The United States Department of Energy issued an order granting American LNG Marketing blanket authorization to export LNG from its Hialeah facility in Medley, Florida.

Liquefied natural gas will be delivered in ISO containers and loaded onto container ships or roll-on/roll-off ocean-going carriers for export at Port Canaveral or other ports in Florida, according to the filing.

On a cumulative basis, American LNG will export up to the equivalent of 6.04 billion cubic feet of natural gas over a two-year period.

The facility, once completed, will have a total production capacity of 100,000 gallons of LNG per day or 8.26 MMcf of natural gas, and a storage capacity of approximately 270,000 gallons.

DOE previously issued two long-term authorizations to American LNG to export liquefied natural gas to free trade agreements and non-FTA countries. American LNG was authorized to export up to the equivalent of 3.02 bcf per year in each of the orders.

The company noted that the blanket authorization is to enable it to engage in short-term exports of domestically produced LNG prior and following the commencement of commercial operations. The volumes proposed for export are not additive to either of the previously granted authorizations.

American LNG is controlled by Fortress Equity Partners, a partnership sponsored by entities related to Fortress Investment Group. The company added that the Hialeah facility is owned and operated by LNG Holdings, another company controlled by FEP.

LNG Holdings contracted Chart Industries to provide its standard C100N LNG liquefaction plant for the project.

http://www.lngworldnews.com/american-lng-granted-blanket-lng-export-permit/

Blackstone Group LP is partnering with two oil and gas companies as it targets assets in the sought-after Permian shale formation.

Jetta Permian, formed with Jetta Operating Company Inc., plans to acquire leaseholds in the Permian’s Delaware Basin in West Texas and southern New Mexico, New York-based Blackstone said in a statement Thursday. The partnership has $1 billion of capital committed.

Blackstone has also designated $500 million in a partnership with Guidon Energy to acquire assets in the Permian’s Midland Basin "with the potential to commit significantly more with future acquisitions." Guidon purchased about 16,000 net acres in Martin County, Texas, in April.

The partnerships underscore the industry’s interest in one of the few regions where drilling remains profitable at current prices. The Permian has dominated acreage deals among independent drillers this year. PDC Energy Inc. bought into the Permian with a $1.5 billion acquisition announced this week. Meanwhile Parsley Energy Inc. and Concho Resources Inc. also added holdings in the play this month.

Crude prices have rebounded to above $47 a barrel since dropping near $26 in February. Private equity firms have stepped into the market to pick up assets that have lost value since oil plunged from above $100 a barrel in the middle of 2014.

Blackstone’s energy private equity business, led by David Foley, raised $7 billion across two funds in the past four years. The most recent vehicle, which finished gathering $4.5 billion last year, had only spent about 5 percent of its money as of June 30, according to Blackstone’s second-quarter earnings statement.

http://www.bloomberg.com/news/articles/2016-08-25/blackstone-unleashes-cash-hoard-in-texas-shale-oil-land-grab

China’s biggest oil company wants natural gas to account for half its output by the end of the decade.

PetroChina Co. aims to raise natural gas as a share of its production from 37 percent currently, President Wang Dongjin told reporters Thursday in Hong Kong. The company supports the government’s efforts to liberalize gas prices and implement market-based reforms, he said.

“We will have some adjustment on oil and gas production down the road,” Wang said. “There is a huge potential for natural gas production to grow in the years to come.”

The world’s largest energy consumer is seeking to raise the share of less-polluting natural gas in its energy mix to 10 percent by 2020. President Xi Jinping’s government twice cut gas prices last year in an attempt to boost demand. While demand growth for oil has slowed, natural gas use rose 9.8 percent in the first half this year.

PetroChina shares in Hong Kong gained as much as 1.9 percent, the biggest intraday gain in more than a week, and were up 0.6 percent at HK$5.25 at 1:41 p.m. local time. The city’s benchmark Hang Seng Index added 0.3 percent.

2030 Targets

The state-owned explorer plans to raise output by around 30 percent to produce more than 300 million tons of oil and gas equivalent (6.02 million barrels per day) by 2030, with half of that coming from overseas projects, Wang said. PetroChina had 14.4 percent of its output coming from overseas in the first half of the year, according to its interim report.

“The target should be very achievable based on our current overseas oil and gas equity reserves,” Wang said. “The pace of overseas oil and gas production growth will also be affected by factors including crude price when we make investment decisions.”

