Oil, Gas, And Fracking News Reads 09September, 2018 – Part 1

Written by rjs, MarketWatch 666

Here are some selected new articles from the week ended 09 September 2018.

This article is a feature every Monday evening on GEI.

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It appears that US natural gas supplies will start this winter at a 15 year low, & maybe even lower than that

Oil prices fell for the first time in three weeks this week, as anxiety about the economic impact of worsening trade wars overwhelmed concerns about Iran sanction related supply issues…after rising 1.6% to $69.80 a barrel last week and not trading on Labor Day, October contracts for US light sweet crudejumped to as high as $71.40 a barrel on Tuesday when Gulf Coast platforms were shut down in advance of tropical storm Gordon, but fell back to close the day just 7 cents higher at $69.87 a barrel, weighed down by a stronger dollar and a report of higher crude supplies at the Cushing OK terminal…when the storm weakened and moved away from oil-producing areas with little apparent impact, oil prices fell $1.15 to $68.72 a barrel on Wednesday, as concerns mounted about the economic impact of global trade disputes…with a Trump deadline on Chinese tariffs looming, oil prices extended those losses on Thursday, initially lower on an API report of a smaller than expected crude draw and continued lower on the EIA report of surging fuel supplies, with crude for October delivery settling 1.4% lower at $67.64 a barrel…oil prices were marginally lower again on Friday, as signs of tightening U.S. oil output were offset by a stronger dollar and fears rising U.S.-China trade tensions could hamper oil demand, with oil prices ending nearly 3% lower for the week at $67.75 a barrel…

Natural gas prices were also lower this week, despite the heat wave that sat over the heavily populated Northeastern US all week, with natural gas prices for October delivery falling 9.3 cents on Tuesday, 2.8 cents on Wednesday, and 2.3 cents on Thursday before rising four-tenths of a cent on Friday and ending the week 4.8% lower at $2.776 per mmBTU….moreover, despite the precarious winter supply situation, natural gas for January delivery didn’t fare any better, falling 14.9 cents for the week to end at 2.965 per mmBTU, the lowest close for that contract since Spring….either natural gas traders know something we don’t, or a lot of people are going to end up on the wrong side of that trade…

This week’s EIA natural gas storage report for week ending August 31st (hence not yet including this week’s heat wave) indicated that natural gas in storage in the US rose by 63 billion cubic feet to 2,568 billion cubic feet during that cited week, which still left our gas supplies 643 billion cubic feet, or 20.0% below the 3,211 billion cubic feet that were in storage on September 1st of last year, and 590 billion cubic feet, or 18.5% below the five-year average of 3,158 billion cubic feet of natural gas that are typically in storage at the end of August….this week’s 63 billion cubic feet increase in natural gas supplies was slightly more than an S&P Global Platts’ survey of analysts calling for a 60 billion cubic feet increase, but it was slightly below the 65 billion cubic foot average of natural gas that are typically added to storage during the last week of August in recent years, the eighth such below average inventory increase in the past nine weeks…once again, almost all of this week’s increase was added to natural gas storage facilities in the Midwest, which saw a 32 billion cubic feet increase, and in the East, where supplies increased by 22 billion cubic feet…just 5 billion cubic feet cubic feet of gas were added to storage in the Pacific region, where natural gas supplies are 24.1% below normal for this time of year, while the South Central region actually saw a billion cubic feet pulled out of storage, as their natural gas storage deficit rose to 22.9% below their five-year average..

Natural gas usually needs to be withdrawn from storage for heating starting around the first full week of November, so that means we most likely have 9 more weeks of the so-called natural gas ‘injection season’ to build our gas inventories before winter…over the last five years, we’ve averaged 3,835 billion cubic feet of natural gas in storage heading into winter at that first weekend in November, and that average seems to be close to the average of the last decade as well…scanning over the historical natural gas storage archive files (xls), we just find a few times over the last dozen years when gas supplies were substantially below that level going into winter; November 7th of 2014, when supplies managed to recover to 3,611 billion cubic feet after that year’s polar vortex winter; November 7th 2008, when supplies fell to 3,472 billion cubic feet, and November 8th 2007, when supplies were at 3,540 billion cubic feet before wintertime withdrawals began….thus, with our natural gas supplies starting September at 2,568 billion cubic feet, we would have to add a nearly impossible 116 billion cubic feet per week before the first weekend in November merely to avoid having our winter gas supplies fall to a 10 year low…moreover, to beat the 2008 nadir, we would still need to add more than 100 billion cubic feet a week…looking at the xls record of recent years, we added 479 billion cubic feet, or just 53 billion cubic feet per week, over the same 9 weeks of 2017; we added 610 billion cubic feet, or 61 billion cubic feet per week in the ten weeks through November 11 of 2016, and we added 723 billion cubic feet, or 80 billion cubic feet per week, during the corresponding 9 weeks of the injection season in 2015…those numbers certain suggest it’s highly unlikely that we could add 100 billion cubic feet per week of natural gas to storage for the rest of this injection season, so bettering 2008 seems out of the question…based on the averages of the last 3 years, we’ll probably add about 65 billion cubic feet per week over the next nine weeks, and show about 3153 billion cubic feet of natural gas in storage on November 2nd, which probably means we’ll be going into winter with our natural gas supplies near the 3187 billion cubic feet of gas we had stored on November 7th 2003, which would thus be a 15 year low…

The Latest US Oil Data from the EIA

This week’s US oil data from the US Energy Information Administration, covering the week ending August 31st, showed that despite a sizable increase in our net oil imports, we withdrew more oil from our commercial crude supplies to meet the needs of our refineries for the seventeenth time in the past thirty-two weeks, because the “unaccounted for crude” factor switched from the supply side of the crude oil balance sheet to the consumption the side of it… our imports of crude oil rose by an average of 229,000 barrels per day to an average of 7,714,000 barrels per day, after falling by an average of 1,529,000 barrels per day over the prior 2 weeks, while our exports of crude oil fell by an average of 271,000 barrels per day to an average of 1,508,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 6,206,000 barrels of per day during the week ending August 31st, 500,000 more barrels per day than the net of our imports minus exports during the prior week…over the same period, field production of crude oil from US wells was reportedly unchanged at a record 11,000,000 barrels per day, which means that our daily supply of oil from the net of our trade in oil and from wells totaled an average of 17,206,000 barrels per day during the reporting week…

Meanwhile, US oil refineries were using 17,647,000 barrels of crude per day during the week ending August 31st, 81,000 barrels per day more than the amount of oil they used during the prior week, while over the same period 615,000 barrels of oil per day were reportedly being pulled out of the oil that’s in storage in the US….hence, this week’s crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 179,000 more barrels per day than what refineries reported they used during the week….to account for that disparity between the supply of oil and the disposition of it, the EIA needed to insert a (-179,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as “unaccounted for crude oil”…since that “unaccounted for crude” figure was at +493,000 barrels per day during the prior week, the 667,000 barrel per day swing in that metric from last week explains how withdrawals from storage would rise despite higher net imports, while it also means that week over week changes for one or more of this week’s EIA oil metrics must be in error by a statistically significant amount..(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

Further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports fell to an average of 7,933,000 barrels per day, still fractionally less than the 7,976,000 barrel per day average that we were importing over the same four-week period last year….the 615,000 barrel per day decrease in our total crude inventories was all withdrawn from our commercially available stocks of crude oil, as the amount of oil in our Strategic Petroleum Reserve remained unchanged, even as a sale of 11 million barrels from those reserves to Exxon et al was closed at the end of the week….this week’s crude oil production was reported as being unchanged at 11,000,000 barrels per day despite a rounded 100,000 barrels per day increase to 10,600,000 barrels per day in the output from wells in the lower 48 states, because oil output from Alaska fell by 16,000 barrels per day, which was enough to keep the national total, which is now being rounded to the nearest 100,000 barrels per day, unchanged at 11,000,000 barrels per day….US crude oil production for the week ending September 1st 2017 had been reduced to 8,781,000 barrels per day by Hurricane Harvey, so this week’s rounded oil production figure was roughly 25.3% above that of a year ago, and 30.5% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016…

Meanwhile, US oil refineries were operating at 96.6% of their capacity in using 17,647,000 barrels of crude per day during the week ending August 31st, up from 96.3% the prior week and well above normal, even for this time of year….the 17,647,000 barrels per day of oil that were refined this week were again at a seasonal high, for the 13th out of the past 14 weeks, but not directly comparable to the 14,472,000 barrels of crude per day that were processed during the week ending September 1st 2017, when US refineries were operating at just 79.7% of capacity, because Gulf Coast refineries had been shut down due to Hurricane Harvey at that time..

Despite the modest increase in the amount of oil being refined this week, gasoline output from our refineries was a bit lower, decreasing by 22,000 barrels per day to 10,215,000 barrels per day during the week ending August 31st, after our refineries’ gasoline output had increased by 86,000 barrels per day during the week ending August 24th…again, due to Hurricane Harvey, our gasoline production during the week is not comparable to that of a year ago, but it was 3.6% lower than what had been a record 10,602,000 barrels of gasoline that were produced daily during the week ending August 25th last year…meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) rose by 260,000 barrels per day to a high for the date of 5,439,000 barrels per day, after they had fallen by 247,000 barrels per day over the prior week…for a rough year over year comparison absent hurricane impacts, we’d note this week’s distillates production was 7.6% higher than the 5,055,000 barrels of distillates per day that were being produced during the week ending August 25th, 2017….

Even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week rose by 1,554,000 barrels to 232,774,000 barrels by August 31st, the 12th increase in 28 weeks, and the 26th increase in 43 weeks, as gasoline inventories, as usual, were being built up over the winter months….our supplies of gasoline rose this week because the amount of gasoline supplied to US markets fell by 165,000 barrels per day to 9,734,000 barrels per day, after rising by 446,000 barrels per day the prior week, and because our imports of gasoline rose by 120,000 barrels per day to 988,000 barrels per day, while our exports of gasoline fell by 108,000 barrels per day to 477,000 barrels per day…after this week’s increase, our gasoline inventories were at a seasonal high, 3.5% higher than last September 1st’s level of 226,738,000 barrels, and more than 10% above the 10 year average of our gasoline supplies for this time of the year…

Meanwhile, with big increase in our distillates production, our supplies of distillate fuels were likewise much higher, increasing by 3,119,000 barrels to 133,120,000 barrels during the week ending August 31st, the 11th increase in 15 weeks…our distillates supplies also increased because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 147,000 barrels per day to 4,290,000 barrels per day, after increasing by 372,000 barrels per day the prior week, and because our exports of distillates also fell by 147,000 barrels per day to 989,000 barrels per day, while our imports of distillatesrose by 12,000 barrels per day to 286,000 barrels per day….however, with our distillate supplies still recovering from the 14 year seasonal low that they hit 6 weeks ago, this week’s inventory increase still leaves our distillates supplies 9.9% below the 147,767,000 barrels that we had stored on September 1st, 2017, and roughly 9% lower than the 10 year average of distillates stocks for this time of the year…

Finally, despite this week’s increase in our net oil imports, our commercial supplies of crude oildecreased for the 19th time in 2018 and for the 31st time over the past year, falling by 4,302,000 barrels during the week, from 405,792,000 barrels on August 24th to 401,490,000 barrels on August 31st….but although our crude oil inventories are a bit below the five year average of crude oil supplies for this time of year, they are still roughly 29.6% above the 10 year average of crude oil stocks for the end August, because it wasn’t early 2015 that our oil inventories first rose above 400 million barrels…but since our crude oil inventories have now been falling through most of the past year and a half, our oil supplies as of August 31st were 13.2% below the 462,353,000 barrels of oil we had stored on September 1st of 2017, 16.5% below the 480,725,000 barrels of oil that we had in storage on September 2nd of 2016, and 4.2% below the 426,062,000 barrels of oil we had in storage on September 4th of 2015…

This Week’s Rig Count

The pace of US drilling activity again stalled during the week ending September 7th, after increasing 17 out of the 23 prior weeks….Baker Hughes reported that the total count of rotary rigs running in the US was unchanged at 1048 rigs over the week ending on Friday, which was still 104 more rigs than the 944 rigs that were in use as of the September 8th report of 2017, but was still down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began their attempt to flood the global oil market…

The count of rigs drilling for oil was down by two rigs to 860 rigs this week, which was still 104 more oil rigs than were running a year ago, while it was well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014…at the same time, the number of drilling rigs targeting natural gas formations rose by 2 rigs to 186 rigs this week, which nonetheless was down a rig from the 187 natural gas rigs that were drilling a year ago, and way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008…meanwhile, two rigs drilling exploratory wells in Ohio considered to be “miscellaneous” continued to operate this week, up from just one such “miscellaneous” rig a year ago…

One of the rigs that was added this week was in the Gulf of Mexico, where there are now 17 rigs deployed, up from 16 a year ago…in addition, two rigs continued to drill offshore from Alaska this week, so the total national offshore count is at 19 rigs, which is thus up by 3 from last year’s total of 16 offshore rigs, since a year ago there was no offshore drilling other than in the Gulf…meanwhile, another rig began drilling through an inland body of water in southern Louisiana this week, where there are now three such rigs operating, down from the 5 rigs that were drilling through inland waters there a year ago…

The count of active horizontal drilling rigs was up by 1 rig to 918 horizontal rigs this week, which was also 125 more horizontal rigs than the 793 horizontal rigs that were in use in the US on September 8th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014…on the other hand, the vertical rig count decreased by one rig to 65 vertical rigs this week, which was also down from the 75 vertical rigs that were in use during the same week of last year…meanwhile, the directional rig count was unchanged at 65 directional rigs this week, which was down from the 76 directional rigs that were operating on September 8th of 2017…

