China's crude oil stocks rose by 525,000 b/d in July, half the build seen in the same month of last year due to lower crude supply and higher throughput, although the country is still on its way to raise its stockpiles, calculations by S&P Global Platts based on latest official data showed.

The stock increase was 8.5% faster than the 484,000 b/d registered in the previous month, and within the range of a relatively stable build level as June, which fell significantly from a sharp build-up of over 1 million b/d each in the months of May, April and March.

China does not release official data on stocks. Platts calculates China's net crude stock draw or build for the month by subtracting refinery throughput from the country's crude supply.

The latter takes into account domestic crude production and net crude oil imports.

Crude supply in July stood at 11.24 million b/d, which was the lowest level since December and also 2.1% lower than that in last July, due to a slowdown in crude oil imports as well as lower domestic crude oil output.

Crude oil imports fell to a six-month low of 7.35 million b/d as independent refiners' buying cooled from the wave started in December last year.

Meanwhile, domestic crude oil output hit the lowest level of 3.95 million b/d since October 2011, when was recorded at 3.91 million b/d. Chinese producers have decided to cut domestic production in 2016 to reduce cost amid low crude prices.

At the same time, crude oil throughput saw a 2.5% year-on-year increase, but fell 2.7% from June.

Looking forward, China is expected to continue building crude stocks, given that throughput would stay at the July level or lower because of weak oil products demand in August.

Moreover, the country is continuing to fill its strategic petroleum reserves, including new sites in northeastern China's Jinzhou (18.9 million barrels) and southern China's Yangpu (9.69 million barrels).

Analysts also expect the new Huizhou storage in southern China and Zhoushan Phase II in eastern China, each 31.45 million barrels in capacity, to start taking in crude oil next year.

Over January-July, the country's crude stocks grew by an average 778,000 b/d, equivalent to 165.80 million barrels over the period.

This was 80% higher than the 432,000 b/d, or 91.67 million-barrel build seen in the same period last year. China had built 186 million barrels of crude stocks over 2015, averaging 510,000 b/d.

http://www.platts.com/latest-news/oil/singapore/china-data-crude-stocks-rise-by-525000-bd-in-27648644

China is expected to produce over 20 billion cubic feet of shale gas per day (bcf/d) by 2040, becoming the world's second largest producer after the United States, said the U.S. Energy Information Administration (EIA) on August 15.

The production will account for more than 40% of the country's total natural gas production by 2040, the EIA predicted.

In the past five years, China drilled more than 600 shale gas wells and produced 0.5 bcf/d of shale gas as of 2015, said the EIA in its International Energy Outlook 2016 and Annual Energy Outlook 2016.

The U.S. shale gas production will stay in the first place as it is projected to more than double from 37 bcf/d in 2015 to 79 bcf/d by 2040, accounting for 70% of total U.S. natural gas production, said the EIA.

Canada is now the world's second largest shale gas producer, producing 4.1 bcf/d in 2015. Its shale gas production is projected to continue increasing and will reach less than 10 bcf/d, accounting for almost 30% of its total natural gas production by 2040.

Shale gas will also become the major drive of the world's natural gas growth in the next 24 years, said the EIA.

The world's shale gas production by 2040 is expected to quadruple the level in 2015 and reach 168 bcf/d, accounting for 30% of world natural gas production. The world's natural gas production is expected to increase by about 62% during the same period of time.

http://old.en.sxcoal.com/0/151450/DataShow.html

The long decline in Venezuela’s oil production is becoming a supply risk for international markets, according to a report by Columbia University’s Center on Global Energy Policy.

Exports from the holder of the world’s largest crude reserves fell more than 300,000 barrels a day in June, compared with the 2015 average, according to the report written by Luisa Palacios, a senior managing director at Medley Global Advisors LLC. While Venezuela’s output has been declining all year, the impact is only now being felt on international markets because previous losses were offset by slumping domestic oil demand amid anunprecedented economic recession.

“Venezuela will represent a growing supply risk for oil markets in 2017,” the report said. “While on average crude oil exports in the first half do not yet show an important decline from the same period a year ago, the latest data point to a deteriorating trend.”