The company’s global crude output in the first half of the year fell 1.4 percent to 470.6 million barrels from the same period in 2015, it said in astatement Wednesday. Gas production rose 7.4 percent to 1.66 billion cubic feet. Total oil and gas output was 748.2 million barrels of oil equivalent. While that’s up 1.7 percent from the same period last year, its a 1.3 percent slide from the second half of 2015.

China National Petroleum Corp., PetroChina’s parent company, is prioritizing natural gas exploration and production in the second half the year and may adjust investment strategies depending on the change in oil prices, Chairman Wang Yilin said in a statement last month.

Pipeline Sale

The state-owned explorer’s profit dropped 98 percent to 531 million yuan ($80 million) in the six months to June, while revenue fell 15.8 percent to 739 billion yuan, it said Wednesday. The sale of a Central Asian pipeline network helped the company recover from its first-ever quarterly loss earlier this year.

Lower crude price forced PetroChina’s exploration and production business to post a 2.4 billion yuan operating loss in the first half, compared with a profit of 32.9 billion yuan a year earlier. Operating profit from refining jumped almost fourfold to 21.4 billion yuan from 5.6 billion a year ago, according to PetroChina’s earnings statement.

The explorer cut its domestic crude output target for 2016 to 103 million tons from 106 million tons set at the beginning of the year as some high-cost fields were shut down because they couldn’t make a profit at current oil prices, PetroChina’s President Wang said on Thursday.

Reallocating resources to refining may be a strategy to deal with low crude prices, Wang said. The shift will be temporary as oil and gas output will lead the company’s rebound once oil recovers to $60 to $80 a barrel, he said. The company expects prices to stabilize between $45 to $50 a barrel in the second half of this year, before rising to around $50 to $60 by 2017, and $60 to $80 by 2020, he said.

http://www.bloomberg.com/news/articles/2016-08-25/china-s-biggest-oil-company-wants-to-be-50-natural-gas-by-2020

---

Attached Files

A deepwater oilfield off the coast of eastern Canada could hold 25.5 billion barrels of crude, according to a new seismic report by the Newfoundland and Labrador government, potentially making it the country's largest offshore resource.

But the West Orphan Basin, 300 km (186 miles) northeast of Newfoundland, may still struggle to attract exploration bids in a November land sale due to persistently low crude prices.

Paul Barnes, Atlantic Canada and Arctic manager with the Canadian Association of Petroleum Producers, said while publicly available seismic data was useful, companies needed to drill to prove the potential of a basin and there were a limited number able to spend $200 million-$250 million per deepwater exploration well.

"In order to undertake that type of activity you have to be a very financially well-off company or multinational and have a degree of confidence there's potential there to find something," Barnes said. "With the downturn in oil prices and less cash to invest, whether this basin will see any activity in that land sale is hard to predict."

Provincial government-owned Nalcor Energy used seismic data, assessed by independent oil and gas consultancy Beicip-Franlab, to study a 20,000 square-km (7,722 sq-mile) area.

The report, released on Wednesday, found the basin could potentially hold 20.6 trillion cubic feet of natural gas in addition to the unrisked oil reserves. Unrisked means it is unclear how much of the reserve will eventually be recovered, but Jim Keating, an executive with Nalcor Energy, said recovery factors typically range between 25 and 75 percent.

The nearby Flemish Pass Basin is estimated to hold 12 billion barrels of potential unrisked reserves. Norwegian company Statoil announced a 300 million to 600 million barrel discovery there in 2013 and the basin attracted C$1.2 billion in exploration commitments in a 2015 licensing round.

The bidding on licenses in the West Orphan Basin will close on Nov. 9. Nalcor's Keating said interest was high so far, and provincial premier Dwight Ball said in a news release he was "cautiously optimistic" about positive results.

Oil and gas companies already active in the Atlantic Canada region were lukewarm when asked about potentially exploring the West Orphan Basin, where no drilling has been done so far.

Statoil said it had no firm plans at this time to undertake additional exploration drilling activities, while Royal Dutch Shell said its focus was on its exploration program offshore Nova Scotia.

http://www.reuters.com/article/us-canada-energy-offshore-idUSKCN1102IE

A voluntary layoff program at state-run oil company Petroleo Brasileiro SA has been accepted by 6,100 employees, a source with direct knowledge of the matter told Reuters.