The details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of September 7th, the second column shows the change in the number of working rigs between last week’s count (August 31st) and this week’s (September 7th) count, the third column shows last week’s August 31st active rig count, the 4th column shows the change between the number of rigs running on Friday and those on the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was on Friday the 8th of September, 2017…

Once again, these summary tables do not match the summary national summary data we just gave you, as the state table implies an increase in the rig count, while the basin table implies a decrease in horizontal drilling…the data for the states not listed is easy to find, and it shows that a rig was shut was shut down in Mississippi, where 5 rigs continue to drill, which is up from 3 rigs in Mississipppi a year ago…we imagine that the 2 rig increase in Wyoming could have been new horizontal drilling in the Powder River Basin, where oil exploiters have expressed new interest, but since the horizontal rigs that were added this week could have been in any one of a dozen basins that Baker Hughes does not track separately, one would have to dig through the individual well logs in the Baker Hughes pivot table to find out for sure, something we are not inclined to do this week…that’s also where this week’s increase in natural gas rigs also appears to be hidden, since a gas rig was shut down in the Haynesville while 3 gas rigs were added in basins not tracked separately by Baker Hughes…

City voters to decide fracking ban, council term limits – Vindicator – A perennial anti-fracking charter amendment will make it on the ballot this year without a court battle. The Mahoning County Board of Elections certified the ballot issue at Tuesday’s meeting along with two measures that would eliminate term limits for members of Youngstown city council and council president. An identical anti-fracking proposal, called the Youngstown Water Protection Bill of Rights, had been unanimously rejected by the board of elections in March, but the Ohio Supreme Court ruled that the board exceeded its authority by rejecting the initiative and ordered it on May’s primary ballot. Board Chairman Mark Munroe said the language of this fall’s proposal matched the language that the court ordered on the ballot in the primary. “It was certainly appropriate that the board approved it,” Munroe said. “We made the conscious decision to use the same wording that we did in May,” said Susie Beiersdorfer, a member of the committee that backed the proposal. In March, the board cited House Bill 463, which requires election boards to invalidate petitions if they determine they fall outside a local government’s authority. The Ohio Department of Natural Resources regulates fracking under state law, so parts of the local charter amendment may not be enforceable. City voters have rejected different versions of the measure in seven previous elections dating back to 2013. Business and labor groups routinely turn out to oppose the measure, but Beiersdorfer said she’s optimistic about its chances this fall. “I think more people are becoming aware,” she said. The proposal includes a measure that would forbid city government from using water and wastewater funds for economic-development projects.

Fracking begins at Cabot Oil’s Ashland County site – The Columbus Dispatch – WOOSTER – Drilling on Cabot Oil and Gas’ third well pad site in northeastern Ohio is beginning just as fracking has commenced on the company’s first site, in Ashland County’s Green Township. Cabot has said it plans eventually to have five exploratory wells built in the Ashland, Richland, Wayne Holmes and Knox County region. Locations for two additional well-pad sites in addition to the pads in Green, Mohican and Vermillion townships in Ashland County have not yet been nailed down, according to George Stark, director of public affairs for the Houston-based company. Stark said two possible sites for well pads are south of Loudonville off County Road 529, or in Richland County’s Monroe Township, near Malabar Farm. “After (the site on state Rt.) 511, we don’t have a place,” he said. “There’s a few locations off of (state Rt.) 39 and we’re just working the permits. “There’s a lot (of locations) on the drawing board, some farther along than others. Soon we need to pull the trigger. Construction season is something we will be mindful of.” Stark said the company is working with landowners to get leases signed so they can apply for the necessary permits from the state. A drilling rig was placed at the Vermillion well pad on Rt. 511 at the beginning of last week. The rig previously had been at the first well pad site on Green Township off Township Road 2375 and, over the last month at the Mohican Township site on Township Road 257. The well at Township Road 2375, identified as Kamenik Pad 1 by Cabot, was first drilled toward the end of June. Once the rig moved to the Mohican Township pad, containers for water were placed in Green Township to prepare for horizontal hydraulic fracturing, or fracking. Stark said the well in Green Township was hydraulically fractured over the last week extending horizontally about 1,000 feet and is the first of the three constructed well pads to be in production. “When we flow it back the water and the sand come back also. In the initial flow back, you are getting all the water and all of the sand … After awhile, you will get 90 percent water and 10 percent product. Over time, we will get 10 percent water and 90 percent product.” The waste-water from the fracking process is being hauled to storage wells elsewhere, Stark said.

Cabot O&G Fracks Its First OH Knox Well, Drilling 3rd OH Well – According to a news account from Ohio, Cabot Oil & Gas is either in the midst of, or just recently completed, fracking their very first shale well in central Ohio. The well is located in Ashland County’s Green Township. As we previously reported, Cabot is targeting the Knox formation (see Cabot O&G Opens Branch Office in OH – Hoping to Find Oil in Knox). Cabot has already drilled two wells, fracked one, and moved their drilling rig last week to Vermillion Township (also in Ashland County) to begin drilling a third well. The first three wells are all located in Ashland. As for the next two, Cabot isn’t 100% sure. Maybe another well in Ashland, but maybe a well in Richland County instead. Cabot’s George Stark says to stay tuned for the location of the final two test wells the company will drill. Cabot plans to have all five test wells drilled and fracked by the end of this year. “It should be a busy September and October,” according to Stark.

Number of Producing Wells in Utica Surpasses 2000 – The number of horizontal wells producing oil and gas in the Utica shale in eastern Ohio has risen above 2,000, according to the latest data from the Ohio Department of Natural Resources. ODNR says that as of Sept. 1, Ohio recorded 2,009 horizontal wells in production across the Utica shale. The agency reported there were 1,957 producing wells in the Utica the final week of August. As of Sept. 1, ODNR reported that it had issued 2,881 permits for horizontal wells, of which energy companies had drilled 2,404. The state said it issued eight permits for the week. Four were awarded to Chesapeake Exploration LLC for wells in Harrison County, three were issued to XTO Energy for wells in Belmont County and a single permit was issued to Triad Hunter LLC for a well in Noble County, according to ODNR. The number of oil and gas rigs operating in the Utica stood at 20 for the week ended Sept. 1, unchanged from the previous week.

Wayne National Forest mineral auctions canceled – Marietta Times – The withdrawal of two mineral leases set to be auctioned later this month in the Wayne National Forest was received with relief from an organization that had protested the proposal and frustration from the state trade organization for oil and gas interests. The two plots, one of 35 acres and the other about 40 acres, are in Monroe County, and the mineral leases were scheduled for auction Sept. 20, according to an announcement in July by the Bureau of Land Management. The BLM announced Aug. 28 that the auction was canceled, citing Title 43 Code of Federal Regulations, paragraphs 3120.1-3, but offering no further explanation.That part of the code refers to suspending the offering of a parcel while an appeal is under consideration.Wendy Park, a senior lawyer for the Center for Biological Diversity, said Wednesday that her organization’s protest was the only one she could find that was lodged against the lease offering. Parks said the center opposed the lease because of its potential impact on nearby water bodies and settled areas. When the 400,000 acres of the Wayne National Forest was opened to oil and gas extraction leasing in 2016, she said, the environmental impact examination was general rather than site specific, and the leases offered since then have not taken local conditions into account. “This is pretty much what we’ve been saying in all our protests, that they’re not taking a hard look at the impact of fracking on site-specific resources,” she said. In addition to endangered species of bats, she said, there also are public health and cultural concerns.“There are homes and communities near these leases, and toxic chemicals and air pollution would certainly have an impact on the health of local residents,” she said. “They also have failed to comply with the obligation to make sure cultural and historical resources are not harmed.”

Rover Asks to Start Up Final Laterals as Majorsville Volumes Ramp – Rover Pipeline LLC has asked FERC for authorization to start service on its last remaining supply laterals as the operator approaches the end of construction on its 713-mile, 3.25 Bcf/d Appalachian takeaway project.Rover told the Federal Energy Regulatory Commission in a filing Friday that its Sherwood and CGT laterals are mechanically complete and ready for service. Rover also asked for authorization to start up its Sherwood Compressor Station and two meter stations associated with the lines.The Sherwood Lateral would run roughly 54 miles from eastern Ohio into West Virginia to draw supplies from MarkWest Energy Partners LP’s Sherwood processing facility. The CGT Lateral would extend about six miles from the Sherwood line to an interconnect with Columbia Gas Transmission. Rover asked FERC to issue authorization in time to place the facilities in service by Sept. 15.“Rover’s shippers have urgently requested Rover to place these facilities in service to allow their stranded natural gas supplies to be transported to Midwest markets,” the operator told FERC. One notable shipper that stands to benefit from the start-up of the remaining Rover laterals is Antero Resources Corp. Management for the Denver-based producer said during a 2Q2018 earnings conference call that it expects to deliver additional volumes of gas into the Midwest once the Sherwood Lateral enters service.

Rover natural gas pipeline lifts restriction on capacity at key supply lateral – Energy Transfer Partners’ Rover Pipeline said it has resumed normal operations Friday after issuing a force majeure for a brief period that required a flow reduction to about 250 MMcf/d on one of the supply laterals it recently started up. A notice to customers said the force majeure for unexpected repairs on the Majorsville lateral and the associated capacity restriction were lifted. Spokeswoman Alexis Daniel said in a statement that the force majeure, issued late Thursday, was part of the normal startup of the compressor stations in which maintenance of a piece of equipment was required. “The repairs were completed quickly,” Daniel said. The lateral entered service September 1 after the US Federal Energy Regulatory Commission granted authorization following a months-long holdup stemming from the operator needing to satisfy the commission that it was adequately restoring areas affected by erosion and land movement. Daniel said ground movement was not a factor in the issuance of the force majeure. The Majorsville lateral runs about 24 miles from a receipt point in Marshall County, West Virginia, to an interconnect with the Clarington lateral in Belmont, Ohio. Rover, with a total capacity of 3.25 Bcf/d, is designed to move gas from the Marcellus and Utica shale production areas to downstream markets as well as to the Dawn Hub in Ontario. It is among a handful of infrastructure projects meant to boost takeaway capacity from the prolific Appalachian Basin producing region. A request for approval is pending before regulators to start the final two laterals on the pipeline.

Southwestern to Double Down in Appalachia After $1.9B Fayetteville Sale –Southwestern Energy Co. is going all-in on the Appalachian Basin, announcing on Tuesday that it would exit the play it gave rise to with the $1.9 billion sale of the Fayetteville Shale assets and move some of the proceeds into the liquids-rich Northeast, which has consistently outperformed declining production in Arkansas. Southwestern, which has been marketing the Fayetteville properties since the beginning of the year to reposition its portfolio as part of a broader cost-cutting initiative, said it would sell its Fayetteville assets to privately held Flywheel Energy LLC, a company backed by Kayne Private Energy Income Funds. The deal is expected to close in December. Under the transaction, Southwestern would become a pure-play Appalachian operator, selling 915,000 net acres in the Fayetteville, 4,033 operated producing wells, 3.7 Tcf of proved reserves, associated midstream assets and anticipated 2019 production of 225-230 Bcf. The sale marks the end of an era, as the Fayetteville built Southwestern’s brand as an unconventional explorer. The Houston-based independent lays claim to the first successful natural gas production from the formation, becoming one of its most dominant players over the years. It spent $11 million for 343,000 acres in 2003 at a time when benchmark natural gas prices traded above $5.00/MMBtu for most of the year and continued increasing to hit a peak of nearly $13.00/MMBtu in 2012.

CNX, Hess complete sale of Utica shale play assets to Ascent Resources – CNX Resources and Hess have completed their previously announced sale of their Ohio Utica joint venture interests in the shale play in eastern Ohio, US for around $400m to Ascent Resources. The deal involves sale of 39,000 net acres to Ascent Resources including 26,000 net undeveloped acres. Hess said that it will use the proceeds from the deal to invest in its higher return growth opportunities in Guyana and the Bakken, and also for funding the previously announced share repurchase program.In Guyana, Hess announced a ninth discovery in the Guyana basin last week following the drilling of the Longtail-1 well in the Stabroek Block.CNX Resources, on the other hand, had earlier said that it would use the net proceeds from the sale to pay down debt, invest in drilling and completion activities and also for making bolt-on acreage acquisitions whenever opportunities are available.The sale for CNX Resources included 50 net producing wells, five 50% working interest wells it had recently completed, two 50% working interest wells for which it has drilled the top hole, and nearly 26,000 net undeveloped acres.The sold assets are located in the wet gas Utica Shale areas of Belmont, Guernsey, Harrison, and Noble counties. Ascent Resources has also completed acquisition of natural gas and oil leasehold interests, fee minerals and associated assets in the Utica shale play in the Appalachian Basin from Utica Minerals Development for around $477m.