Venezuela has been hit hard by the two-year slump in crude prices. Its economy is expected to shrink 10 percent this year, the largest contraction in more than a decade, while consumer prices rise more than 700 percent, according to the International Monetary Fund. The nation’s output dropped to a 13-year low in July as international oil services companies scaled back their activities after state-run Petroleos de Venezuela SA fell more than $1 billion behind in debt repayments.

Falling Consumption

Venezuela’s crude production in July dropped to 2.15 million barrels a day, compared with an average 2.4 million last year, the International Energy Agency said on Aug. 11.

As the nation’s economy contracted, domestic demand for oil dropped by more than 100,000 barrels a day last year compared with 2014, the Columbia University report said, citing data from the Ministry of Oil and Mining. While it’s possible that Venezuela’s domestic consumption will keep falling, there are signs the lower production is now affecting exports, it said.

Venezuela’s strategy of focusing on the expansion of oil production in a region called the Orinoco belt is also bringing in fewer dollars. The heavy crude is less desirable to refiners and typically sells for less than lighter grades of oil that are easier to process into fuels such as gasoline.

The Venezuelan crude basket, based on an average of all crudes handled by the state oil company, widened its discount to West Texas Intermediate, the U.S. benchmark, to about $9 a barrel on Aug. 12, compared with about $1 a year earlier.

Blending the heavy oil with higher-priced light crudes purchased from other exporters can make it more marketable, but is a costly option for a country that’s on the brink of debt default, the report said. Should credit concerns prevent Venezuela from importing the light oil it needs, net exports could fall by another 300,000 barrels a day, the Columbia report said.

“The continuation of this strategy will significantly eat into the government’s oil rent, and thus its ability to export its way out of this crisis,” the report said.

Venezuela’s is renewing efforts to get the Organization of Petroleum Exporting Countries and nations outside the group to cooperate. Oil minister Eulogio del Pino met his Iranian counterpart in Tehran Sunday, although the Persian Gulf nation hasn’t decided if it will attend a meeting of producers to discuss stabilizing prices on the sidelines of an energy forum in Algiers next month.

“Venezuela was already having economic problems when the oil price was at $100 per barrel,” so a price recovery is unlikely to solve its predicament, according to Columbia’s report.

http://www.bloomberg.com/news/articles/2016-08-16/venezuela-oil-exports-seen-falling-as-economic-woes-worsen

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Attached Files

Nigeria’s losses in daily oil production due to militant attacks have hit 900,000 barrels, said Petroleum Minister Ibe Kachikwu, speaking to CNN. He added that the federal government is in talks with the militant groups responsible for this cut in production in the Niger Delta, saying that over the next couple of months, the negotiating parties will hopefully reach an agreement that will put an end to the attacks.

“We are producing some 1.5 million barrels per day and would need on average 900,000 barrels per day to catch up on what we have lost. If we can achieve peace, this will be feasible,” Kachikwu said.

This, however, would go counter to what other OPEC members are planning, or rather hoping, to do at the next informal meeting of the cartel in Algeria next month. The minister expressed doubt as to the success of such a plan, citing the meeting in Doha earlier this year, initiated by Russia, which was ready to put a cap on oil production in a bid to prop up prices, and the participants’ failure to agree on such a cap.

Attacks on production and transportation infrastructure in the Niger Delta have taken their toll on Nigeria, which used to be Africa’s biggest exporter of crude. The groups responsible for the attacks insist that local communities are being deprived of their fair share of oil revenues, left to live in poverty and pollution.

Last week, a former federal minister, Femi Fani-Kayode tweetedthat Nigeria’s President Muhammadu Buhari was basically fed up with the attacks and was ready to split the country if oil was struck in the North.