The number may rise by month-end, the deadline for the plan proposed by the oil giant known as Petrobras. Around 12,000 employees, or 21 percent of its workforce, are eligible.

If all eligible employees accepted the voluntary layoff program, Petrobras would face an immediate cost of 4.4 billion reais ($1.3 billion) but save 33 billion reais in salaries over the next four years, the company said upon announcing the plan.

http://www.reuters.com/article/petrobras-layoffs-idUSL1N1B622K

BP, on behalf of the Tangguh Production Sharing Contractors, has announced that it has signed two major Tangguh Expansion Project contracts for the onshore LNG engineering, procurement and construction (EPC) and offshore GPF engineering, procurement, construction and installation (EPCI).

The contract signing, which took place in BP’s office in South Jakarta, Indonesia, was witnessed by the Chairman of SKK Migas, Amien Sunaryadi.

The onshore EPC contract has been awarded to a joint venture led by Indonesian EPC contractor Tripatra with Chiyoda, Saipem and Suluh Ardhi Engineering. The Offshore EPCI ihas been awarded to PT Saipem Indonesia.

BP confirmed that construction of Tangguh Train 3 is set to begin by the end of this year. First LNG production ins scheduled for 2020.

http://www.lngindustry.com/liquefaction/25082016/Tangguh-LNG-expansion-contracts-signed-2958/

Iraq’s resumption last week of oil shipments through a Kurdish-controlled pipeline bumped up its export capacity by five percent almost overnight. Now OPEC’s second-biggest producer is seeking a formal deal with the self-ruling Kurds to ensure it can maintain the increased flows.

The central government in Baghdad has been locked in a dispute with the semi-autonomous Kurdistan Regional Government in the north of Iraq since 2014, when the Kurds began selling their oil independently. In March, Iraq’s state-run North Oil Co. stopped using its only export route, the KRG’s pipeline to Turkey, for crude it pumped in Kirkuk province. The Oil Ministry ordereda restoration of these exports last week.

“We’re still waiting for an agreement on the details regarding who should receive the oil revenues,” Deputy Oil Minister Fayyad Al-Nima said Wednesday in a telephone interview.

The government is now exporting about 100,000 barrels a day from its Kirkuk fields, Al-Nima said. Officials at the KRG’s Ministry of Natural Resources didn’t immediately reply to e-mailed and telephone requests for comment.

Sustaining Supply

A formal accord could keep Iraq’s northern exports flowing smoothly, sustaining the producer’s recent increase in supply to global markets. Iraq has struggled to raise oil exports this year, due partly to its feud with the KRG, and a failure by the two sides to reach a political agreement could jeopardize the renewed shipments. The three Kirkuk fields -- Baba Gorgor, Jambour and Khabbaz -- can produce a combined 150,000 barrels a day for export.

“It looks like a very shaky foundation for the restart,” Richard Mallinson, an analyst at Energy Aspects Ltd. in London, said by phone.

The central government and the KRG last reached a deal in December 2014, when they agreed that the Kurds would give Baghdad control of their exports in exchange for a full payment of their share of the federal budget. Within six months, independent Kurdish exports had resumed, and each side was accusing the other of not meeting its obligations.

Minister’s Support

Iraq’s new oil minister, Jabbar al-Luaibi, fed hopes for a new agreement, saying on Aug. 15, his first day in office, that he saw ways to resolve the dispute.

“I don’t think it’s unreasonable to hope for two or three months of steady flows” of oil exports from Kirkuk, Robin Mills, chief executive officer of Dubai-based consultant Qamar Energy, said by phone. “Beyond that it really depends. Does the new minister succeed in coming up with a more sustainable proposition?”

Both governments could benefit from a deal, not least because both are short of cash after more than two years of battling Islamic State militants and weathering low oil prices. Iraq is exporting 3.8 million barrels a day, including oil sold by the KRG, Prime Minister Haidar Al-Abadi said Tuesday at a news conference.

“It’s in the interest of both governments to try and get as much revenue as they can at the moment,” Hannah Poppy, an analyst at The Risk Advisory Group in London, said by phone. “It probably won’t be sustainable in the long term, simply because of the wider political disputes.”

http://www.bloomberg.com/news/articles/2016-08-25/iraq-seeks-formal-deal-with-kurds-to-protect-new-oil-exports

Iran will help other oil producers stabilise the world market so long as fellow OPEC members recognise its right to regain lost market share, the country' oil minister said on Friday in remarks made ahead of next month's meeting of the oil exporters group.

