pitch near a hospital which Isis fighters used before they fled the city – under an agreement with Kurdish forces – and could only be identified by markings which gave only their first names (if they were civilians) or their nom de guerre if they were jihadis. Who killed them? Even less space was given to another gruesome discovery last month in tunnels beneath the Syrian town of Douma, east of Damascus. This vast stone warren of underground streets wide enough for cars and trucks was found to contain 112 bodies, 30 of them Syrian soldiers, the rest probably civilians, many killed long ago, presumably by the Jaish al-Islam group which fought for the town for many years. Were they hostages for whom the Islamists wished to exchange prisoners? And then murdered when no deal was struck?   My colleague Patrick Cockburn investigated an even more terrible mass killing outside Mosul which occurred in 2014, most of the victims Shia Iraqi soldiers. We know this because Isis filmed their appalling end, shot in the head and then tossed carelessly into the blood-stained waters of the Tigris, some of them floating far south towards Baghdad.  Like the vast mass graves of Europe after the Second World War – especially in the Soviet Union – the memory of this savagery will not be forgotten. Which is why the Iraqi authorities (largely Shia in the case of “judicial” trials which meet no international standards) have been hanging Isis suspects like thrushes on prison gallows, 30 at a time, in the south of the country.  And so it goes on.

    Syria Imposes New Rules of Engagement on Israel - On Thursday 10th May 2018, an unprecedented exchange of strikes happened between Israel and Syria. The mainstream media, as well as some “alternative” media like Russia Today, were quick to relay the Israeli army version, according to which the Zionist entity “retaliated” to an “Iranian attack by Revolutionary Guards’ Al-Quds Force” consisting of “twenty rockets” fired at Israeli positions in the occupied Golan, four of which were “intercepted by the Iron Dome” and the others “crashed into Syrian territory”, no damage being recorded in Israel. Israel has reportedly responded to this unprecedented “act of aggression” by a “large-scale operation” that would have destroyed “the entire Iranian infrastructure in Syria”, in order to deter the Islamic Republic from any stray impulse of future strikes. This narrative takes for granted the postulates, data and myths of the Zionist entity’s propaganda – which imposes permanent military censorship on the Israeli media, exposing any offender to a prison sentence; and reading the international media, one might get the idea that, like American economic sanctions, this censorship is extraterritorial – but none of them can withstand scrutiny. The aggressor is undoubtedly Israel, who carried out more than a hundred strikes against Syria since the beginning of the conflict. After Duma’s chemical stage attacks, this aggresion intensified with attacks on the Syrian T-4 base on April 9, which killed 7 Iranian Revolutionary Guard. Following the US announcement of withdrawal from the Iran nuclear deal, new Israeli strikes targeted Syrian positions on Tuesday (May 8th) in the southern suburbs of Damascus, and Wednesday (May 9th) in Quneitra, in the south of the country. Undeniably, Syria has only responded to yet another aggression, with a firmness that has shaken Israel and forced it out of the muteness to which it usually confines itself. The Syrian – and not Iranian – response consisted of more than fifty – and not twenty – rockets against four sensitive Israeli military bases in the occupied Golan, which caused material damage and even casualties according to Al-Manar, Hezbollah’s media. These were not reported by the Israeli press because of the draconian military censorship forbidding mentioning Israel’s initial aggression, more than twenty rockets fired on Israel, the identification of their targets and any hint to the damage inflicted, in order to reassure the population inside and allow the vassal Western capitals to shout their sickening refrain of the sacrosanct-right-of-Israel-to-defend-itself. The Lebanese channel Al-Mayadeen specifically identified the military posts struck:

    Get Ready for the New Middle East Battlefield: The Golan - The exchange of missiles last week on the Syrian-Israeli border was anything but normal. This firefight established new rules of engagement in the Levant, and made the Israeli-occupied Golan Heights an “operational theater” in the Syrian conflict overnight.The mainstream media’s version of events began with Israel retaliating against Iranian missile strikes, and the IDF (Israeli Defense Forces) destroying Iran’s military capabilities inside Syria. But that information is questionable: it comes almost exclusively from Israelis who rarely miss an opportunity to beat the “Iranian threat” war drum. A check of the actual conflict chronology shows that Israel initiated the incident by striking Syrian military targets in Kisweh (the Damascus suburbs) and Baath city (Quneitra) over the two preceding days. Russia had warned both Syria and Iran of the impending Israeli strike with the result that neither Iranian military personnel nor weapons systems appear to have been hit. The Syrian military (and not the IRGC) retaliated by firing 55 rockets at Israeli military outposts and installations in the occupied part of the Golan. Local Arab media identified these targets as key Israeli surveillance centers that crippled Israel’s “eyes and ears” along that vital demarcation line. Israel’s vaunted “Iron Dome” defense system failed to intercept most of these rockets, while the Syrian military intercepted more than half of Israel’s missiles, according to Russian military officials. What is undisputed: the military back-and-forth was the first major firefight between Syria and Israel in the occupied Golan Heights since 1973—making the Golan an operational theater for the first time in over four decades. This is also the first time during the Syrian  War that the Syrian military has retaliated against Israeli strikes by hitting Israeli military installations—not just the incoming missiles and the Israeli warplanes firing them. And finally, Israel must contend for the first time with the fact that any battle it initiates can be waged in its own backyard.

    Israel Kills 55, Wounds 2,000 Gazans In "Terrible Massacre" As US Opens Jerusalem Embassy --The Israeli military continued its violent repression of Palestinian protesters on Monday when soldiers once again gunned down unarmed demonstrators whom it claimed were trying to penetrate the border fence separating Israel from the Gaza Strip. According to Italian newspaper Il Sole 24 Ore, Israeli soldiers said they were "provoked into violence" when small groups of Palestinians began throwing stones at IDF soldiers from the other side of the border fence. The soldiers responded by gunning down demonstrators; by the time the demonstrations had quieted down, at least 28 Palestinians had been killed, and another 600 had been wounded, according to the Hamas-controlled Health Ministry.The Wall Street Journal reported that a 12-year-old and a 14-year-old had been counted among the dead.At least 10,000 Palestinians had gathered early Monday local time along more than 10 locations along the border fence, which is one of several closed borders that has effectively cut off Gaza from the rest of the world (though Hamas has been known to dig tunnels to help people move in and out of the territory), Il Sole 24 Ore reported. The international community has widely condemned President Trump's decision to move the US embassy to Jerusalem (though, as Trump has correctly pointed out, every US president since at least Bill Clinton had promised to move the embassy). The UK reiterated Monday that it doesn't intend to move its embassy, adding that it doesn't agree with President Trump's decision. Update IV (4 pm ET): The death toll is now 55. The number wounded has climbed to more than 2,000.

      Erdogan Blasts: "Terrorist State" Israel Is "Guilty Of Genocide", Withdraws US Ambassador - While Turkish officials on Monday condemned Israel's mass slaughter of Palestinian resident, Turkish President Recep Tayyip Erdogan offered perhaps his most scathing criticism yet, according to the Anadolu News Agency.In a scathing declaration, Erdogan blasted Israel's killings as tantamount to genocide.He also declared that Israel is a "terrorist state" following the murder of 55 Palestinians, while also describing the killings as a "humanitarian tragedy.""What Israel is doing is genocide," he said. "We will continue to stand with the Palestinian people with determination. "We will not allow today to be the day the Muslim world loses Jerusalem..."After blasting the US for moving its embassy in Tel Aviv to Jerusalem on Monday - a decision that many foreign leaders have said will only further inflame tensions between Palestinians and Israelis - Erdogan, who is visiting the UK this week, also declared a three-day period of national mourning in solidarity with the captive residents of that Gaza Strip, who were fired on en masse during Monday's demonstration, which led to more than 55 being killed at last count. Meanwhile, nearly 2,000 had been wounded.Turkey also called for an emergency meeting of the Organization of Islamic Cooperation to be held on Friday, according to Deputy Prime Minister Bekir Bozdag.Bozdag, who made the announcement after a Council of Ministers meeting in Ankara, said the US had "violated" United Nations Security Council resolutions by opening its embassy in Jerusalem on Monday."Today will go down in the history as Bloody Monday for Muslims and Islamic countries," Bozdag said. "Jerusalem's historic and spiritual status will never change. As it was before, Jerusalem will continue to be independent Palestine's capital." Turkey also withdrew its ambassadors from Tel Aviv and Washington so they can attend the meeting.