Ohio shale gas production spikes as driller Ascent pushes expansion – Utica Shale gas from three counties and five producers led Ohio’s 50% year-on-year increase in production to 6.4 Bcf/d in the second quarter. The three counties — Jefferson, Monroe and Belmont — all directly across the Ohio River from West Virginia, accounted for 75% of the total second-quarter production reported to the Ohio Department of Natural Resources by Wednesday. Likewise, the state’s top five producers, led by Ascent Resources, accounted for 75% of the state’s shale gas production. Jefferson County wells, which tripled production from the 2017 second quarter, are split almost exactly in half between two drillers, Ascent and Chesapeake Energy. Ascent was formed around a core of the same executives who pioneered the Utica play for Chesapeake and is now backed by private equity investors First Reserve Management and Energy & Minerals Group. Ascent more than doubled production in a year and continued to widen its lead over rival Gulfport Energy as Ohio’s top Utica Shale producer by volume. The company looks to expand in the play, having struck deals to buy $1.5 billion of Utica wells and leases from Hess and CNX Resources as the second quarter was ending. Gulfport, the state’s previous production leader, increased production 17% compared with the same period of 2017. Gulfport is in the process of milking its Utica dry gas operations, which do not require much new spending, for cash to fund what it says are higher-margin oily wells in the Woodford Shale of Oklahoma’s SCOOP play. Stifel Nicolaus & Co. shale gas analyst Jane Trotsenko said Wednesday that Gulfport is cutting back from two drilling rigs to one in the Utica after operating as many as six rigs in Ohio and will turn its attention to completing the 50 to 60 Utica wells it has drilled but not yet fracked and placed online. “At current crude oil and natural gas prices, the SCOOP offers higher returns (71% for Woodford wet gas) than the Utica (57% Utica dry gas east) and commands a higher allocation of capital,” Trotsenko said. “Over the foreseeable future, we are projecting Gulfport production growth to decelerate in the Utica and future production growth to be driven by their SCOOP assets.” Judging by the number of drilling permits pulled by Ohio’s producers, the three river counties can expect a mild slackening of activity as drillers start to chase wetter wells with higher proportions on NGLs in interior counties such as Harrison and Guernsey as gas prices stay flat and NGL prices increase.

How a Family Surrounded by Shale Gas Plants Took Action — Allen Young and his family can see three sizable natural gas plants – operated by Dominion and Energy Transfer Partners – without taking a step off their property. Over the past three years, these facilities have taken over the boomerang-shaped ridge less than a half-mile from the Young’s home in Powhatan Point, Ohio. Their previously fresh air often smelled, they were plagued by noise from engines and machinery, and the whole family experienced frequent headaches, dizziness, shortness of breath, nosebleeds and other respiratory symptoms. Along with other Ohio residents, Allen is using an important avenue for action: submitting complaints to the Ohio Environmental Protection Agency (Ohio EPA) and the Ohio Department of Health (ODH). Through the Community Empowerment Project, Earthworks offers tools and support to residents like Allen who live on the front lines of oil and gas development. We use a specialized camera that allows us to see and document the air pollution endemic to facilities like the Dominion and ETP compressors. This technology, called Optical Gas Imaging (OGI), makes visible this normally invisible pollution, and is the same technology used by regulators like the Ohio EPA. After Allen saw OGI footage of the emissions he and his family were exposed to every day, he decided to start submitting formal complaints to the Ohio EPA. Ohio EPA rules require that the agency investigate and respond to complaints from the public. Meanwhile, Allen incorporated new methods to document and share his observations. He began logging his family’s health symptoms and measuring the noise pollution from the compressors with a phone app. He shared his family’s story in a video interview conducted by Earthworks, and was featured in news stories by the Allegheny Front and local WTRF News. Finally, with more calls – and the suggestions of some very helpful, determined ODH staff – we learned of a small office within the Department with the ability to investigate exactly these types of complaints. The ODH’s Health Assessment Section eagerly took the details Allen had carefully amassed – including noise levels, photographs of his children’s skin rashes and nose bleeds, prescriptions for recently emerged health symptoms – and began its own investigation by collaborating with Ohio EPA. Within two months, ODH and Ohio EPA had conducted air quality testing right in Allen’s backyard. Ohio EPA informed us of additional plans for a summer-long odor study at these and other nearby sites. What’s more – and perhaps the biggest relief for Allen and his family – Dominion installed new equipment to control noise, and the Young’s backyard fell quiet again.

Feds: Sunoco pipeline spilled 33,500 gallons of gas at Darby Creek in June – More than 33,500 gallons of gasoline spilled from a Sunoco pipeline along Darby Creek in Tinicum Township near Philadelphia International Airport in June, according to recently released federal data.The release created a sheen on the creek and crews were sent to contain the spill from a 12-inch pipeline that Sunoco plans to use as it constructs the Mariner East 2 pipeline for natural gas tapped from the Marcellus Shale. The pipeline was manufactured in 1937. The Pipeline and Hazardous Materials Safety Administration released a spreadsheet last week containing data on the accident, classifying it as a significant – but not serious – spill. The data were supplied by Sunoco. Until then, there were few publicly available details of the incident. The release of the new data was first reported by State Impact Pennsylvania.

Fracking chemicals dumped in the Allegheny River a decade ago are still showing up in mussels — Chemicals from fracking wastewater dumped into Pennsylvania’s Allegheny River before 2011 are still accumulating in the bodies of freshwater mussels downstream, according to a new study.Researchers at Pennsylvania State University found elevated concentrations of radioactive Strontium in the shells of freshwater mussels downstream from a former fracking wastewater disposal site in Warren, Pennsylvania, about 143 miles northeast (and upstream) of Pittsburgh.While the potential health impacts on humans from this contamination are unclear, high levels of exposure to radioactive Strontium can cause cancer and birth defects. “Mussels record the changes in water quality that they see over their lifetimes in the layers of their hard shells,” Nathaniel Warner, a professor in the Department of Civil and Environmental Engineering at Pennsylvania State University who co-authored the study, told EHN. “We can go back about 10 years and see the spikes that indicate when wastewater from Marcellus shale was being treated and discharged into the Allegheny River.” The study, published Wednesday in the peer-reviewed journal Environmental Science & Technology, is among the first to show bioaccumulation – the buildup of chemicals in the bodies of living creatures – from oil and gas wastewater downstream of a surface water disposal facility. “We don’t know how much of an impact this has on human health, or if it has any impact at all,” Warner said, “but this means it’s entering the food chain.” He noted that they’d like to look at the soft tissue of the mussels next, since muskrats and fish dine on freshwater mussels, but “no animals really eat the shells.”

Columbia nuns take gas pipeline case to US Supreme Court, plan solar project — Roman Catholic nuns near Columbia will petition the U.S. Supreme Court in their effort to remove a gas pipeline from their “sacred” farm property. On their Facebook page, the Adorers of the Blood of Christ also say they plan to build a solar farm on their property. “This project at this sacred site of resistance would bear witness to clean, sustainable, earth-friendly energy sources,” the nuns wrote. Twice, the nuns have lost court decisions in their lawsuit against the Federal Energy Regulatory Commission and the Transcontinental Pipe Line Co. for condemning the nuns’ farmland in West Hempfield Township to build the Atlantic Sunrise natural gas pipeline. The nuns claimed that forcibly building the pipeline through their property was a violation of their protected religious beliefs to protect the Earth from harm, such as the use of fossil fuels. The nuns claim a violation of the federal Religious Freedom Restoration Act. But two courts said those claims should have been raised during the pipeline’s administrative process before FERC, not after pipeline approval had been given. The nuns will now attempt to get the Supreme Court to take up their case. Less than 5 percent of the cases filed with the court are taken up by justices.

Pennsylvania Shale Production, Operations Again Post Quarterly Gains – An unconventional natural gas production report issued Friday by the Pennsylvania Independent Fiscal Office (IFO) showed little to frown about during the second quarter, as volumes increased, more producing wells were online and the well inventory declined.Based on data collected by the Pennsylvania Department of Environmental Protection, the IFO said second quarter unconventional production increased to 1.456 Tcf, or 10% higher than it was in the year-ago period and slightly above the 1.441 Tcf produced in 1Q2017. The gain was driven by a 10% production increase from horizontal wells, which account for nearly all production in the state.It was the seventh consecutive quarter/quarter increase from horizontal wells. IFO added that over the last two years, horizontal production has increased by 15%. Over the same time, since 2Q2016, average per-well production increased by 27.4%, as operators continued pushing for optimized completions.All of the second quarter production growth, according to the report, came from wells spud in 2016 and 2017. Wells spud in the two years comprised more than one-third of all production in the quarter. Wells spud in 2015, meanwhile, showed the largest decline in production (37%) and production from wells spud in 2014 or earlier declined by 17.8%. The state’s second quarter well inventory, defined by the IFO as those drilled but uncompleted or shut-in, declined from 1Q2017 by 102 to 1,519. Similarly, total producing wells increased by 10.4% year/year to 8,672, consisting of 8,194 horizontal wells and 478 vertical wells drilled to unconventional formations.

Shell’s Cracker Project Progressing After Administration Waives Steel Quota – Shell Chemical Appalachia LLC can continue constructing its multi-billion dollar ethane cracker in western Pennsylvania without delay after the Trump administration last week eased restrictions on imported steel from South Korea, Argentina and Brazil.President Trump signed a proclamation allowing the Department of Commerce to provide targeted relief from quotas, or restrictions on the amount of product that can be imported, that were imposed on the countries in March. Companies can now apply for quota exclusions based on insufficient product quantity or quality available from U.S. steel or aluminum producers. Piping for Shell’s massive facility has been sitting in port for months under the control of U.S. Customs and Border Patrol, unable to move to Pennsylvania because of the quotas. Last March, the Trump administration imposed a 25% tariff on steel imports and a 10% tariff on aluminum imports. The tariffs took effect for most countries on March 23. After negotiations, quotas were placed on steel imports from Argentina, Brazil and South Korea and for aluminum imports from Argentina in lieu of the tariffs. Shell’s pipe, which is from Brazil, can now be delivered to the construction site. Shell’s decision to build the cracker in Pennsylvania marks the first time in more than 20 years that such a facility has been built in the United States outside of the Gulf Coast. The facility, which is expected to enter service in the early 2020s, is designed to consume a little more than 100,000 b/d of ethane to produce 1.5 million metric tons/year (mmty) of ethylene and 1.6 mmty of polyethylene. Late last year, Shell transitioned from site remediation and early works, such as sewage, electricity and foundations, to the primary construction phase during which the actual plant is being built.

Appalachia Group Awards Contract for $3.4B Ethane Storage Hub – A proposed multibillion-dollar regional storage complex for natural gas liquids sourced from the Marcellus, Utica and Rogersville shale plays this week moved one step closer to reality this week. Steve Hedrick, CEO of Appalachia Development Group, LLC (ADG) told Rigzone that it had named Parsons Corp. as its engineering, procurement and construction (EPC) partner for the buildout of the Appalachia Storage and Trading Hub (ASTH). “We are driven by the greater vision of $36 billion in follow-on investment associated with this catalyst for development of the petrochemical industry in Appalachia,” Hedrick added. According to ADG, Parsons will initially focus on the pre-front end engineering design (FEED) and FEED stages including project management and execution planning. Subsequent phases would include constructing the $3.4 billion project and its long-term operation, the Charleston, W.Va.-based project sponsor stated. The American Chemistry Council (ACC) has estimated that the ethane storage hub would act as a catalyst for more than $36 billion in follow-on petrochemicals investments and the creation of more than 100,000 long-term jobs, ADG reported. On January 3 of this year, ADG stated that its application for a $1.9 billion loan guarantee for ASTH from the U.S. Department of Energy (DOE) had advanced from the first to the second phase of DOE’s review process. “The Pre-FEED and FEED phases will support our Part II application to the DOE Title XVII Loan Guarantee Program,” Hedrick explained. “From filing, approval of the Part II application can take from approximately six months to two years. Therefore, speculating on a timeline for future phases is premature.” As it pursues a DOE loan guarantee, ADG is also trying to secure $1.4 billion in private funding for the project. “A complex array of investors are engaged, from private equity to investment banks to strategic investors whose own success in their sector is advantaged by the success of this catalyst for the development of the petrochemical industry,” Hedrick said.

Appalachian Prices Poised to Shake Off Shoulder Season Slump as Takeaway Grows — As major expansions like the 3.25 Bcf/d Rover Pipeline and 1.7 Bcf/d Atlantic Sunrise approach full service, further growing Appalachian takeaway capacity, the wide basis differentials that once dogged the historically constrained Marcellus and Utica shale region are shrinking — a trend that could come into sharp relief this shoulder season. Recent basis trades at a number of key Appalachian hubs suggest Northeast producers could see substantially improved pricing this shoulder season compared with 2017 even as supply estimates show sharply higher output from the region. The dramatic shift in regional pricing has also coincided with new takeaway capacity and a starkly different storage picture this year compared to last.After spot prices at Dominion South traded more than $2.00/MMBtu below Henry Hub at times during September and October 2017, the bellwether Appalachian location was priced in at a negative basis of just 42 cents for September bidweek, with October forwards recently priced at around 40 cents back of Henry.Recent shoulder season pricing at other Appalachian points paints a similar picture. Forwards markets currently expect Transco Leidy Line and Millennium East Pool to see basis differentials shrink dramatically year/year (y/y) to around negative 40 cents for October 2018 versus spot prices that frequently traded around $1.50-2.00 back of Henry over the same period in 2017. “After years of perpetual pipeline constraints, pipeline utilization data indicates that some Northeast takeaway pipelines have a little bit of capacity to spare — a trend that has major implications for regional pricing relative to downstream markets,” RBN Energy LLC analyst Sheetal Nasta said in a recent note to clients. “At the same time, more pipeline expansions are on the horizon that promise to bring on even more gas supply from Marcellus/Utica producers,” including recent developments suggesting new capacity from Rover and Atlantic Sunrise is imminent.