Iran, OPEC's third-largest producer, boosted output after Western sanctions were lifted in January, and had to refused to join OPEC and some non-members in an accord earlier this year to freeze production levels.

"Iran will cooperate with OPEC to help the oil market recover, but expects others to respect its rights to regain its lost share of the market," Bijan Namdar Zanganeh was quoted as saying by the oil ministry's news agency SHANA.

Asked about an oil output freeze plan, Zanganeh said that Iran supports any effort to bring stability to the market.

Tehran insists it will be ready for joint action only once it regains pre-sanctions output of 4 million barrels per day (bpd). It pumped 3.6 million bpd in July, OPEC figures show.

Zanganeh said Iran had no role in instability of the oil market, as the crisis happened when Tehran's exports were less than 1 million bpd.

Members of the Organization of the Petroleum Exporting Countries will meet on the sidelines of the International Energy Forum (IEF), which groups producers and consumers, in Algeria on Sept. 26-28.

http://www.reuters.com/article/opec-freeze-iran-idUSL8N1B70I8

Norway-listed offshore driller Seadrill, once the crown jewel in the businessempire of shipping tycoon John Fredriksen, said the oil industry may be turning a corner as it posted second-quarter earnings above forecasts on Thursday.

At the height of the oil price boom, the company was the world's largest offshore driller by market capitalisation, but it has been struggling as oil firms slash costs to counter a 57-percent decline in crude prices since mid-2014.

Seadrill's share price has fallen by 90 percent over the past two years, against a 1.5 percent rise for the Oslo benchmark index over the same period.

But the cycle may be turning, Seadrill said on Thursday, joining other industry suppliers that have recently pointed to signs of recovery in demand from oil companies.

"Oil prices stabilized in the $40-50 range during the quarter and there is a growing belief that we are at or near the bottom of this downcycle," Seadrill said in a statement.

Seadrill's earnings before interest, tax, depreciation and amortisation (EBITDA) fell to $557 million in the second quarter, against $651 million a year ago and expectations for $512 million in a Reuters poll of analysts.

Seadrill repeated that it expected to conclude the refinancing process of its $10 billion debt by the end of the year.

http://www.reuters.com/article/seadrill-results-idUSL8N1B61IB

Malaysia's biggest lender Malayan Banking Bhd  said on Thursday it is keeping a close watch on loans made to the oil and gas sector, after posting a 27 percent drop in quarterly net profit as allowances for loan impairment losses tripled.

Slowing loan growth in Malaysia and higher provisioning for loan impairments across the region due to rising risks in industries such as oil and gas have hurt Southeast Asia's fourth largest bank by assets.

"We will... remain vigilant and maintain proactive management of asset quality while building our capital and liquidity positions," Group CEO Abdul Farid Alias said in a statement.

Net profit slid to 1.16 billion ringgit ($288.70 million) for the April-June quarter from 1.58 billion ringgit a year ago. Net interest income rose 7.5 percent to 2.88 billion ringgit.

The bank saw allowances for impairment losses jump to 982 million ringgit in the quarter from 301 million ringgit in the same period last year.

Group CFO Amirul Feisal Wan Zahir said Maybank was also monitoring the oil and gas sector. About 3.75 percent of the group's total loans were in that sector, he said.

"We are monitoring the sector closely in Malaysia and Singapore," Amirul told reporters.

Analysts have said Maybank has exposure to Swiber Holdings (SWBR.SI), which last month became the biggest Singapore business to fall victim to the oil price slump. Amirul declined to comment on the bank's exposure to Swiber.

Malaysian oil and gas service provider Perisai Petroleum Teknologi (PPTB.KL) is also facing financial challenges.

Maybank said loans growth at home will likely continue to moderate to 6-7 percent this year from 7-8 percent in 2015 on the back of easing household loans growth.

It maintained its overall 2016 loans growth forecast of 8-9 percent. Maybank had seen 12 percent growth in the previous year.

Maybank's CEO did not rule out another 25-basis-point rate cut by the central bank this year, adding that the cuts could drive loan growth for the lender.