“My prayer for Nigeria is that oil is found in commercial quantities in the core north. I am glad that @MBuhari is looking for it desperately. If he finds it he and the north will be the first to call for a break up of the country. If he fails to find it they will continue to be the greatest obstacle to the restructuring of our nation and they will continue to provide the greatest opposition to the peaceful division of our country. Why? Because without southern oil the north is nothing,” the former aviation minister wrote.

http://oilprice.com/Latest-Energy-News/World-News/Nigeria-Oil-Losses-Reach-900000-Bpd-Due-to-Militant-Attacks.html

Oil exploration company Cairn Energy Plc raised its best estimate of reserves at its oilfields off the coast of Senegal by almost a third on Tuesday, following successful appraisal of the SNE-4 test well earlier this year.

The company said its 2C resource estimate, or its best estimate of contingent resources, for its Senegal wells had increased to 473 million barrels from its earlier forecast of 385 million barrels in May.

Cairn Energy also said that independently verified estimates of reserves in its Senegal fields were more than 2.7 billion barrels, with further exploration potential of about 500 million barrels in the region.

http://www.reuters.com/article/cairn-energy-outlook-idUSL3N1AX2D5

Wood Group PLC shares were steady in early trade after good and bad news statements cancelled each other out.

The ‘good’ first and the landing of a US$700mln a field services contract with Tengizchevroil in Kazakhstan.

This was tempered by the interim results, which revealed the company is still hostage to the depressed oil price.

As a major supplier to the industry its unsurprising its revenues (down 17% at US$2.6bn) and its earnings (off 26% at US$166mln) have taken a battering.

Against this backdrop, and with debts of US$351mln, some will be a little surprise Wood Group managed to hike the dividend 10% to 10.8 cents per share.

The payment is perhaps echoes a sense of cautious optimism detected in the comments of chief executive Robin Watson.

“Looking further ahead, we see early indications of modest recovery in some areas and believe our customer relationships, geographic footprint, strong financial footing and relentless focus on delivering value through our asset life cycle services and specialist technical solutions, position us well,” he told investors.

http://www.proactiveinvestors.co.uk/companies/news/129365/wood-group-still-hostage-to-depressed-oil-price-129365.html

The impending startup of Qatar Petroleum's new condensate-fed refinery has led to a sharp reduction of deodorized field condensate supply in the spot market, providing a much-needed boost to Asian ultra-light crude suppliers looking to clear October cargoes, market participants said Tuesday.

Lofty premiums paid for Qatar's Low Sulfur Condensate for loading in October caught some Asian end-users by surprise and the price outlook for both Asia and Middle East ultra-light crudes took a positive turn due to the shortage of DFC cargoes.

Latest market talk in Asia indicated that Qatar International Petroleum Marketing Co., or Tasweeq, has recently sold two 500,000-barrel cargoes of LSC in pre-tender deals to South Korean end-users at premiums in the range of $1.50-$1.70/b to Platts front-month Dubai crude oil assessments, sharply higher than the $1.10/b premium received for September-loading LSC last month.

S&P Global Platts assessed LSC at a premium of $1.40/b Tuesday, the highest level since posting a $1.45/b premium on June 29.

With Tasweeq's sell tender closing late afternoon is Asia Tuesday, trade sources said very little was heard on any pre-tender deals for DFC for loading in October, a possible indication that the vast majority of October DFC supply could have been set aside for the new Laffan Refinery 2.

"There's no DFC being offered, but I expect to see one done [via tender]," said a Singapore-based condensate trader.

Qatar Petroleum in its latest annual report said Laffan Refinery 2, or LR2, was expected to be fully operational in the third quarter. Industry sources this week expected this to occur in late September.

The new facility will be able to process an additional 146,000 b/d, raising Laffan Refinery's total processing capacity to 292,000 b/d, the state-run petroleum company said in the annual report.

Regional ultra-light crude traders said the number of DFC cargoes in the spot market could drop to as low as one or two per month if the LR2 condensate refinery runs at 50% or more of its capacity early in the startup phase.

"We are witnessing a severe lack of DFC supply in the market this month. Normally Tasweeq and some term lifters would sell five cargoes at least [in pre-tender deals] but there's hardly any available this time around," said a North Asian crude trader.

"When you assume LR2 running at maximum capacity of around 146,000 b/d, that would roughly equate to about 9 DFC cargoes... the market impact would be quite substantial if you consider this," the North Asian trader added.