Orphan Wells: States Wrestle With Soaring Costs For Oil & Gas Industry Mess – WKMS – William Suan is no stranger to the problems abandoned oil and gas wells can cause. “I had to fence one off because it’s leaking now,” he said, standing inside a barn on his cattle ranch near Lost Creek, West Virginia. There are five inactive wells on his land, most installed in the ’60s and ’70s, and the companies that owned the wells have long since gone out of business. Hidden in the wooded thicket on the backside of his property is a three-foot-tall rusted tube jutting out of the ground. A soft bubbling sound emanates from the well. “See the gas bubbling out of it?” he said. “Sometimes there’s oil. There’s where they had one of those pads to soak up the oil last time I complained about it.” In 2012, Suan won a case against the West Virginia of Environmental Protection to get one of the wells on his property plugged. Since then, he says he has been unsuccessful in getting environmental regulators to take additional action. Having enough resources to plug old, inactive wells is a challenge not unique to West Virginia. Across the country, many state regulators have few resources to deal with an ever expanding list of abandoned wells. “The states are pretty good at regulating wells that are being explored, are being fracked, are in production, but they kind of lose interest once that happens,” said Alan Krupnick, a senior fellow with the nonpartisan environmental think tank, Resources For the Future. “There’s not enough attention being paid to reducing the risk from these abandoned wells.” Across the Ohio Valley, thousands of oil and gas wells sit idle. An analysis of state data by the Ohio Valley ReSource estimates more than 8,000 oil and gas wells are considered “orphan.” Definitions of orphan and abandoned wells vary by state, but in general, orphan wells lack an operator or company that can pay to plug them. That responsibility then falls to state regulators who are frequently struggling to keep up with demand and scrambling to find money to clean up the mess.In Kentucky and West Virginia, agencies tasked with plugging those wells rely on forfeited bonds. That money is collected in a fund and used to plug the highest priority wells.Well plugging can be an expensive undertaking. Across the Ohio Valley, regulators reported figures to upwards of $200,000 to plug a single well.“We may have an emergency repair on a big well and we may have had bonds forfeited on several small wells and those funds just don’t add up,” said Lanny Brannock, a spokesperson with the Kentucky Energy and Environment Cabinet. “So, we’re constantly behind on funding for orphan wells.”

Two tree sitters join fight against Mountain Valley Pipeline – Now that Mountain Valley Pipeline workers are back at work, so are pipeline protestors. On Wednesday, two new tree sitters suspended 50 feet in the air and are protesting against Mountain Valley Pipeline in Montgomery County.One of them is 24-year-old Virginia Tech grad Lauren Bowman, whose goal is to delay MVP’s work. “This is private property and it doesn’t belong to Mountain Valley Pipeline. So, I am not breaking any laws,” said Bowman. Bowman and her fellow protester, Nettle, are asking Gov. Ralph Northam to revoke water permits for this project in hopes of protecting creeks like this one. “No amount of money is worth the lives and people of this community and that we are not backing down,” Bowman said. The rest of the camp tells 10 News they plan to stay here for as long they can. “This water goes through the Spring Hollow Reservoir, which goes through to both Salem and Roanoke and that’s a big deal. And I feel like people just aren’t paying attention,” said Connie Fitzsimmons, a pipeline protester. According to Fitzsimmons, she and the others are here to protect the water for future generations and want to send this message to the community. “There isn’t any compromise when it comes to people lives and we are going to be paying for this pipeline for years to come,” said Bowman.

Lawsuit Could Shut Down Controversial Great Lakes Pipeline – Two environmental groups have filed suit against the U.S. Coast Guard in a Detroit federal district court, arguing that their plan to respond in the case of a Great Lakes pipeline oil spill is inadequate, The Detroit News reported on Aug. 22.The suit is part of a larger push to shut down Enbridge’s Line 5 pipeline that runs under the Straits of Mackinac between Lakes Huron and Michigan and comes as indigenous activists have set up campsprotesting the line that could damage 400 miles of shoreline in a spill.”Until we decommission this aging, risky pipeline, we need the best-possible spill response plan to protect our Great Lakes, our communities, our wildlifeand our economy,” National Wildlife Federation staff attorney Oday Salim said in a statement reported by The Detroit News.National Wildlife Federation and the Environmental Law & Policy Center (ELPC) are suing based on comments made by former Coast Guard Commandant Admiral Paul Zukunft during a congressional hearing in November during which he said the Coast Guard was not prepared for a pipeline spill in the Great Lakes.”Between 2014 and 2017, Coast Guard personnel have publicly stated that the agency is ill-equipped to adequately remove a spill from the open waters of the Great Lakes – let alone one as severe as a worst case discharge,” the lawsuit states, Courthouse News Service reported.The suit argues that the Coast Guard’s 2017 approval of the North Michigan Area Contingency Plan violates the Oil Pollution Act of 1990, which was written in response to the Exxon-Valdez oil spill and mandates contingency plans in any areas where oil is transported through water, according to The Detroit News.The case further argues that, if the contingency plan is invalid, the facility response plan (FRP) required to allow Enbridge to run its pipelines under the Great Lakes would also be invalid, according to Courthouse News Service.”You are not allowed to operate without a facility response plan,” ELPC senior attorney Margrethe Kearney told The Detroit News. “If the court agrees, as they should, that the area contingency plan is not valid then certainly one of the outcomes could be someone requesting that Line 5 be shut down.”

Enbridge, Fond du Lac Band reach deal to route Line 3 through reservation — Enbridge Energy and the Fond du Lac Band of Lake Superior Chippewa have reached an agreement to build the Line 3 replacement oil pipeline through the band’s reservation near Cloquet in northeast Minnesota. The financial terms of the deal are confidential. But the agreement provides Enbridge with easements through 2039 for the six existing oil pipelines that cross the reservation. The easements were scheduled to expire in 2029. Enbridge will construct the new pipeline in an expanded right-of-way next to the existing pipeline corridor. The Calgary-based company will also remove the old pipeline from the reservation after the new line is built and in service.Enbridge plans to replace the existing, degraded Line 3 pipeline with a new line that will be able to carry nearly twice as much Canadian oil across northern Minnesota. The Minnesota Public Utilities Commission approved a certificate of need and route permit for the Line 3 project in June. The new pipeline will follow a different route across the state than the current oil pipelines Enbridge operates. It will follow the existing corridor from the Alberta tar sands to just outside Clearbrook, Minn., but will then move south toward Park Rapids, Minn., before veering east toward the company’s pipeline terminal in Superior, Wis.

The fight to stop the Dakota Access Pipeline continues in the bayous of Louisiana — Cherri Foytlin is Din’e, Cherokee, and Latina, the mother of six children ages 10 to 21, and lives in Rayne, Louisiana, a small struggling town just off the interstate. She is one of a council of four indigenous women who lead an activist camp here called L’Eau Est La Vie (Water is Life). Other core members call her “a badass.” For the last year and a half, Foytlin and the other activists have planned and executed dozens of direct actions from the camp’s several buggy acres, which belong by heritage to the Atakapa-Ishak, a Gulf Coast Native American tribe. At first glance, there isn’t much to see. A row of tents. A kitchen inside a garage. A carport that shelters an above-ground pool, half filled, and a truck currently under repair. Yet from this scrappy home base, Foytlin and a handful of people have put their bodies in the way of the construction of the Bayou Bridge Pipeline again and again and again. This pipeline is a project of Energy Transfer Partners, a Fortune 500 company that is also the parent company of the Dakota Access Pipeline. Much like that higher-profile project, this one runs through a vital watery ecosystem, the Atchafalaya Basin, and threatens not only the water people drink but also the ways of life of indigenous and other local people. To prevent its potential havoc, Foytlin and the other L’Eau Est La Vie activists have battled the project from trees, on land, and by kayak. They have been cuffed, tasered, and arrested. This Labor Day weekend, L’Eau Est La Vie put out a national call for reinforcements for a new wave of actions. It offered newcomers training in using ropes and climbing gear to scale a cypress tree and then establish and defend a tree sit, and led lessons in boat-based resistance, in which “kayaktivists” row up to remote swamp construction zones. Hands were also needed for ongoing construction projects: compost toilets, showers, and a library. I came down to learn why they are so determined. I also wondered why their fight has been almost completely ignored.

First Nations and farmers are marching across Iowa to stop the Dakota Access Pipeline – Many think that the fight to stop the Dakota Access Pipeline in the Midwest is long over. That couldn’t be further from the truth.On September 1, a group of 30 landowners, farmers, environmentalists, and indigenous peoples under the banner First Nation Farmer-Climate Unity March set out by foot on a 90-mile journey from Des Moines, Iowa, to Fort Dodge, Iowa. The march is, in part, an effort to raise awareness about the ongoing legal battles landowners in Iowa face against the 1,172-mile long crude oil pipeline. They plan to arrive at their destination Saturday. A 2016 lawsuit challenging the Iowa Utilities Board’s permit granting eminent domain to developer Energy Transfer Partners is heading to the Supreme Court of Iowa later this month. A group of landowners and environmental organizations like the Sierra Club are arguing that eminent domain shouldn’t have been used to take private land for this pipeline. The hope is that the judge’s final ruling would require it to move elsewhere. “We feel that first nation people and farmers have a much closer connection to the Earth and that we need to be listened to when we talk about environmental disasters and climate change,” Pipeline opponents worry about the impact oil spills can have on the land, especially farmland. This march aims to highlight these concerns and heighten the public interest in the ongoing lawsuit.

Anadarko shuts in oil production, US Coast Guard secures USGC ports ahead of Gordon – US independent Anadarko on Monday shut production at two Gulf of Mexico platforms, Horn Mountain and Marlin, while the US Coast Guard began preparing ports in preparation for Tropical Storm Gordon. “We have … shut-in production at both platforms to protect the environment,” Anadarko said in a statement Monday, adding that production was continuing at its other platforms. Anadarko operates 10 platforms in the Gulf of Mexico with production of approximately 160,000 b/d of oil equivalent, according to the company’s website. At the key Louisiana Offshore Oil Port, operations are running normally while port officials continue monitoring the storm, officials said. Gordon’s track looks set to make landfall east of the LOOP operation, which is near Port Fourchon south of New Orleans, early Wednesday. However, further to the east, the port of Mobile, Alabama, is already at Port Condition Zulu, according to the USCG website. This means it is closed to all incoming and outgoing traffic with gale force winds expected within 12 hours. This includes the port of Pascagoula, Mississippi, which serves Chevron’s a 330,000 b/d refinery, where the company was monitoring the storm as of Sunday, Chevron spokesman Braden Reddall said in an email. The Lower Mississippi ports of Baton Rouge and New Orleans are on Port Condition Yankee, according to shippers, which means gale force winds are expected within 24 hours. While the port remains open to all commercial traffic, vessels in port need to report their intention to the USCG to stay and batten down the hatches or move out. ExxonMobil’s 502,500 b/d Baton Rouge, Louisiana, refinery is on watch ahead of Gordon, where heavy rainfall in excess of 12 inches is expected to cause flash flooding.

US Energy Operations Begin Recovering After Tropical Storm Gordon (Reuters) – Energy companies and port operators along the U.S. Gulf Coast took steps on Wednesday to resume operations after Tropical Storm Gordon shut more than 9 percent of the region’s oil and gas output. Gordon never became a hurricane as forecast and weakened into a depression on Wednesday, just hours after making landfall near the Alabama-Mississippi border, helping to keep production and refining operations running unimpeded at most energy facilities in the Gulf and along the Louisiana coast. Coast Guard inspectors flew over ports in Mississippi and Alabama to evaluate the facilities, which remained closed on Wednesday morning to most traffic, Petty Officer 3rd Class Alexandria Preston said. In New Orleans, pilots began moving cargo ships through the mouth of the Mississippi River after the storm, said Matt Gresham, a spokesman for the Port of New Orleans. “We had no impacts from the storm and operations resumed as normal this morning,” said Gresham. The lock connecting the Mississippi River to the intracoastal waterway that stretches to Texas and Florida was opened and pilots began escorting ships out of the area, he said. U.S. crude futures prices slipped more than 1 percent as Gulf production constraints appeared temporary and global trade disputes came into the forefront. U.S. crude futures were off $1 at $68.85 per barrel in afternoon trade. In all, company shut-ins lopped 315,992 barrels of oil and nearly 500 million cubic feet of natural gas from Gulf output in the last two days, according to Wednesday’s estimate by the U.S. Bureau of Safety and Environmental Enforcement. The bureau, which regulates offshore drilling, said 9.4 percent of oil production and 10.4 percent of natural gas output was halted by the storm’s path through the U.S. Gulf of Mexico. Workers were evacuated from 48 production platforms, it said in an updated statement on Wednesday. Offshore oil production accounts for 17 percent of total U.S. oil production and 5 percent of the nation’s natural gas production. Companies including Exxon Mobil Corp, Chevron Corp , Talos Energy Inc and Anadarko Petroleum had evacuated offshore platforms ahead of the storm. By Wednesday afternoon, Chevron said it has begun to restaff and restore production at its Petronius platform. Anadarko also said it plans to begin moving workers back to two offshore sites and will restart production as quickly as possible.

Vessel accident causes oil spill near Port Arthur – Clean up efforts are underway after a vessel collision caused an oil spill near Port Arthur, Texas. The U.S. Coast Guard said an estimated 13,272 gallons of marine diesel fuel was discharged after an accident involving the towing vessel Savage Pathfinder and the motor vessel Endurance on Wednesday evening. No injuries were reported. Containment boom was placed around the vessel, and the source of the leak has been secured, the Coast Guard said. Coast Guard Marine Safety Unit Port Arthur and Texas General Land Office personnel are involved in the investigation and response efforts. “We are working with TGLO, the responsible party and all maritime stakeholders to minimize impact as quickly as possible,” said Capt. Jackie Twomey, federal on scene coordinator and commanding officer of MSU Port Arthur. An urgent marine information broadcast has been sent cautioning mariners transiting around Texaco Point and Port Arthur. The cause of the incident is under investigation.

