Oil, Gas, And Fracking News Reads 21May 2018 – Part 1

by rjs, MarketWatch 666

Here are some selected new articles from the week ended 20 May 2018.

This will be a feature at Global Economic Intersection every Tuesday evening.

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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 state’s 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. Mura said:

“The Cabinet carefully considered all of the responses to the [Corrective Action Plan] and truly believes that this alternative is the best way forward.”

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. Bill Price, organizing manager for the Sierra Club in the Appalachian region, said:

“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.”

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 ff2340(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 ff2340(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 Outsideonline.com 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 by email:

“DEQ conducted an 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 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. Kevin Neveu, chief executive at Precision Drilling Corp, said:

“Recruitment and staffing is a big challenge. We’re aggressively focused on recruiting people.”

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. Steward told Rigzone:

“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. 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.”

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. 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.”

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.”

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. He added:

“It’s not like there was a situation where they ran over a buried pipeline. 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 skeptical 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. 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. Becca Fischer of WildEarth Guardians said:

“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. 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: reut.rs/2rxoqFz

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.