Last month, Bank Negara Malaysia surprised markets by cutting its overnight interest rate MYINTR=ECI by 25 basis points to 3.00 percent, the country's first rate cut since 2009.

http://www.reuters.com/article/us-maybank-results-idUSKCN1100QZ

---

Attached Files

U.S. Bureau of Ocean Energy Management (BOEM) on Wednesday held a lease sale offering acreage in 4399 blocks across 23.8 million acres million in the Gulf of Mexico, offshore Texas.

The Lease Sale 248, as it was officially called, attracted 24 bids from only three oil and gas exploration companies which took part in the bidding round, BHP Billiton, BP, and ExxonMobil.

There were no competing bids for the same acreage. The sum of all bids submitted was a little over $18 million.

BHP Billiton, an Australian energy giant, offered the most bids. The company offerred to acquire acreage over 12 blocks in the U.S. Gulf of Mexico, located in East Breaks and Alamino Canyon areas.

By the number of bids submitted, BP was the second. The British oil major filed bids for ten blocks, all situated in the Garden Banks area of the Gulf.

Also, U.S. supermajor ExxonMobil submitted two bids for two blocks situated in the East Breaks areas. Worth noting, of all the bids submitted, the highest one for a single block was filed by ExxonMobil – $1.25 million. However, when all the bids are summed up, BHP Billiton offered almost $10 million, BP $6.3, and ExxonMobil $1.75 milion.

In this sale, BOEM offered 23.8 million acres in federal waters offshore Texas for oil and gas exploration and development. The three companies submitted bids for blocks covering 138.240 acres.

Director Abigail Ross Hopper said: “Though this sale reflects today’s market conditions and industry’s current development strategy, the bidding confirms that there is continued interest in the deepwater areas of the Gulf”.

Today’s sale in New Orleans, Louisiana, was the first federal offshore oil and gas auction broadcastlive on the internet.

Sale 248 included approximately 4,399 blocks, located from nine to 250 nautical miles offshore, in water depths ranging from 16 to more than 10,975 feet (5 to 3,340 meters). As a result of offering this area for lease, BOEM estimates a range of economically recoverable hydrocarbons to be discovered and produced of 116 to 200 million barrels of oil and 538 to 938 billion cubic feet of natural gas.

Following today’s sale, each bid will go through an 90-day evaluation process before a lease is awarded.

http://www.offshoreenergytoday.com/boem-offers-4399-offshore-blocks-attracts-bids-for-24/

While the latest report from Baker Hughes showed that the oil rig count rose again, now up for eight consecutive weeks – now up nearly 30 percent from the lows of late May to 406 rigs – the Permian Basin has got a headstart.

Permian is resoundingly considered the lowest-cost U.S. shale play, and its rig count bottomed out a month prior to the low ebb of the aggregate rig count in late-April, some two-and-a-half months after WTI dipped into twenty dollardom. The Permian rig count has now rebounded emphatically, up nearly fifty percent in recent months, and accounting for nearly half of all active U.S. rigs.

http://fuelfix.com/blog/2016/08/24/market-currents-permian-rig-count-up-nearly-50-percent-from-low/

Canacol Energy Ltd. is pleased to provide the following update concerning the Nispero 1 gas discovery, the doubling of its gas drilling program for the remainder of 2016, and an increase of 9% in Corporate cash sales to 19,440 barrels of oil equivalent per day for the month of July 2016 compared to the average cash sales of 17,817 boepd for the quarter of April 1 to June 30, 2016.

Nispero 1 Exploration Discovery (100% Operated Working Interest)

The Nispero 1 exploration well was spud on the Esperanza Exploration and Exploitation Contract on July 17, 2016. The well reached total depth of 9,906 feet measured depth ('ft md') on August 7, 2016, encountering 79 ft md (55 feet true vertical depth) of net gas pay with average porosity of 17% within the primary Cienage de Oro ('CDO') reservoir target. The CDO reservoir interval was perforated in 7 different intervals between 8,792 to 9,630 ft md and flowed at a final stabilized rate of 28 million cubic feet per day ('MMscfpd') of dry gas with no water at a flowing tubing head pressure of 2,045 pounds per square inch over a test period of 53 hours. The Corporation is currently completing the Nispero 1 well for permanent production via a flow line that will tie the well into the Corporation's operated Jobo production facility.