More than 1,000 gallons of oil spilled near Flint Hills East Dock – – Several agencies are responding to a major oil spill near the Port of Corpus Christi. The United States Coast Guard is reporting that an estimated 1,176 gallons of oil was spilled from an overloaded barge. The incident happened Thursday evening near the Flint Hills East Dock. Representatives with the U.S. Coast Guard’s Incident Management Division, Corpus Christi Oil Spill Association, Flint Hills and crew members from the barge were on the scene to help with clean-up efforts. The Coast Guard says a sheen of about 100 yards by 450 yards could be seen. Crews placed boom in the water and around the barge to contain the spill. There is no word on how long the clean-up will take.

US oil production rises to record as Texas ups drilling – – US crude oil production rose 231,000 barrels per day, or 2 percent, to a record 10.674 million bpd in June, the US Energy Information Administration said in a monthly report on Friday. The agency also revised its estimate for May up by 1,000 bpd to 10.4 million bpd. US output has been closely watched by crude oil markets, which have contended with concerns about oversupply as oil production ramps up and trade tensions between the United States and China weigh on global demand forecasts. The gains reflected growing production on land in Texas, where output climbed 165,000 bpd, or 3.9 percent to 4.4 million bpd. Output also rose in the Gulf of Mexico, climbing 10.3 percent, or 154,000 bpd to 1.7 million bpd. US natural gas production in the lower 48 states rose to an all-time high of 90.8 billion cubic feet per day (bcfd) in June, up from the prior record of 89.9 bcfd in May, according to EIA’s 914 production report. Output in Texas, the nation’s largest gas producer, increased 1.5 percent in June to 23.9 bcfd. In Pennsylvania, the second biggest gas producing state, production rose 2.2 percent to 16.5 bcfd in June. The United States has been the world’s biggest producer of gas since 2009, ahead of Russia.

ETP, Partners Pull Trigger on Permian Gulf Coast Oil Pipeline – A 30-inch diameter pipeline to carry Permian Basin oil supply to the Texas Coast has enough support to move forward, a quartet led by Energy Transfer Partners LP (ETP) said Tuesday. The 600-mile Permian-Gulf Coast (PGC) pipeline is expected to be operational by mid-2020 with “multiple” origins in West Texas, including Wink, Crane and Midland. ETP already had partnered with Magellan Midstream Partners LP (MMP) to build the system, with MPLX LP and Delek US Holdings Inc. announced as partners on Tuesday. ETP offered few details. However, the system initially is to be designed to transport Permian oil to its Nederland terminal southeast of Houston and to MMP’s East Houston terminal. They each have access to the Houston Ship Channel. Ultimately, the four partners may increase the pipe diameter to expand capacity, based on additional commitments received during an upcoming open season, which is expected to be launched this week. ETP management indicated during first and second quarter conference calls this year that the PGC initially would transport up to 600,000 b/d, expandable to 1 million b/d. In addition to transporting Permian oil to Nederland and the East Houston terminals, the system could provide shipper capacity to ETP’s storage facility and pipeline header systems, as well as deliveries into Bayou Bridge, which moves oil from Nederland to Lake Charles, LA.

With pipelines full, oil and gas companies turning to trucks, rail – Oil producers in the Permian Basin, dealing with a shortage of pipelines, are increasingly turning to trucks and rail to ship the flood of crude from the West Texas oil field to refineries and export terminals on the Gulf Coast. These transportation shifts are driven by two simple math problems. First, crude oil production in the Permian has reached 3.6 million barrels a day, while pipeline capacity out of the region is just 3.5 million barrels a day, according to the energy research firm Wood Mackenzie. Next, crude is selling for as much as $10 more a barrel in South Texas, the Gulf Coast and other markets outside of West Texas, where inventories are building in part because of the lack of pipeline capacity The latest effort to move oil to more lucrative markets was launched earlier this week, when the Houston oil transport company JupiterMLP signed a deal with Vista Proppants and Logistics of Fort Worth to ship West Texas crude by rail from Vista’s loading terminal in Pecos. Vista plans to ship about 400,000 barrels a month from its Pecos terminal through 2019 and potentially into 2020, depending on when pipeline projects are completed. Pipeline capacity has become a particular problem in the Permian, as booming production of both crude and natural gas has exceeded capacity and created bottlenecks. Several companies, including Kinder Morgan and Phillips 66 Partners, both of Houston, are racing to complete pipeline projects, but most are not expected to begin operations until at least next year. The bottlenecks, meanwhile, are not only having an impact on prices in West Texas prices, but also production. The Railroad Commission of Texas, which oversees the oil and gas industry, recently reported that oil production in the state – most of it concentrated in the Permian – declined about 2 percent in June, compared to the same month a year earlier, the first year over year decline since early 2017. Analysts attributed the decrease to the pipeline shortage.

Burn, baby, burn- Natural gas is cheap, and Texas drillers are flaring more of it – Oil drillers are burning excess natural gas to keep the crude oil flowing. Natural gas is mostly a byproduct of crude oil drilling in the Permian Basin. So the shortage of pipeline capacity to transport the gas to market has played a role in companies burning – or flaring – large amounts of natural gas to keep that roadblock from slowing oil production. State data and analysts’ reports show large increases in flaring permits and volumes in Texas. A similar situation happened – although with much larger percentages flared – several years ago in North Dakota. That prompted state regulators to rein in the practice. Texas Railroad Commissioner Ryan Sitton said this summer he expects to address the situation within the next six months. “The regulatory side is going to start to be a problem as we continue to try to flare more gas in order to get the commodity we’re looking for, which is crude oil. The flaring is not only value lost to the operator, but it’s also value lost to the state in terms of tax dollars.” —Sarp Ozkan, senior oil and gas marketing analyst, Drillinginfo Drillers want to sell their gas but not if it slows oil production.

New Mexico’s Permian-Heavy Lease Sale Draws Record Bids at Nearly $1B In a year in which New Mexico has already set milestones for oil production and lease sale revenues, it has set a record for the 3Q2018 federal land auction grossing nearly $1 billion, according to a U.S. Bureau of Land Management (BLM). A two-day online sale by the Carlsbad office brought in more than $972 million, which exceeds the proceeds from all of lease sales in New Mexico last year. The sale also surpasses BLM’s previous best sales year. Most of the parcels were in the heart of southeastern New Mexico’s Permian Basin in Eddy (56 parcels) and Lea (68) counties, and a small amount in Chaves County (18). In total, 142 parcels covering 50,797 acres were included in the two-day sale. On Wednesday, the first day of the sale, New Mexico set a national record for the highest bid for a single parcel and the highest per-acre bid ever placed — $81,889/acre for a 1,240-acre parcel in Eddy County, bringing in $101.5 million. The previous records all have been set in New Mexico. The previous record for a single parcel was $76.6 million for a September 2016 auction, and the previous per-acre record was set last December at $40,001/acre. In the first day alone, 71 parcels totaling more than 28,000 acres were sold for a total of $386 million, more revenue than BLM 2017 proceeds of $358 million. BLM’s previous overall record for lease sales nationally was $408 million set in 2008.

Industrial group warns Congress of gas pipeline threat – Lobbyists representing U.S. manufacturing and chemical companies are urging Congress to secure natural gas pipelines against physical and cyber attack. In letter sent to the Senate Energy and Natural Resources Committee and the House Energy and Commerce Committee this week, Industrial Energy Consumers of America President Paul Cicio said Congress should create mandatory security standards similar to those required of electric utilities.”When so much is resting on the reliability of natural gas pipelines, we cannot help but be concerned that the security requirements under the Transportation Security Administration are voluntary, not mandatory,” Cicio wrote. “Natural gas pipelines are the weak link in U.S. national energy infrastructure.” The letter comes as the Trump administration is weighing the creation of a federal subsidy for coal and nuclear power plants on the grounds their on-site supply of fuel provides a more secure power supply. Natural gas plants, on the other hand, are reliant on a near constant supply of gas delivered via pipelines.In building support for such an action, which has been opposed by groups as diverse as the Sierra Club and the American Petroleum Institute, Energy Secretary Rick Perry has cited the potential for pipeline disruption through terrorist attack.The Interstate Natural Gas Association of America, which represents pipeline companies and has argued against creating a national security standard, declined to comment on the letter from IECA. IECA describes itself as an “association of leading manufacturing companies with $1.0 trillion in annual sales, over 3,700 facilities nationwide, and with more than 1.7 million employees worldwide.” A membership list posted by the Natural Resources Defense Council in 2015 listed the group’s membership as including Dow Chemical, Marathon Refining, LyondellBasell and Goodyear Tire & Rubber Co.

Schlumberger CEO Warns Transport Constraints To Slow Shale Gains (Reuters) – The chief executive of the largest oilfield service provider, Schlumberger, warned on Tuesday that bottlenecks in the largest U.S. shale basin would slow oil production growth and investments in the region. A surge in oil and gas production in the Permian basin of west Texas and New Mexico has outstripped transport capacity, pushing the local price of oil to four-year lows and threatening to curtail drilling activity. Any slowdown could hurt oilfield service companies that have only recently started to recover from the 2014 oil-price crash. “These challenges will likely have a dampening effect on production growth, wellhead prices and investment levels in the coming year,” CEO Paal Kibsgaard said at a Barclays conference in New York. The lack of transportation capacity would be resolved by the end of 2019, he said. Kibsgaard said market consensus that Permian production will continue to climb by 1.5 million barrels per day annually is “starting to be called into question.” The Permian produced about 3.4 million barrels of oil per day in August, or about 46 percent of all U.S. shale production, according to an estimate from the U.S. Energy Information Administration (EIA). The hydraulic fracturing market, which had been seen as a bright spot in the North American services sector, also has softened more than expected, Kibsgaard said, as more producers hold off completing wells until oil prices climb and more pressure-pumping fleets enter the market.

Oklahoma Teachers Just Purged the Statehouse of Their Enemies — For nearly a decade, Republican officials have been treating ordinary Oklahomans like the colonial subjects of an extractive empire. On Governor Mary Fallin’s watch, fracking companies have turned the Sooner State into the earthquake capital of the world; (literally) dictated policy to her attorney general; and strong-armed legislators into giving them a $470 million tax break – in a year when Oklahoma faced a $1.3 billion budget shortfall.To protect Harold Hamm’s god-given right to pay infinitesimal tax rates on his gas profits (while externalizing the environmental costs of fracking onto Oklahoma taxpayers), tea party Republicans raided the state’s rainy-day funds, and strip-mined its public-school system. Between 2008 and 2015, Oklahoma’s slashed its per-student education spending by 23.6 percent, more than any other state in the country. Some rural school districts were forced to adopt four-day weeks; others struggled to find competent teachers, as the GOP’s refusal to pay competitive salaries chased talented educators across the border into Texas. Students who were lucky enough to have both five-day weeks and qualified instructors still had to tolerate decaying textbooks. Polls showed overwhelming public support for raising taxes on the wealthy and oil companies to increase investment in education. GOP lawmakers showed no interest in those polls. But then, Oklahoma teachers decided to give their state a civics lesson. Inspired by their counterparts in West Virginia, Oklahoma teachers went on strike to demand long-overdue raises for themselves, more education funding for their students, and much higher taxes on the wealthy and energy companies – to ensure that those first two demands would be honored indefinitely. They won one out of three. Despite the fact the teachers had no legal right to strike – and that the Oklahoma state legislature requires a three-fourths majority to pass tax increases of any kind – the teachers galvanized enough public support to force Fallin to give an inch. As energy billionaire (and GOP mega-donor) Harold Hamm glowered from the gallery, Oklahoma state lawmakers passed a tiny increase in the tax on fracking production (one small enough to leave Oklahoma with the lowest such tax rate in the nation), so as to fund $6,100 raises for the state’s teachers. The strikers were pleased, but unappeased. They promised to make lawmakers pay for refusing to finance broader investments in education with larger tax hikes. Last night, Oklahoma’s GOP primary season came to an end – and the teachers beat the billionaires in a rout. Nineteen Republicans voted against raising taxes to increase teacher pay last spring; only four will be on the ballot this November.

Fracking can cause earthquakes up to 10 km away – Assessing how far from a well earthquakes might occur has practical consequences for regulation and management. At first glance, one might expect that the most likely place for wastewater disposal to trigger an earthquake is at the site of the injection well, but this is not necessarily true. Since the 1970s, scientists and engineers have understood that injecting water directly into faults can jack the faults open, making it easier for them to slide in an earthquake. More recently it has become clear that water injection can also cause earthquakes in other ways. For example, water injected underground can create pressure that deforms the surrounding rock and pushes faults toward slipping in earthquakes. This effect is called poroelasticity. Because water does not need to be injected directly into the fault to generate earthquakes via poroelasticity, it can trigger them far away from the injection well.Deep disposal wells are typically less than a foot in diameter, so the chance of any individual well intersecting a fault that is ready to have an earthquake is quite small. But at greater distances from the well, the number of faults that are affected rises, increasing the chance of encountering a fault that can be triggered. Of course, the pressure that a well exerts also decreases with distance. There is a trade-off between decreasing effects from the well and increasing chances of triggering a fault. As a result, it is not obvious how far earthquakes may occur from injection wells.To assess this question, we examined sites around around the world that were well-isolated from other injection sites, so that earthquakes could clearly be associated with a specific well and project. We focused on around 20 sites that had publicly accessible, high-quality data, including accurate earthquake locations.We found that these sites fell into two categories, depending on the injection strategy used. For context, oil and gas deposits form in basins. As layers of sediments gradually accumulate, any organic materials trapped in these layers are compressed, heated and eventually converted into fossil fuels. Energy companies may inject wastewater either into the sedimentary rocks that fill oil and gas basins, or into older, harder underlying basement rock.