Construction of LR2 began in April 2014, and the shareholders in the second refinery are QP (84%), Total (10%), Idemitsu (2%), Cosmo (2%), Mitsui (1%) and Marubeni (1%).

The refinery, with a nameplate capacity of 146,000 b/d, will have the capacity to produce 60,000 b/d of naphtha, 53,000 b/d of jet fuel, 24,000 b/d of gasoil and 9,000 b/d of LPG.

CONDENSATE PRICE DIFFERENTIALS SEEN SUPPORTED

Market participants said despite the tepid light distillate product margins of late, suppliers of both sweet and sour condensates around the region would likely adjust their selling ideas higher in a bid to take full advantage of the sharp decline in DFC supply.

"Many had initially anticipated another month of bear market due to the sliding naphtha cracks and the unsold August and September overhang... but I guess the tide could turn," said another Singapore-based crude trader. Last market talk in Australia indicated that Woodside Petroleum could have sold a 650,000-barrel cargo of North West Shelf condensate for loading over October 11-15 to a South Korean buyer at a discount of around $2/b to Platts Dated Brent crude assessments.

It was said to have sold a NWS cargo for loading in September 2-6 at a discount of around $2.30/b in the previous trading cycle.

"I think the splitters might pay more if they are really worried about the DFC supply," said another North Asian crude trader.

However, many traders continued to adopt a cautious stance as tepid naphtha crack values and ample condensate supply from Southeast Asia and Oceania could put a cap on any upside in cash differentials for regional ultra-light crudes.

Latest Platts data showed the second-month naphtha to Dubai swap crack fell below the minus $4/b mark to minus $4.07/b Monday, the lowest level in more than 15 months. The spread was last wider on May 8, 2015, at minus $4.20/b.

The crack value has averaged minus $2.37/b to date this month, compared with minus $1.60/b in July and minus $0.77/b in June.

The last time the average monthly naphtha crack was lower was in July 2015 at minus $2.75/b.

http://www.platts.com/latest-news/oil/singapore/qatar-dfc-shortage-a-boon-for-asian-condensate-27647927

- In the second quarter of 2016 the Corporate Group reported net income of COP $787 billion, 117% higher than in the first quarter of 2016. For the first half of the year our net income totaled COPS$1,150 billion.

- With the receipt of Rubiales and Cusiana fields, Ecopetrol achieves a new landmark as a world-class operator with more than 500 thousand barrels per day.

- We accomplished our target: the startup of the 34 units of Cartagena Refinery. Now moving forward to the stabilization phase.

In the view of Ecopetrol S.A.'s CEO, Juan Carlos Echeverry G.:

"April marked my first year leading Ecopetrol. A year characterized by a sharp drop in oil prices, challenging the oil and gas industry. We also witnessed a strong El Niño weather phenomenon, the closure of the border with Venezuela and attacks on transport infrastructure.

The renewal of the management team, the adjustment and austerity measures, as well as the focus on profitable production and the preservation of both cash flow and leverage metrics have enabled Ecopetrol to navigate the price scenario and present positive operating and financial results in the second quarter of 2016.

Net income attributable to Ecopetrol shareholders reached COP$787 billion, 117% higher as compared to the first quarter of 2016, thanks to a 34% recovery in Brent crude price, a decrease in our operational costs and structural savings efforts. Our EBITDA margin remained solid at around 39%.

In the second quarter of 2016 the Company reported savings of COP$392 billion pesos, for a cumulative COP$813 billion pesos for the first semester. The savings target for 2016 is COP$1.6 trillion pesos.

We raised COP$725 billion from the divestment of part of our stake in Interconexión Eléctrica S.A. E.S.P.(ISA) and Empresa de Energía de Bogotá S.A. E.S.P. (EEB). Further, we launched "Ronda Campos 2016", an initiative to offer our interest in 20 minor oil fields located in Catatumbo, Middle and Upper Magdalena Valley, Llanos and Putumayo regions.