Given the success at Nispero, the Corporation plans to immediately drill the offsetting Trombon gas prospect from the same drilling platform the Nispero 1 well was drilled from. The Trombon 1 exploration well will target the same CDO reservoir interval tested in the offsetting Nispero 1 well, but in a distinct and isolated fault block located approximately 2 kilometers south of the Nispero discovery. The Corporation anticipates spudding the Trombon 1 well late in the week of August 29, 2016, and anticipates that the well will take 5 to 6 weeks to drill and flow test.

Expansion of the 2016 Gas Drilling Program

The Corporation is currently contracting a second rig to drill the Nelson 6 and Nelson 8 wells while the existing rig will be left to drill the Trombon 1 exploration well and then be mobilized to drill appraisal wells in the Clarinete and Oboe fields. The Nelson 6 exploration well will target gas pay within the shallow Porquero sandstone reservoir in the Nelson field. The Nelson 8 well is a development well targeting productive reservoirs within the CDO reservoir that are not being drained by the existing producing wells in the Nelson field. The Corporation anticipates that both new Nelson wells will be drilled and tested prior to the end of 2016. Following the drilling and testing of the Trombon 1 exploration well, the existing rig will be mobilized to the Clarinete field to drill the Clarinete 3 appraisal well prior to the end of 2016. The Corporation intends to keep one drilling rig active for all of 2017 drilling gas exploration and appraisal wells on its operated VIM 5, Esperanza, VIM 19 and VIM 21 Exploration and Production contracts.

The objectives of the expanded gas drilling program are to 1) target management's estimate of more than 100 billion cubic feet of potential recoverable resource in order to secure new gas sales contracts, and 2) increase the productive capacity of the Corporations gas assets to more than 190 MMscfpd in 2017 to supply the new contracts.

The Corporation also plans to spud the Mono Cappuccino oil exploration well on its operated VMM2 E&P contract in the last quarter of 2016.

Corporate Production

Gas and oil cash sales before royalties for the month of July 2016 averaged approximately 19,440 boepd, which consisted of 88.0 MMscfpd (15,431 boepd) of gas, and 4,009 barrels of oil per day of oil which included production from Ecuador. Of the 88 MMscfpd of gas cash sales, approximately 85.0 MMscfpd were realized contractual gas sales as the Corporation saw its customers accept physical delivery of nearly all of their nominated gas volumes. The average cash netback of the gas cash sales was approximately US$ 26.60 / barrel of oil equivalent during this period, while the average cash netback of the oil sales was US$ 25.16 / barrel.

http://www.oilvoice.com/n/Canacol-Energy-tests-Nispero1-exploration-well-at-28-MMSCFPD-expands-drilling-program-and-reports-on-July-production/f5c8d3db67a8.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

U.S. crude oil refinery inputs averaged 16.7 million barrels per day during the week ending August 19, 2016, 186,000 barrels per day less than the previous week’s average. Refineries operated at 92.5% of their operable capacity last week. Gasoline production decreased last week, averaging over 10.0 million barrels per day. Distillate fuel production decreased last week, averaging over 4.8 million barrels per day.

U.S. crude oil imports averaged over 8.6 million barrels per day last week, up by 449,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 8.5 million barrels per day, 13.3% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 801,000 barrels per day. Distillate fuel imports averaged 224,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.5 million barrels from the previous week. At 523.6 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories remained unchanged last week, and are well above the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 0.1 million barrels last week and are near the upper limit of the average range for this time of year. Propane/propylene inventories rose 2.4 million barrels last week and are above the upper limit of the average range. Total commercial petroleum inventories increased by 6.6 million barrels last week.

Total products supplied over the last four-week period averaged about 20.8 million barrels per day, up by 2.3% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.7 million barrels per day, up by 1.8% from the same period last year. Distillate fuel product supplied averaged 3.7 million barrels per day over the last four weeks, unchanged from the same period last year. Jet fuel product supplied is up 4.7% compared to the same four-week period last year.

Cushing +400,000

http://ir.eia.gov/wpsr/wpsrsummary.pdf

                                                               Last Week   Week Before  Last Year
Domestic Production '000..........    8,548           8,597            9,337
Alaska '000................................... 483              477               427

http://ir.eia.gov/wpsr/overview.pdf

An up to $261 million share sale in Castrol India Ltd (CAST.NS) by BP Plc due to take place on Wednesday according to a term sheet seen by Reuters had not taken place as of the end of the trading day, according to exchange data.