Idle oil, gas wells threaten Indian tribes while energy companies, regulators do little — An estimated 3.5 million oil and gas wells have been drilled throughout North America. No federal agency or national organization chronicles exactly how many of these are, like those in the Chuska Mountains, in purgatory: They are no longer producing oil and gas but for various reasons they have yet to be shut down, a process that involves cementing in the well bore, clearing off equipment, cleaning up any pollution in the soil or water and grading and seeding the land to resemble what it once was. How many of these idle wells pockmark lands owned by tribes and tribal members isn’t well documented. A 2015 Government Accountability Office report found that the inventory of oil and gas wells on tribal lands is incomplete. In the San Juan Basin, an oil and gas field that extends eastward from Red Valley and includes parts of the Ute Mountain Ute, Southern Ute, Jicarilla Apache and Navajo reservations, a back of the envelope calculation concludes there are certainly more than 500 and possibly several thousand inactive oil and gas wells[1]. (These wells have a lot of different legal definitions – abandoned, temporarily abandoned, orphaned, shut-in, lost. They can also be designated as producing but, like the wells near the Benallys’ cabin, have not been active for months or years. For simplicity’s sake, this article will refer to all such wells as inactive or idle.)

Oil’s Next Hotspot: The Cowboy State — As the crude powerhouse that is Texas’ Permian Basin becomes old news, oil explorers are looking for the next big thing–and they have found it in the more-than 4000 feet of stacked pay in Wyoming’s Powder River Basin. In Powder River, Big Oil has found less-congested pipelines, cheaper land, and more importantly, a whole lot of oil. It’s not the first time that the Powder River Basin has garnered industry attention. In 2014, when oil prices were soaring, many industry players were already eyeing the basin as the next big thing, but when oil prices waned in the following years many drilling plans in Powder River were abandoned for established operations. Now, as United States crude prices ballooned by nearly 50 percent over the last year, there has been a renewed rush for land deals in oil rich areas, and the Powder River Basin is no exception. Although the deals are largely undisclosed, we know that there have been a number of deals in Wyoming, bringing industry-wide interest to the conventional and shale formations found there. In the last month the state of Wyoming has seen Oklahoma-based firm Rebellion Energy pay more than $100 million for 19,000 acres, Vermilion Energy spend $150 million for 55,000 acres, and Navigation Powder River LLC spend about $10 million for 3,000 acres. Not bad for a month’s work.Another potential catalyst for growth in Wyoming oil is currently underway just south in neighboring Colorado, where votes will decide on November 6th whether to further limit the drilling of oil by increasing the buffer zone between dwellings and oil and gas wells to 2,500 feet. If the Colorado electorate votes to increase the buffer, drilling will become impossible in much of the state, a development that with almost certainly push even more investors over the state line into Wyoming, where the laws are friendlier to oil and gas extractors. To highlight this fact, Wyoming gubernatorial candidates were tripping over each other to proclaim their love for fossil fuels, the state’s major jobs creator, in the run-up to the August 21st election, and winner Mark Gordon is strongly backed by Peter Wold of Wold Oil Properties, a prominent figure in Wyoming oil.

Trump admin rejects environmental concerns over Dakota Access pipeline | TheHill: The Trump administration cleared the Dakota Access oil pipeline on Friday, saying that further environmental review didn’t bring up any new concerns. The Army Corps of Engineers said it completed the new analysis more than a year after a court ordered the review after American Indian tribes and environmentalists sued to shut the project down. The agency, which was responsible for approving the pipeline’s crossing of various waterways, quoted on Friday Washington, D.C., federal Judge James Boasberg’s June 2017 ruling that ordered the review. Army Corps of Engineers said it completed an “analysis of available information and considered materials in the administrative record and has fully considered ‘the impacts of an oil spill on fishing rights, hunting rights, or environmental justice, or the degree to which the pipeline’s effects are likely to be highly controversial.’”“The Corps’ review on remand did not reveal ‘significant new circumstance[s] or information relevant to environmental concerns,’” the agency said, quoting from the statute for environmental reviews. Boasberg’s decision last year was a victory for opponents of Dakota Access, a project that the Obama administration had tried to hold up amid high-profile protests, including the creation of a protest camp near North Dakota’s Standing Rock Indian Reservation that was used for months. President Trump directed the Army Corps to issue the pipeline’s final permits shortly after taking office in January 2017. While Boasberg did not order the pipeline – which had started operation by that point – to shut down, his ruling nonetheless opened the door to a potential shutdown or changes to its operation. But Friday’s filing, for the time being, puts that possibility to rest.

ACLU: Government plotted to surveil, disrupt Keystone XL protesters | TheHill: Members of the American Civil Liberties Union (ACLU) and its Montana affiliate are suing the Departments of Defense, Homeland Security, Interior and Justice, seeking proof of what the groups allege is a plot to surveil and potentially hamper people trying to protest the Keystone XL pipeline. The ACLU says it uncovered documents showing “substantial evidence of federal preventative measures against Keystone XL protests, such as a Department of Justice [DOJ] ‘anti-terrorism’ training in Fort Harrison, Montana, and a DOJ ‘Social Networking and Cyber Awareness’ training in the town of Circle, Montana,” according to the ACLU’s announcement of the suit.The documents also allegedly show “discussions between federal officials about the creation of an ‘interagency team’ to ‘deal with safety and security concerns related to the Keystone XL project.’” “Evidence that the federal government plans to treat Keystone XL protests with counterterrorism tactics, coupled with the recent memory of excessive uses of force and surveillance at the Standing Rock protests, raises immense concerns about the safety of indigenous and environmental protesters who seek to exercise their First Amendment rights,” wrote Jacob Hutt, the lawyer who filed the ACLU’s first request for documents, about the suit. The original 2016 demonstrations against the Keystone XL pipeline ended in violent clashes between law enforcement and protesters. The two groups clashed in October of that year when activists confronted construction crews, according to The Wall Street Journal. A law enforcement spokeswoman said four private security guards and two guard dogs were injured in the fray. A spokesman for the Standing Rock Sioux said protesters reported that security dogs bit six people, including a young child, and that 30 people were pepper-sprayed. A law enforcement spokeswoman said the authorities had not received any reports of protesters being injured.

SLO County map shows fracking could occur at Morro Rock – A new map released by a Central Coast environmental watchdog group shows areas in San Luis Obispo County that the Bureau of Land Management could open for fracking – including Morro Rock and a portion of Montaña de Oro State Park. Los Padres ForestWatch – a Santa Barbara-based organization focused on protecting public lands – on Tuesday released an interactive map showing 273,000 acres of federal land and mineral holdings in San Luis Obispo, Santa Barbara and Ventura counties. The Bureau of Land Management (BLM), part of the U.S. Department of the Interior, is required to evaluate the environmental impacts of fracking on this land as part of a settlement reached after a 2015 lawsuit. !ForestWatch and the Center for Biological Diversity filed the suit after the BLM developed a Resource Management Plan for the Bakersfield Field Office region – which includes San Luis Obispo County – in 2014.The organizations wanted BLM to look more deeply into the impacts of hydraulic fracturing, commonly known as fracking, which involves injecting liquid into the ground to extract oil or gas.The lawsuit settlement requires the BLM to study federal holdings and prepare an environmental impact statement that will serve as a supplement to the 2014 Resource Management Plan. The agency also cannot lease any new land until the study is finished.According to a recent Sacramento Bee story, the BLM hasn’t issued new energy leases in California since 2013, when a federal judge ruled the agency violated environmental laws after it opened oil leases in Monterey County without studying fracking. San Luis Obispo County voters in November will consider a ballot measure banning new fracking in the region, but that would not apply to federally owned land.

Halliburton CEO Cites Lack of ‘Customer Urgency’ in North America; 3Q Outlook Cut – U.S. onshore well completions expert Keane Group Inc. joined Halliburton Co. this week in reducing third quarter forecasts on less demand than anticipated, with customer drilling efficiencies beginning to level off.The oilfield services (OFS) operators, both based in Houston, each acknowledged at the Barclays CEO Energy-Power Brokers Conference in New York City that activity has been lower than predicted in 3Q2018. Halliburton CEO Jeff Miller presented at the conference, while Keane’s management team provided its outlook to investors.Miller, who leads the No. 1 pressure pumping provider in North America, said the macro supply and demand outlook “is the best it has been in four years…Global demand for hydrocarbons is solid,” with the International Monetary Fund’s global gross domestic product growth outlook at 3.9% for 2019.However, he repeated what he said during a second quarter conference call about near-term issues impacting North America, which include a shortage of pipeline takeaway capacity, particularly in the Permian Basin, along with rising inflation, labor shortages and logistics issues to get equipment where it needs to be.The short-term has challenges, Miller said. “For example, regarding pipeline takeaway in the Permian Basin, some operators will reallocate capital to other basins, some will slow down, others will build DUCs,” aka drilled but uncompleted wells. In Appalachia, producers exhausted their 2018 budgets early, “followed by a reevaluation…Some customers are choosing to do more work while others decided to stop or slow down.”

Fracking As The Next Financial Meltdown (Or Not) – Two new books attack fracking from different perspectives, Amity and Prosperity by Eliza Griswold and Saudi America: The Truth about Fracking and how it’s Changing America by Bethany MacLean. The first discusses the health and environmental problems in a small town where fracking is being done, the latter argues that “Fracking is such a fragile industry that it is not hard to make it go bust.” (I have ordered but not read both books, and am basing this on two book reviews of the former and an opinion piece written by the author of the latter.) The first book appears to do little more than relate specific instances of contamination and health problems, apparently taking a human approach rather than an epidemiological one. Possibly it does more than that, but the table of contents doesn’t show a list of figures or tables with graphs. I have no doubt that the family’s travails described in the book are real, but it is not clear (at this point) if the author has proven their causes nor shown their broader relevance. Any number of books can be written about the horrors of living near a pig farm, a daycare center, or a cookie factory, but until I read this, I can’t say if this goes beyond that level of rational analysis. Stay tuned. The second book, by Bethany McLean needs to be taken seriously, given the author’s track record of exposing the Enron scandal. One would like to think that it is much more analytical, but since it hasn’t been published yet (although Amazon says it’s a bestseller! Kudos), that can’t be judged. On the other hand, the arguments made in herSunday NYT piece give me cause for concern. Without a doubt, large amounts of money was poured into the shale industry, a good portion of it without due diligence. However, I have several times listened to financial analysts argue, in the most extreme case, that not a single fracked well is profitable, while industry executives counter that their profits are very large.

United States Sells 11M Oil Barrels to ExxonMobil, Others –The United States intends to release 11 million barrels of oil from its Strategic Petroleum Reserve of 660 million barrels, following a regular draw-down schedule devised to generate funds for government programs. The sour crude is expected to reach the market in October and November, after being sold as a fund generator for a drug program. The oil will be supplied from sites in West Hackberry, LA and Bryan Mound and Big Hill, TX.With the target of reducing budget deficit, President Trump proposed the sale of half of the Strategic Petroleum Reserve. So far, the Congress has authorized the sale of about 240 million barrels of oil during 2017-2027. Several energy companies bought the oil from the U.S. Department of Energy’s (DOE) Office of Fossil Energy following the notice provided at August-end. The largest publicly traded energy company, Exxon Mobil Corporation XOM bought around 3.3 million barrels of oil from the stockpile. Motiva Enterprises LLC of Saudi Arabia bought 2.4 million barrels, while downstream energy company Phillips 66 PSX bought more than 2 million barrels. Royal Dutch Shell plc RDS.A bought crude of almost 1.6 million barrels from the stockpile and Marathon Petroleum Corporation MPC purchased nearly 1.4 millions. Currently Marathon Petroleum has a Zacks Rank #2 (Buy). Also, Valero Energy Corporation VLO agreed to purchase 330 thousand barrels of crude. The selling price of the crude was in the range of $67.66-$69.05 per barrel. Although the recent sale of crude from the stockpile is not enough to reduce the negative effect on oil supply in the international oil market, it can definitely ease the tightness of the same to some extent. Per analysts at ClearView Energy Partners, the timing of the crude sale indicates the concern of President Donald Trump related to the oil market. More such decisions from the Trump administration will help to maintain the smooth supply of oil. The President can release up to 30 million barrels of oil during emergency periods.

Oil spill reported on the Onion Lake Cree Nation – An oil spill has been reported in a community some 40 kilometers north of Lloydminister. On Aug. 26, an oil release at a well on the Onion Lake Cree Nation was reported by BlackPearl Resources. A brief statement from Jim Billington, the director of communications for the SaskParty noted officials from the Ministry of Energy and Resources were on hand monitoring the situation. The statement indicated no bodies of water were affected by the release and no injuries were reported in the incident. BlackPearl Resources responded to paNOW’s request for comment Sept. 4. In a statement it said 12 cubic meters of spill oil and fresh water spilled at a wellsite located within its Onion Lake Heavy Oil Project and spill response procedures were followed successfully. The amount is the equivalent of over 3,000 gallons. The statement added no waterbodies, streams, or marshy areas were impacted and clean up of oil stained soil and vegetation is complete and was disposed of at a third party waste handling facility. The company laid the blame for the spill as “improper procedures” and noted “our operational procedures have been updated to prevent this from re-occurring.”