Ecopetrol received Rubiales and Cusiana fields and now operates more than 500 thousand barrels per day. The Rubiales field gave us 53 thousand barrels per day of additional production, partially offsetting the impact of lower investments in other assets and the temporary suspension of some fields.

The Company successfully completed the startup process of the 34 units that comprise the Cartagena Refinery.

In the last sixteen months we have comprehensively renewed our management team, attracting people with broad experience and an important record in major international oil and gas companies.

It is the case of the Chief Operating Officer, Chief Financial Officer, Chief Transformation Officer; as well as the Vice-presidents of Refining, Social and Environmental Sustainability, Legal Affairs, and most regional Vice Presidents; additionally, new people will soon arrive to lead in Procurement and in Transportation. Finally, two vice-presidencies were created: Engineering and Projects, and Compliance.

The transformation plan has 500 ongoing tasks. These initiatives have already begun to materialize in Ecopetrol's results. For example, the dilution cost reduction initiative, which is part of the efficiency front, has reduced Ecopetrol's diluent purchases by almost 14 thousand barrels per day. The cumulative savings in 2015 and the first half of 2016 amounted to COP$726 billion pesos. This initiative is crucial for viable production projects in heavy crudes that represent 57% of the Corporate Group's oil production.

The Company's priority has been the protection of the cash flow. In the second quarter of 2016 the cash balance was strengthened with resources from divestments and the international loan with the Export Development Canada (EDC) for US$300 million as well as the reopening of the international bond due to 2023 for US$500 million, a clear sign of the capital markets' confidence. With these resources Ecopetrol has fulfilled close to 85% of its financing needs for 2016. Moreover, Standard and Poor's and Fitch Ratings reaffirmed the BBB investment grade rating for Ecopetrol.

The Company's 2017-2020 business plan is being reviewed in line with our forecasted price scenarios and our efficiency gains achieved, these gains could be even greater in the future. We hope to present our updated medium-term goals no later than October of this year.

Ecopetrol continues its transformation in order to position itself as a competitive player, strengthening its exploration and production portfolio to capture opportunities arising from a fundamental recovery in oil prices, and increasing structurally efficiency in Refining and Transport to ensure financial sustainability and creation of value for its shareholders."

http://www.prnewswire.com/news-releases/ecopetrol-group-announces-its-results-for-the-second-quarter-and-first-half-of-2016-300313892.html

Norway’s oil production hit a five-year high last month, fuelled largely by output from Eni’s Goliat field in the Barents Sea.

http://www.upstreamonline.com/live/1441461/goliat-boosts-norway-output?utm_source=twitterfeed&utm_medium=twitter

U.S. crude oil inventories are down just over 1 million barrels for the week ended 12 August, according to the weekly American Petroleum Institute (API) report, but U.S. gasoline inventories are up over 2 million barrels in the biggest increase in six months.

Cushing crude inventories were down 680,000 barrels.

Earlier today, crude oil rallied to a one-month high, but slid back down following the release of the API data. West Texas Intermediate (WTI) for September delivery closed at US$46.58 on the New York Mercantile Exchange, but was down to US$46.41 in electronic trading at the time of writing.

Analysts expectations, as carried by S&P Global Platts, were for a 200,000-barrel drawdown on U.S. crude oil inventories, with the API figures coming at roughly half that. But for gas, the API figures were unexpected. Analysts were tapping a 1.8-million-barrel drop in gasoline inventories, while the API is showing a nearly 2.2-million-barrel increase. Distillates were also up significantly over the week, with the API data showing a 2.4-million-barrel build.

This should contribute to further market volatility, though Zero Hedge notes that oil is primarily tracking the dollar right now and not paying as much attention to its own fundamentals.

More attention will be on the official inventory data coming tomorrow at 10:30am (EST) from the Energy Information Administration (EIA), which could contradict API data, as has been a recent trend.

Last week, the API reported the opposite—the biggest crude oil inventory build in three months, and a draw on gasoline stocks. That API report had crude inventories up 2.09 million barrels, and gasoline stockpiles down 3.9 million barrels, with distillates at a 1.5-million barrel draw.