      Tension in Gaza as Palestinians begin to bury 58 dead - BBC News: Funerals are being held in Gaza after the deadliest day of violence there since a war in 2014. On Monday, 58 people were killed when Israeli troops opened fire during Palestinian protests. Tuesday is the 70th anniversary of what Palestinians call the Nakba - a mass displacement after Israel's creation. Israel's military said it was preparing for further confrontations on Tuesday ,but Palestinian groups indicated they intended to rein in the protests. Monday's violence came as the US inaugurated its first embassy in Jerusalem, a controversial move that broke with decades of US policy and incensed Palestinians. Palestinians claim East Jerusalem as the capital of a future Palestinian state. Many see the US move as backing Israeli control over the whole of the city, which Israel regards as its indivisible capital. Palestinian officials said that as well as those killed, about 2,700 people had been injured in what they called a massacre. Israeli Prime Minister Benjamin Netanyahu said his military was acting in self-defence against Gaza's Islamist rulers, Hamas, who seek to destroy Israel. Israel's military said it had only fired at "targets of terrorist activity". The UN human rights office was heavily critical of Israel's use of force. "The mere fact of approaching a fence is not a lethal, life-threatening act, so that does not warrant being shot," spokesman Rupert Colville told reporters in Geneva. "How much threat can a double amputee be making from the other side of a large fortified fence?" he asked - referring to a widely shared report that a wheelchair user was killed during the violence. 

      Doctors Without Borders Condemns the ‘Bloodbath’ in Gaza as a Result of Israel’s ‘Disproportionate Use of Violence’ -- Doctors Without Borders released a statement Monday condemning the brutal attacks on unarmed protesters in Gaza by the Israeli military as demonstrations broke out at the border. Protesters opposed the opening of a new U.S. embassy for Israel in the city of Jerusalem, a move ordered by President Donald Trump."What happened today is unacceptable and inhuman," said spokeswoman Marie-Elisabeth Ingres. "The death toll provided this evening by Gaza health authorities—55 dead and 2,271 wounded—including 1,359 wounded with live ammunition, is staggering. It is unbearable to witness such a massive number of unarmed people being shot in such a short time."The organization has been treating victims of the violence since the protests began last month, but Ingres said that the doctors have been overwhelmed by the number of people needing care: "Our teams carried out more than 30 surgical interventions today, sometimes on two or three patients in the same operating theater, and even in the corridors. Ingres also made it clear that, despite the White House's blaming of the killings on Hamas, Doctors Without Borders believes Israel's policies are the cause of the brutality. "This bloodbath is the continuation of the Israeli army’s policy during the last seven weeks: shooting with live ammunition at demonstrators, on the assumption that anyone approaching the separation fence is a legitimate target," she said. "As new demonstrations are announced for tomorrow, the Israeli army must stop its disproportionate use of violence against Palestinian protesters."

      Chinese state councilor, Iranian foreign minister hold talks -  (Xinhua) -- Chinese State Councilor and Foreign Minister Wang Yi held talks with Iranian Foreign Minister Mohammad Javad Zarif in Beijing on Sunday.Wang said China attaches importance to the traditional friendship with Iran, as well as the comprehensive strategic partnership between the two countries.China regards Iran as an important partner in the Belt and Road construction, Wang said, noting that China is willing to work with Iran to implement the consensus reached by leaders of the two countries to promote various cooperation.Wang said China firmly safeguard multilateralism and international agreements.The Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), was hard-earned and the deal helped to safeguard the international system of non-proliferation and maintain the peace and stability in the Middle East, Wang said.As an important party, China made a lot of work in the process of reaching and implementing the JCPOA, Wang said."China will take an objective, fair and responsible attitude, keep communication and cooperation with all parties concerned, and continue to work to maintain the deal," Wang said.