Mr. Trump, NAFTA 2.0 Must Promote Natural Gas Trade With Canada – Forbes – Any new U.S. trade deal with Canada must build upon the great energy partnership that we already have. Most Americans probably don’t realize that although U.S. natural gas production has surged almost 40% since our shale revolution took flight in 2008, we still import a lot of gas from Canada. Today, we get about 8.1 Bcf/d of piped gas from our northern neighbor. The main importing points of entry are in the West and Midwest: Idaho (26%), Montana (18%), North Dakota (17%), Minnesota (16%), and Washington (14%) taking in over 90% of all volumes last year. These areas sit remote from our shale sites, namely Texas and Appalachia that produce over 60% of U.S. gas. Taking in low cost gas from Canada makes economic sense and is obviously no threat to U.S. energy security.In fact, Canada is our largest energy partner, with energy constituting 20% of all trade that we get from Canada. We are a net energy importer from Canada. In recent years, the value of U.S. energy imports from Canada have been in the $50 to $60 billion range, well above the $15 billion value of U.S. energy exports to Canada. Canada supplies over 10% of our gas and 20% of the crude oil that we use.But, let me focus on natural gas in particular, the most vital source of new energy supply here and around the world. Our total gas imports from Canada are valued at about $6 billion. Producing 17 Bcf/d (which is more than Pennsylvania does), Canada is fourth globally in total gas production, above China and even LNG leader Qatar, behind only the U.S., Russia, and Iran. As for U.S. gas to Canada, our exports average over 2 Bcf/d, mainly going from Michigan and New York into the eastern provinces. Taking Appalachian gas from the Marcellus and Utica shale plays, the Rover(3.25 Bcf/d capacity) and Nexus (1.5 Bcf/d capacity) pipelines will be shipping more gas up through eastern Michigan into Canada’s Dawn Hub in Ontario. It’s looking forward where the importance of Canada’s energy becomes crystal clear. Canada has nearly unlimited oil and gas deposits, and importing nations around the world are seeking out the country to supply. That’s mostly because Canada has a slow growing population and a mature energy demand market so incremental domestic needs are quite low. The expanding capacity to export is perhaps Canada’s greatest energy advantage.

Kinder Morgan Completes Sale of Trans Mountain Project – Kinder Morgan Canada Limited, a subsidiary of Kinder Morgan, Inc KMI, announced that the Trans Mountain Pipeline system and the Trans Mountain Expansion Project have been indirectly purchased by the Government of Canada. The transaction was completed through Trans Mountain Corporation, a subsidiary of the Canada Development Investment Corporation. The total purchase consideration was $4.5 billion in cash. A final decision related to the utilization of the after-tax net proceeds of the transaction is expected to be announced after market close on Sep 4, 2018, once the board of Kinder Morgan Canada concludes ongoing negotiations. With respect to the closing, Kinder Morgan Canada also swapped existing $500-million secured revolving credit facility with a period of four years with a new $500-million unsecured revolving credit facility for working capital purposes. The Trans Mountain Pipeline system, which is intended to nearly triple the transportation capacity to carry crude from Alberta’s oil sands to a facility in the Pacific province of British Columbia, is struggling with approval issues and oppositions from various groups. The Government of Canada approved the Trans Mountain expansion project on Nov 29, 2016. The pipeline expansion has been facing antagonism from various provincial governments of British Columbia as well as municipalities, native groups and environmental activists. These emphasize the uncertainty over the key energy projects in Canada. The shortage of pipelines and rail transportations has disrupted the production schedule of the companies in Western Canada. The companies had to slow activities due to obstruction in crude transportation. In view of this, Alberta’s provincial government supports the project that has also received approval from Canada’s federal government.

Trans Mountain Pipeline a Serious Misstep for Trudeau – Jerri-Lynn here: As Bloomberg reported last week, in Nafta Crunch Caps a Pretty Dreadful Week for Justin Trudeau: This has not been a good week for Justin Trudeau. It began with a surprise U.S.-Mexico trade pact that excluded Canada from a Nafta rewrite, sending the prime minister’s negotiating team scrambling to strike a deal ahead of the Trump administration’s deadline. Then a key pipeline he spent billions to nationalize got sideswiped by a court decision, and the most important ally in his climate change plan abandoned him. And now the White House has informed Congress of its intent to sign an new agreement with or without the northern nation. As this post spells out, Trudeau has received his well-deserved comeuppance for attempting to “play politics in a very ham-fisted way” on the Trans Mountain pipeline issue. What now follows? To highlight what Grandia says below:Regardless of the election outcome, Trudeau missed an opportunity to be the leader many of us desperately wanted him to be.Sound familiar? (For further background on this issue, see this previous Kevin Grandia cross-post, Canada Oil Pipeline: Trudeau Just Knocked Over the First Domino.) In a serious blow to Kinder Morgan’s Trans Mountain pipeline project, Canada’s federal court of appeal ruled today that the pipeline cannot proceed with construction due to a lack of consultation with First Nations.In their ruling, the court stated that the Canadian National Energy Board’s [NEB], “process and findings were so flawed that the Governor in Council could not reasonably rely on the Board’s report; second, Canada failed to fulfil the duty to consult owed to Indigenous peoples.”What appears at the heart of the decision is that while Kinder Morgan undertook consultation with concerned communities, the consultations did not lead to any real meaningful changes in the plan. In other words, First Nations leaders felt they were paid lip service over their concerns raised about important issues like how risks to our freshwater aquifers would be mitigated in the case of a spill.At a press conference held after the decision, Coldwater Band Chief Lee Spahan said that, “they [the NEB] can say they consulted but they never ever ever got our consent. Our fight is about our aquifer, the very importance of water.”Just 30 minutes after the court ruling was announced, Kinder Morgan Canada shareholders voted 99.98% in favor of approving the sale of the Trans Mountain pipeline to the Canadian government. This is a move that will no doubt be heavily scrutinized in the days that follow. But even more scrutiny will be heaped on Prime Minister Justin Trudeau, who turned what was a longstanding controversy in Canada into a complete and utter quagmire.

Trans Mountain Expansion Kerfuffle Frustrating Trudeau, Alberta Premier – Canadian Prime Minister Justin Trudeau failed Wednesday to revive a pipeline construction alliance with Alberta that the province’s government shelved after a court verdict last week sided with native protesters to halt the Trans Mountain Expansion Project (TMEP).During Edmonton meetings, Alberta Premier Rachel Notley voiced frustration and held back from restoring support to Trudeau. In their discarded bargain she endorsed his environmental agenda in exchange for federal approval of the overseas export project.“We absolutely cannot be held hostage to a regulatory merry-go-round that never ends,” she said. After a meeting behind closed doors with Trudeau, she let her annoyance show by giving only a two-word comment when asked how it went: “It was.” The Canadian government’s decision to buy the pipeline was completed last week even after a unanimous ruling by a federal appeals court, which concluded that the government’s review was flawed and said Indigenous groups had not been adequately consulted. The C$4.5 billion ($3.6 billion) deal closed last Friday (Aug. 31) and on Tuesday, Kinder Morgan Inc. (KMI) announced that its share of the proceeds, valued at about US$2 billion, would be used to pay down debt. The remaining assets for Kinder Morgan Canada Ltd. (KML), which are underpinned by multi-year take-or-pay contracts, include the Edmonton terminals, the Cochin Pipeline and the Vancouver Wharves terminal. Edmonton is expanding the Base Line Terminal, which is ahead of schedule and under budget, according to Kean. The expansion is expected online in 2019.

Mexican energy sector likely to ride out AMLO’s shale ban – Axios – Mexican President-elect Andrés Manuel López Obrador (AMLO) proposed a ban on fracking last month, which would prevent the country from tapping its potentially vast shale resources. Despite Mexico’s rising natural gas demand and increasing dependence on natural gas imports, the country’s shale reserves so far have not figured into its energy reform. While a shale ban might have long-term effects on Mexico’s economy, it’s unlikely to do so during AMLO’s term, which is limited to six years. Because of structural barriers to shale extraction that would nevertheless persist in that timespan, even a complete ban on fracking wouldn’t significantly impact the Mexican energy sector. Mexico’s declining oil and natural gas production has motivated comprehensive energy reform that opened the oil and gas sectors to private investment. Though not without challenges, the reform promises to lift hydrocarbon production, mostly in the form of offshore crude oil. Despite past criticism of the reform, AMLO has hasnow seemingly come to accept its necessity. In Mexico several factors hinder a rapid success akin to that of the U.S. shale revolution:

1. Mineral rights are owned by the state, reducing the likelihood that potential landowners will accept disruption to their property.
2. The lack of well-developed private oil, gas and service sectors precludes shale production’s high-intensity drilling.
3. The lack of pipeline and road infrastructure, as well as worker housing and facilities, makes it difficult to tap shale resources located in sparsely populated and underdeveloped areas.
4. Equipment, supplies, transport security and personnel concerns related to drug cartel activity and violence are likely to impede the development and make it more costly – as will the aridity of the areas where shale is located.

Given the prospects for crude production offshore, a shale ban would not hurt Mexico’s crude market. But a long-term ban on shale development – however slowly it might otherwise occur – would eventually impact Mexico’s natural gas market, making the country increasingly dependent on imports. Most of those supplies would likely come from U.S. shale companies propped up by a large market at its Southern border.

Venezuela Oil Price Jumps for Second Week: — The price Venezuela receives for its mix of medium and heavy oil rose for a second consecutive week during the week ending August 31. According to figures released by the Venezuela Ministry of Petroleum and Mining, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending August 31 rose to $68.80, up $2.85 from the previous week’s $65.95. WTI in New York averaged $69.18 — up $2.10 — for the week, while Brent crude traded in London averaged $76.58 — up $3.34 from the previous week. According to Venezuelan government figures, the average price in 2018 for Venezuela’s mix of heavy and medium crude for 2018 which Caracas now prices in Chinese Yuan is now $60.45. Venezuela’s average oil price for 2017 was $46.66, up from 2016’s $35.15. It is higher than 2015’s $44.65 but lower than 2014’s $88.42, 2013’s $98.08, 2012’s $103.42 and 2011’s $101.06, 2010’s $72.43. The 2009 average was $57.01. In 2017, WTI averaged $50.88 — up from 2016’s $43.32 — while Brent averaged $54.73 — up from 2016’s $44.98. Historically, Venezuela’s basket set its highest weekly average ever on July 18, 2008, when it hit $126.46 before economies around the world began crashing under the weight of expensive oil. The recent low was set January 22, 2016, when Venezuela’s basket averaged just $21.63. The United States is the largest importer of Venezuela’s oil exports.

The Collapse Of Venezuela’s Imaginary Oil Currency — Earlier this year, Venezuelan President Nicolas Maduro rolled out his latest scheme to rescue his economy, offer an alternative to the increasingly worthless bolivar, and skirt U.S. sanctions on financial transactions. But Maduro’s cryptocurrency, supposedly backed by Venezuela’s oil reserves, is a very hollow promise.To be sure, few analysts expected much from the “petro,” Maduro’s hastily launched cryptocurrency. One petro was supposed to be backed by one barrel of oil, and the vast reserves of oil located in a specific part of Venezuela were promised as a backstop for the new cryptocurrency. It was always an odd scheme. After all, what makes the petro any different from the bolivar, Venezuela’s official currency? Isn’t the value of and faith in the bolivar also effectively backed by the country’s oil wealth?Well, the bolivar is worthless, and Maduro wanted to start anew. Maduro thought the petro would help the government avoid the reach of U.S. sanctions, at least in theory. But the new cryptocurrency has unsurprisingly failed to catch on.The petro is supposed to be backed by 5 billion barrels of oil located in Atapirire, a small town in Venezuela’s remote savanna in the middle of the country. Reserves in this region are the lynchpin of the petro, and as such, they are intended to underwrite the regime’s plan for economic recovery.But as Reuters details in a special report, the region is not only lacking in oil production, but there is no visible effort at developing oil in this area at all. The only evidence of an oil presence were old rigs that have clearly been inoperable for a long time, as they are rusted out and covered in weeds. “There is no sign of that petro here,” a local resident told Reuters. Worse, the town suffers from blackouts, hunger, poverty and decrepit infrastructure, an increasingly common plight for the country on the whole. More broadly, there is “little evidence of a thriving petro trade,” Reuters correspondent Brian Ellsworth concluded, after interviewing dozens of cryptocurrency experts over a period of months. Maduro says that the sale of the petro have translated into $3.3 billion in funds for the government, a claim that is suspect, to say the least.

Colombian Oil Company Tries to Contain an Oil Spill After Blasting Oil Pipeline – State-owned Empresa Colombiana de Petróleos (Ecopetrol) was trying to contain the oil spill caused by the blast on Tuesday of a section of the Caño Limón Coveñas pipeline in the rural area of Teorama (northeast).“We have activated the contingency plan after the attack in the rural area of Teorama (Norte de Santander) after the attack by groups outside the law,” Ecopetrol said in a statement.A crew of 45 workers was working on the site to contain the spill that has contaminated the La Llana creek and the Catatumbo river.On the night of September 4, the municipal administration ordered the evacuation of the neighbouring residents, but in the morning they were allowed to return to their homes, although Ecopetrol maintains the prohibition of lighting kitchens, bonfires, cigarettes or similar near the place of the oil spill. “In Ecopetrol, we reiterate the rejection of any illicit activity that puts the lives of the communities at risk and negatively impacts the environment; thus, we work for the environmental restoration in the La Llana creek and in the Catatumbo river, “the oil company said in its Twitter account. The company did not identify the name of the illegal group that committed the sabotage, but the police blamed the guerrilla of the National Liberation Army (ELN), which has a presence in the area. “This fact is attributed to the members of the ELN, who commit crimes in this sector of the Catatumbo,” said Colonel George Quintero, commander of the police in Norte de Santander, according to statements published by the newspaper El Tiempo. The official said that about 30 families have been affected by the pollution of the tributaries.