The EIA last week reported a 1.1-million-barrel rise in commercial crude oil inventories for the week to August 5, with the total reaching 523.6 million barrels. The week before that also saw a 1.4-million-barrel build.

The API data should be good news for oil prices, but the surprise gasoline and distillates build skews the picture.

http://oilprice.com/Latest-Energy-News/World-News/API-Drop-in-US-Crude-Oil-Stocks-But-Surprise-Gasoline-Build.html

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Concho Resources Inc. today announced it has reached a definitive agreement to acquire approximately 40,000 net acres in the core of the Midland Basin from Reliance Energy, a privately held, Midland-based energy company, for $1.625 billion. The privately negotiated acquisition is consistent with Concho's opportunistic and disciplined portfolio management strategy as it expands its core Midland Basin position to more than 150,000 net acres and production of 30 thousand barrels of oil equivalent per day (MBoepd).

Acquisition Highlights

Adds approximately 40,000 net acres with an average 99% working interest to Concho's core Midland Basin position
Includes approximately 10 MBoepd (67% oil) of current production
Enhances the Company's drilling inventory with more than 530 long-lateral drilling locations targeting the Middle Spraberry, Lower Spraberry and Wolfcamp B
Provides expansive development upside across multiple zones

Tim Leach, Chairman, Chief Executive Officer and President, commented, 'This transaction demonstrates Concho's commitment to the Midland Basin as a core operating area and highlights our continued efforts to consolidate complementary leasehold. In line with the objectives of our southern Delaware Basin acquisition in the first quarter of 2016, these assets not only build scale, but more importantly high-grade our inventory with additional long-lateral locations that compete with the best projects in the Permian Basin. As we continue to enhance our ability to efficiently allocate capital across our four key assets in the Permian Basin, we are uniquely positioned to deliver attractive returns today and build shareholder value over the long term.'

The acquisition includes 10 MBoepd from 326 vertical wells and 44 horizontal wells, only one of which was completed in 2016. The present value of this stable production base at current NYMEX strip pricing is approximately $0.5 billion, with the remaining $1.1 billion of the purchase price attributable to 40,000 undeveloped acres.

Estimated proved reserves attributable to the acquisition total approximately 43 million Boe. Proved developed reserves represent approximately 69% of the total proved reserves. The estimate of proved reserves is based on the Company's internal estimates as of June 30, 2016, and utilizes the Securities and Exchange Commission's reserve recognition standards and pricing assumptions based on the trailing 12-month average first-day-of-the-month prices of $39.63 per Bbl of oil and $2.24 per MMBtu of natural gas.

The acquired acreage is located in Andrews, Martin and Ector counties in Texas with minimal leasehold obligations. The acquisition adds more than 530 long-lateral drilling locations to the Company's inventory. Due to the contiguous nature of the acquired assets, two-thirds of these locations are two-mile laterals, and the remaining locations are 1.5-mile laterals. The engineered locations are based on eight locations per zone in the Middle Spraberry, Lower Spraberry or Wolfcamp B, with two to three of these zones targeted per drilling spacing unit. The Company believes there is substantial development upside from applying optimal drilling and completion methods, testing closer well spacing and delineating other zones.

Consideration in the transaction includes approximately $1.1 billion of cash and 3.96 million shares of Concho's common stock valued at approximately $0.5 billion and issuable pursuant to a stock payment option that the Company intends to exercise. The Company intends to fund the cash portion of the acquisition through proceeds from a potential equity market transaction, subject to market conditions and other factors. The acquisition is expected to close in October 2016, and is subject to customary closing conditions.

http://www.oilvoice.com/n/Concho-Resources-announces-Midland-Basin-acquisition/dd73c988a849.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

The New York Stock Exchange (NYSE) has certain minimum standards if a company wants to continue trading stocks on the exchange:

The company’s stock price must be trading for at least $1 per share, and the company’s market capitalization must be at least $50 million. Market cap is pretty easy to calculate: it’s the number of outstanding shares times the per-share price. If you have 50 million shares of stock and the price is trading for $1/share, you’re there. You meet the NYSE’s requirements.