      As Rosneft's Vietnam unit drills in disputed area of South China Sea, Beijing issues warning  (Reuters) - Rosneft Vietnam BV, a unit of Russian state oil firm Rosneft, is concerned that its recent drilling in an area of the South China Sea that is claimed by China could upset Beijing, two sources with direct knowledge of the situation told Reuters on Wednesday.  Rosneft said on Tuesday its Vietnamese unit had started drilling at the LD-3P well, part of the Lan Do “Red Orchid” offshore gas field in Block 06.1, 370 kms (230 miles) southeast of Vietnam. The block is “within the area outlined by China’s nine-dash line,” according to energy consultancy and research firm Wood Mackenzie.   When asked about the Reuters report of the drilling, China’s foreign ministry spokesman said that no country, organisation, company or individual can, without the permission of the Chinese government, carry out oil and gas exploration or exploitation activities in waters under Chinese jurisdiction.  “We urge relevant parties to earnestly respect China’s sovereign and jurisdictional rights and not do anything that could impact bilateral relations or this region’s peace and stability,” the spokesman, Lu Kang, told a regular news briefing on Thursday. China’s U-shaped “nine-dash line” marks a vast expanse of the South China Sea that it claims, including large swathes of Vietnam’s Exclusive Economic Zone. Maps of the area indicate the block is around 85 kms (53 miles) inside the contested area. A series of dashes, the line is not continuous making China’s claims often ambiguous. In recent years, though, China has increasingly patrolled and enforced the area, claiming historic rights to the resources and features within it. In March, Vietnam halted an oil drilling project in the nearby “Red Emperor” block following pressure from China, sources told Reuters. That block is licensed to Spanish energy firm Repsol, which has asked Vietnam to pay compensation over the issue.  The Vietnamese foreign ministry did not respond to a request from Reuters for comment.

      China says no one can carry out oil, gas activities in the South China Sea Without Beijing's Permission (Reuters) - China’s Foreign Ministry said on Thursday that no country, organization, company or individual can carry out oil and gas exploration or exploitation in Chinese waters without permission from Beijing.  Ministry spokesman Lu Kang made the comment at a regular news briefing when asked about recent drilling by Rosneft Vietnam BV, a unit of Russian state oil firm Rosneft, in an area of the South China Sea that is claimed by China.   “We urge relevant parties to earnestly respect China’s sovereign and jurisdictional rights and not do anything that could impact bilateral relations or this region’s peace and stability,” Lu said. 

      EU top diplomats agree to follow through Iran nuclear deal - (Xinhua) -- European top diplomats on Tuesday agreed to follow through the landmark Iran nuclear deal despite U.S. President Donald Trump's decision to withdraw last week, EU foreign policy chief Federica Mogherini told reporters on Tuesday.To this end, the EU will launch intensive discussion at all levels with Iran in next few weeks, Mogherini said at a press conference following a meeting with foreign ministers of Britain, Germany, France and Iran.The discussion will focus on, among others, how to maintain economic relations and effective banking transactions with Iran in the context of renewed U.S sanctions, according to Mogherini."We reaffirm our resolve to continue to implement the nuclear deal in all its parts, in good faith, and in a constructive atmosphere," said Mogherini."We are determined to ensure that Iran Deal stays in place. We know it's a difficult task but we are determined to do that," Mogherini noted, adding "we started to work to put in place measures that help ensure that this happens."She proclaimed that she will brief leaders of EU members states on Wednesday in Sofia, Bulgaria, which is about to host the EU-Western Balkan summit.

      Europe Is Seeking "Practical Solution" To Salvage Iran Deal - Much to President Trump's chagrin, The European Union's top diplomat, Federica Mogherini, said on Tuesday that the bloc would seek avenues for protecting businesses operating in Iran - even as the US threatens to impose tighter sanctions on any company that dares to continue operating in Iran after the US has revived its economic sanctions. While it couldn't provide any economic or legal guarantees to the Islamic Republic, Mogherini said they would find a way to keep badly needed investment flowing into Iran. A series of experts have been assigned to the issue, and they're expected to propose a few options in the coming weeks.  "We are working on finding a practical solution," Mogherini told a news conference."We are talking about solutions to keep the deal alive," she said, adding that measures would seek to allow Iran to keep exporting oil and for European banks to operate.The EU has already warned the US that it's prepared to impose "counter-sanctions" if the US interferes with European firms who choose to maintain their business relationships in Iran, as President Trump threatened to do in a phone call with European leaders shortly before he announced the US's withdrawal from the agreement, according to Reuters.Iranian President Hassan Rouhani surprised the other signatories of the Joint Comprehensive Plan of Action last week when he said Iran would continue to abide by the terms of the deal - for now, at least - and give the other signatories a chance to salvage it.Both Russia and China have expressed regret over the US's decision. Both have vowed to maintain ties with Iran in accordance with the deal.