UK Councils Invest Billions in Fracking, Including Companies Tied to Donald Trump – DeSmog (blog) — Council pension funds across the UK have invested billions in companies involved with fracking, new data claims. Authorities in areas where the controversial practice is set to take place also have millions invested such companies.Some of the funds also have investments in companies with close ties to members of President Trump’s administration, which is currently embarking on a major climate and environmental regulation roll-back. New data from campaign groups Platform, 350.org, and Friends of the Earth claims council pension funds across the UK collectively have over £9 billion in companies involved with fracking. Dumfries and Galloway council’s pension fund has the largest portion of its investments in companies involved with fracking, with almost seven percent invested, according to the data. Greater Manchester council’s fund has £989 million invested in fracking activities – the largest overall investment, and second largest by proportion of its fund. Lancashire County Council, home to the UK’s only functioning fracking site atPreston New Road, has £186 million invested in fracking activities through its pension fund, according to the data. After tremors were felt during testing at the site in 2012, an 18-month moratorium was placed on fracking across the UK. Cuadrilla Resources has been subject to daily protests since it restarted operations in 2017. Third Energy has a controversial fracking site at Kirby Misperton in North Yorkshire, while the council’s fund has £81 million invested in other companies fracking across the world. West Sussex’s fund has £119 million invested in companies with fracking activities. The county is home to the controversial Balcombe site, which Cuadrilla Resources tried and failed to frack in 2013. The company was given the go-ahead to restart testing at the site in January 2018, despite opposition from the local community.

Nord Stream 2 Pipeline On Track Despite Sanction Risk, Operator Says (Reuters) – The Nord Stream 2 pipeline to transport Russian gas to Germany is progressing on schedule, its operator said on Friday, with European investors still committed to the project despite criticism from the United States and the threat of sanctions. In July, Washington repeated a warning to Western firms invested in the pipeline that they were at risk of sanctions, saying Moscow was using the project to divide Europe. Berlin and Moscow have been at odds since Russia annexed Crimea four years ago, but they have a common interest in the Nord Stream 2 project. The pipeline will allow Russia to bypass Ukraine, where its gas giant Gazprom has faced past disruptions. Disputes between Gazprom and Ukraine, a key Russian gas export route, over gas prices and transit fees have resulted in a number of supply stoppages to Europe in the past decade. “The project is progressing according to schedule,” Nord Stream 2 AG, the Swiss-based project’s operating company, told Reuters in an emailed statement. Gas is due to start flowing at the end of 2019 to bypass routes through Ukraine. Nord Stream 2 AG, which will double the existing Nord Stream 1 capacity from a current 55 billion cubic metres of gas a year, is owned by Gazprom, which is taking on half of the planned costs of 9.5 billion euros ($11 billion). The rest is divided between five European energy companies – Germany’s Uniper and Wintershall, Anglo- Dutch group Royal Dutch Shell, France’s Engie and Austria’s OMV. By the end of June, 4.8 billion euros had already been invested in the 1,200-kilometre (746 miles) pipeline project, and pipelaying in the Baltic Sea started in July. “Uniper will remain one of the financing partners of this project and we are – as before – fully committed to the project,” Uniper’s Chief Financial Officer Christopher Delbrueck said in a statement this week. “We will continue to adhere to our contractual obligations to Nord Stream 2.”

German refinery explosion: Eight injured and 1,800 evacuated— An explosion and fire at an oil refinery in southern Germany has injured eight people, officials say. The incident at the refinery near Ingolstadt, which is about 80km (50 miles) north of Munich, happened at 05:30 local time (03:30 GMT). Hundreds of firefighters are at the scene, and a police statement said there was “a risk of more explosions”. Authorities ordered 1,800 residents to evacuate their homes, but local media report they are now able to return. Images and video shared on social media show a major fire and huge plumes of smoke billowing into the air. Image copyright Reuters / Twitter @I_LECTRON Image caption The explosion is said to have been felt within a radius of several kilometres Image copyright AFP Image caption Hundreds of firefighters have been deployed to the site The cause of the explosion, which was reportedly felt within a radius of several kilometres, is not yet known. In a statement, police said three of the victims had suffered “medium or serious injuries”. They added that work to extinguish the flames was continuing. Residents within a 20km radius of the site have been advised to keep their doors and windows closed because of the smoke. The refinery is owned by the Bayernoil group, which employs nearly 800 people across two sites in the region.

Transocean Banks on Ultra-Deepwater Recovery with Ocean Rig Deal – Transocean Ltd. and Ocean Rig UDW Inc. have struck a definitive agreement under which the former will acquire the latter in a cash and stock transaction valued at approximately $2.7 billion, inclusive of Ocean Rig’s net debt, Transocean announced Tuesday.“The proposed acquisition of Ocean Rig provides us with a unique opportunity to continue enhancing our fleet of ultra-deepwater and harsh environment floaters, without compromising our liquidity or overall balance sheet flexibility,” Jeremy Thigpen, Transocean’s president and CEO, said in a written statement announcing the proposed merger. “The combination of constructive and stable oil prices over the last several quarters, streamlined offshore project costs and undeniable reserve replacement challenges has driven a material increase in offshore contracting activity.” Along those lines, adding Ocean Rig’s assets will augment Transocean’s fleet of ultra-deepwater drillships “and better position us to capitalize on what, we believe, is an imminent recovery in the ultra-deepwater market,” Thigpen noted.According to Transocean, Ocean Rig’s fleet includes:

• Nine high-specification ultra-deepwater drillships
• Two harsh environment semisubmersibles
• Two high-specification ultra-deepwater drillships under construction

Transocean’s website states that its existing fleet includes:

• 24 ultra-deepwater rigs
• 12 harsh-environment semisubmersibles
• Two deepwater semisubmersibles
• Five midwater semisubmersible floaters

North Sea assets up for sale top $8.8bn – Billions of dollars worth of assets are up for sale in the North Sea as some of the world’s largest oil and gas companies scale back their presence in the region and smaller ones come to the fore. Majors including BP and Royal Dutch Shell are still keeping their positions in key areas such as the west of Shetlands but for most of them, the central North Sea is less core. There has been considerable deal activity in the region over the past two years as an influx of private equity money sparked a new momentum. Companies such as Chrysaor, Siccar Point and Neptune Energy have emerged. Wood Mackenzie said equity commitments of $10bn have helped fuel $12bn of M&A in the North Sea since 2014. “A new independent sector is emerging,” said Philip Lambert of Lambert Energy Advisory. “The existing companies are getting bigger and there is blue-chip private equity money coming in from around the world.”

Offshore oil production shows signs of turnaround — Offshore oil production is showing signs of a turnaround as crude prices rise and operations become more efficient, giving energy compaies in Houston and elsewhere the confidence to resume deepwater projects stalled during the oil bust. The sector’s recovery, which has lagged the broader industry rebound, is concentrated in regions including Scandinavia, West Africa, Southeast Asia and Latin America, where new discoveries and lower costs of of production have piqued the interest of companies looking to make money outside of shale, according to a recent analysis by research firm IHS Markit. “This the last stage of the recovery,” said Patrick Jankowski, senior economist with the Greater Houston Partnership. “When you start to see activity in this sector, you know the bust is over.”

Outages At Norwegian Gas Fields To Cut Supply Up To Four Weeks – Unplanned works on fields and systems pumping Norwegian gas to other European countries will reduce Norway’s outbound gas flows for up to four weeks, which, according to traders, will further boost natural gas prices in Europe. According to Norwegian gas operator Gassco, two unplanned events are currently reducing day-ahead and within-day supplies and may continue to do so for up to four weeks.On Sunday, an outage affecting the fields delivering gas into the SEGAL pipeline system occurred, and according to Gassco data as of Monday morning local time, unplanned corrective maintenance on fields delivering into the SEGAL system will reduce gas availability by 5.8 million cubic meters for a period of between one and two weeks.This outage adds to an outage at the Åsgard field, where a compressor failure requires unplanned works and flows would be reduced by 8.6 million cu m for between three and four weeks.Prices at the Dutch TTF gas hub have been moving up on the news of the outage, a European gas trader told S&P Global Platts on Monday.In the UK, wholesale gas prices rose slightly on Friday, with the Norwegian outage at Åsgard contributing to the rise along with rising exports and withdrawals from storage. Prices further rose on Monday morning UK time, as planned maintenance at some UK sites and unplanned outages at others combined to push prices up.This summer, natural gas prices in the UK surged to the highest for a summer season, with Europe’s natural gas market the most bullish in years as higher-than-expected summer demand and a tighter market drive natural gas price futures to levels last seen during this past winter’s supply crunch. The past winter season in Europe was one of the coldest this decade, sending gas demand soaring and the level of natural gas stored in tanks across Europe dropping to below average levels.

Denmark Becomes Net Oil Importer For First Time In 25 Years – For the first time since 1993, Denmark is on track to become a net oil importer this year, as oil production in the Danish part of the North Sea will be lower than the country’s consumption, the Danish Energy Agency said on Thursday, revising down its oil production forecasts. The new forecast by the agency is a change from last year’s assessment and forecasts, which had expected that Denmark would continue to be a net oil exporter for a number of years, the agency said.Now, the country is expected to be a net oil exporter for every year until 2024, when oil production is forecast to exceed consumption due to expected start-up of new developments. The Danish Energy Agency revised down its oil production forecast by 8 percent compared to last year’s forecast, mostly due to a downward revision of the resources, delays, and a “greater uncertainty regarding the development of several fields and discoveries.”For this year, the agency expects Denmark’s oil production to average just 128,000 bpd, a figure 10 percent lower than last year’s 2018, mainly due to what is expected to be lower production from some of the larger oil fields.Between 2018 and 2022, the oil production estimate was revised down by an average 14 percent, attributable again to lower production expected at some larger oil fields.The outlook for Denmark’s natural gas exporter status is rosier. Denmark is expected to remain a net natural gas exporter until 2035, except for the years 2020 and 2021 when the Tyra field redevelopment – approved last year – will be underway, the Danish agency noted.“The approval of the rebuilding of the facilities on the Tyra field implies that the uncertainty in this regard is less than before. However, great uncertainty remains with regard to the development of a number of projects hence contributing to the forecast being somewhat uncertain,” the agency said.

Russian Oil Giants Offer Bright Spot in Cloudy Economy (Bloomberg) — Russia’s oil companies are on a tear. The nation’s top crude producers more than doubled their combined profit in the first half, trouncing estimates thanks to a weaker ruble and rebounding prices. And with output curbs easing, the influx of cash is set to continue. “Russian oilmen feel financially better than any other crude producer in the world,” said Andrey Polischuk, an energy analyst at Raiffeisen Centrobank in Moscow. “Operating costs are low, production is either already at a record or close to a record, and oil in rubles is setting new historical records.” Russia’s currency crisis, which has seen the ruble halve against the dollar since the first U.S. and European sanctions hit in 2014, has made it cheaper for local companies to pump oil, while boosting the price of crude in ruble terms. That paved the way for bumper half-year profits, while European and U.S. rivals delivered a mixed bag. The combined revenue of Russia’s top five oil producers jumped 32 percent to more than 9.9 trillion rubles ($145 billion), while total net income doubled to almost 1.25 trillion rubles. Yet the risk of more sanctions weighs heavily on the companies, clouding an otherwise sunny outlook. Shares of Rosneft PJSC, Russia’s biggest oil producer, are trading at seven times estimated 12-month earnings compared with about 11 times for Royal Dutch Shell Plc, more than 12 times for BP Plc and 15 times for Exxon Mobil Corp.

Russia’s Huge Natural Gas Pipeline To China Nearly Complete – Gazprom’s Power of Siberia natural gas pipeline from Russia to China is 93 percent complete, the Russian gas giant said in an update on its major projects.A total of 2,010 kilometers (1,249 miles) of pipes are laid for the Power of Siberia gas pipeline between Yakutia and the Russian-Chinese border, or on 93 percent of the route’s length, Gazprom said in a statement.The natural gas pipeline is expected to start sending gas to China at the end of 2019 and its completion is among Gazprom’s top priorities.The two-string submerged crossing of the Power of Siberia pipeline under the Amur River is 78 percent complete, and the Atamanskaya compressor station adjacent to the border is also under construction, the Russian company says.Gazprom has a 30-year contract with CNPC for the supply of an annual 1.3 trillion cu ft of natural gas via the infrastructure.This year, Gazprom plans to invest nearly US$3.2 billion (218 billion Russian rubles) in the pipeline project, up from the US$2.3 billion (158.8 billion rubles) investment last year, according to Russia’s TASS news agency.Gazprom and CNPC have also discussed another pipeline from Russia to China via the western route – the so-called Power of Siberia 2 pipeline – that would source gas from Western Siberian gas fields, but little progress has been made regarding the specifics of this project.Gazprom is dominating gas supplies to many European markets while it vies to meet the surging Chinese natural gas demand as the country is in the middle of a massive switch from coal-fired to gas-fired heating in millions of homes. Although Chinese companies are looking to boost domestic natural gas production, local production won’t come even close to meeting surging demand, and China is expected to increasingly rely on gas imports.