Various companies with operations in the Marcellus/Utica have fallen short and have been warned by the NYSE that unless they get their act together, they would be de-listed. Some turned it around (see Eclipse Resources Dodges a Bullet – Stock Won’t Get De-Listed), and some didn’t (seeMagnum Hunter De-Listed from NYSE; Still Shopping Eureka Hunter).

Halcon Resources, a driller with 140,000 Utica acres it doesn’t bother to drill on, was warned in June by the NYSE that their share price, trading under $1/share, is too low. In July Halcon filed for bankruptcy. The NYSE has just issued another warning to Halcon: the company’s market capitalization has now fallen below $50 million…

http://marcellusdrilling.com/2016/08/halcons-market-cap-falls-below-50m-nyse-threatens-to-de-list/

Yesterday MDN’s favourite government agency, the U.S. Energy Information Administration (EIA), issued our favourite monthly report–the Drilling Productivity Report (DPR).

The DPR is the EIA’s best guess, based on expert data crunchers, as to how much each of the U.S.’s seven major shale plays will produce for both oil and natural gas in the coming month.

The EIA projects natural gas production cumulatively across all shale plays will once again fall in September–the seventh consecutive month it will have fallen.

However, as was the case in last month’s report, the Utica stands alone and against the trend by showing an increase in production month over month. Last month the EIA predicted the Utica would increase production by 5 million cubic feet per day, or MMcf/d.

This month’s report shows the Utica is expected to increase production by an average of 9 MMcf/d.

Also of note, last month Marcellus production was projected to drop by 26 MMcf/d, while this month the production drop is projected to be 33 MMcf/d. That is, the rate of production decline in the Marcellus is accelerating.

http://marcellusdrilling.com/2016/08/eia-august-dpr-utica-production-up-marcellus-down/

A recent judge's decision that overturned Obama administration rules on hydraulic fracturing on federal and Indian lands ignores more than a century of regulatory precedent, an attorney appealing that decision said Monday.

"The decision ignores decades of case law," said Mike Freeman, a Colorado-based attorney with Earthjustice. "We respectfully think that the judge got it flat wrong."

On Friday, Earthjustice, along with the Sierra Club, filed opening briefs with the 10th US Circuit Court of Appeals in an appeal case that may ultimately determine whether the federal government can regulate fracking.

The US Department of the Interior also filed briefs arguing that a century of legal precedent and federal regulations allow the agency's Bureau of Land Management to regulate fracking.

"BLM has the authority to oversee resource extraction on federal and Indian leases, including well-stimulation activities, to protect natural resources and the environment," Interior wrote. "BLM and its predecessors have been doing so for nearly 100 years, and modern hydraulic fracturing operations simply are a new version of historically regulated well stimulation techniques."

In March 2015, BLM finalized new rules that included new chemical disclosure, well construction, and fluid disposal requirements for fracking operations on federal and Indian land. Production on those lands currently accounts for about 5% of total US oil supply, according to the US Energy Information Administration.

Industry groups, including the Western Energy Alliance, and states, including North Dakota and Wyoming, successfully sued to have the rules overturned.

In June, US District Court of Wyoming Judge Scott Skavdahl ruled that Interior's fracking rule was "in excess of its statutory authority and contrary to law."

In his decision, Skavdahl wrote that his decision did not deal with whether fracking is "good or bad for the environment," just whether Interior had authority to regulate the practice.

Freeman with Earthjustice called Skavdahl's ruling a "legal error," and claimed that BLM was simply updating its regulations for the first time in roughly 30 years.

"These aren't radical requests," Freeman said. "Most of the requirements are industry best management practices."

Freeman said that answers from petitioners in the case to the briefs filed last week, including responses from the states and industry groups fighting the rules from taking place, are due by September 16. Replies to those answers are due October 7 and, Freeman said, he expects oral arguments in the case will begin before the end of the year.

The appeal could be decided in early 2017.

http://www.platts.com/latest-news/oil/washington/in-appeal-of-us-fracking-ruling-arguments-center-21253330?hootpostid=e543a179a923a7ea608f0539d71c4477