      EU Launches Rebellion Against Trump's Iran Sanctions, Bans European Companies From Complying - Following our discussion of Europe's angry response to Trump's unilateral Iran sanctions, in which European Union budget commissioner, Guenther Oettinger made it clear that Europe will not be viewed as a vassal state of the US, stating that "Trump despises weaklings. If we back down step by step, if we acquiesce, if we become a kind of junior partner of the US then we are lost", moments ago Reuters reported that the European Commission is set to launch tomorrow the process of activating a law that bans European companies from complying with U.S. sanctions against Iran and does not recognise any court rulings that enforce American penalties."As the European Commission we have the duty to protect European companies. We now need to act and this is why we are launching the process of to activate the ‘blocking statute’ from 1996. We will do that tomorrow morning at 1030,” European Commission President Jean-Claude Juncker said.Speaking at news conference after a meeting of EU leaders in Bulgaria, Juncker added that he "also decided to allow the European Investment Bank to facilitate European companies’ investment in Iran. The Commission itself will maintain its cooperation will Iran."Europe's hardline position will infuriate Trump, as Brussels effectively nullifying US sanctions will prompt a violent outburst from Trump, who needs Europe on his side for US sanctions of Iran to have any chance of succeeding.Perhaps sensing what is coming, French President Emmanuel Macron took a slightly softer tone, and said that the French defense of Iran nuclear accord is based on concerns about security and stability, not commerce, and that the deal should be supplemented and it is necessary to continue negotiations, including on missile program. The French president said that "the European Union decided to preserve the nuclear deal and defend EU companies" adding that "our main interest in Iran is not in trade, but in ensuring stability in the region, at the same time, we will not become an ally of Iran against the US."

      How Europe Can Keep Money Flowing to Iran - The determination of European nations, Russia and China to keep the 2015 nuclear agreement with Iran alive isn’t necessarily futile. Europe has more influence than the U.S. on SWIFT, the Brussels-based global payments network. SWIFT is owned by its members and provides the backbone of modern international banking, carrying more than 30 million transaction-related messages a day among 11,000 banks. Because it is based in Brussels, it is subject to European Union laws. In 2012, the EU imposed sanctions on Iranian banks, and SWIFT expelled 30 Iranian members, including the country’s central bank. . With the loss of access to SWIFT in 2012, Iran lost the ability to be paid for its exports and to pay for imports. Domestically, Iranian companies had to revert to the old, slow and expensive hawala transfer system — a major inconvenience for ordinary people as well as merchants.  Even though President Donald Trump announced earlier this month that the U.S. was withdrawing from the 2015 pact that eased sanctions in exchange for Iran’s commitment to curb its nuclear program, the EU, Germany, France, the U.K., China and Russia remain parties to the deal. This means SWIFT isn’t required to kick Iranian banks off its network again. The cooperative says it’ll be consulting with regulators on both sides of the Atlantic, but it’s highly unlikely it will act unless the EU does.  The U.S. sanctions will inevitably bite and multinationals with U.S. operations won’t be able to invest in Iran, but the Islamic Republic wouldn’t be under life-threatening pressure if it can keep exporting oil.  This means Europe — already locked in a dispute with the U.S. because of a threat to impose high tariffs on European steel and aluminum exports — doesn’t have to take Trump’s Iran move lying down. If the EU refrains from excluding Iran from SWIFT, the U.S. could sanction the cooperative, but that could prove harmful to American interests as it would have major consequences for the global financial system. If SWIFT becomes unreliable, there would be huge demand for alternative transaction information systems such as those offered by blockchain startups and authoritarian states to fill the void.