BP, which owns a majority stake in Castrol India, had been due to sell an up to 8.53 percent stake including an upsize option, according to the term sheet seen by Reuters on Tuesday.

A spokesman for BP declined to comment.

Banking sources in India said they were not aware of a share sale having been launched.

http://www.reuters.com/article/india-castrol-bp-idUSL3N1B53JD

Oil and gas companies operating in Norway, western Europe’s biggest producer, cut investment forecasts further for this year and next as they continue to weather a two-year long collapse in crude prices.

Investments in Norway’s offshore oil and gas industry are now expected to fall to 163 billion kroner ($20 billion) in 2016, down from a 166 billion-krone estimate in May, according to a quarterly survey published by Statistic Norway on Wednesday. The estimate for 2017 fell to 151 billion kroner from 153 billion kroner. Investments peaked at 221 billion kroner in 2014 before falling to 195 billion kroner in 2015.

The decrease for 2016 was mainly due to lower estimates for field developments, while lower expected investments in shutdowns and removals and exploration led to a decrease for 2017, the statistics agency said.

“A decrease from the second quarter to the third quarter in the year before the investment year is very unusual,” Statistics Norway said in a statement. It also happened last year for the first time since 1999, it said.

Oil companies are delaying development projects and exploration drilling in Norway and elsewhere to withstand a decline in crude prices. About 40,000 jobs have been cut in Norway’s offshore industry, while the central bank lowered rates to a record. Survey unemployment rose to 4.8 percent in June, the highest since at least 2004, according to separate statement today. The downturn has forced the government to make its first withdrawals from its $890 billion sovereign wealth fund this year as it spends more of the nation’s oil wealth amid dwindling income from petroleum production.

http://www.bloomberg.com/news/articles/2016-08-24/norway-oil-companies-cut-investment-plans-further-amid-slump

PetroChina Co., the country’s biggest oil and gas producer, posted its smallest half-year profit since it was publicly listed in 2000 as the crash in oil prices continues to drag on earnings.

Net income dropped 98 percent to 531 million yuan ($80 million), the state-run explorer said in a statement to the Hong Kong stock exchange on Wednesday. Revenue fell 15.8 percent to 739 billion yuan. The sale of a Central Asian pipeline network helped the company eke out a profit and recover from its first-ever quarterlyloss earlier this year.

“Low crude price is a killer for companies like PetroChina as they pretty much rely on oil incomes to make a living,” Tian Miao, a Beijing-based analyst at North Square Blue Oak Ltd. said by phone.“The performance is not unexpected and what they do in the second half hinges on whether oil can really rebound to a higher level.”

The state-owned explorer’s total global crude oil and gas output rose 1.7 percent to 748.2 million barrels of oil equivalent during the first half of the year, it said on Wednesday. That’s down 1.3 percent from the second half of last year. Capital expenditures fell 17.5 percent to 50.9 billion yuan. The company declared a special dividend of 0.02 yuan a share in addition to an interim dividend distribution of 45 percent of profit.

While oil prices have recovered from a 12-year low earlier this year, the crash continues to roil explorers. Exxon Mobil Corp. and Royal Dutch Shell Plc in July reported their lowest quarterly profits since 1999 and 2005, respectively. Chevron Corp. is suffering the longest earnings slump in more than a quarter century and BP Plc posted its lowest refining margin in six years.

Brent crude, the global benchmark, averaged about $41 a barrel during the first half of the year, down roughly 30 percent from the same period in 2015. Prices have fared better in the second quarter, averaging about $47 from about $35 during the previous three months.

Domestic Decline

High production costs, aging fields and low prices have resulted in a decline in China’s domestic crude output, helping drive imports by the world’s second-biggest consumer to a record. Oil producers including PetroChina and China Petroleum & Chemical Corp. have said they will shut down high-cost fields this year after prices crashed to the lowest since 2003. PetroChina’s domestic crude output in the first half of the year fell 4.2 percent from the same period in 2015 to 385.3 million barrels.

The country’s crude production in July tumbled to the lowest since October 2011 and has slipped 5.1 percent in the first seven months of the year, according to data from the National Bureau of Statistics. The drop contrasts with a 3.1 percent increase in natural gas output over the same period. While demand growth for oil has slowed, natural gas use rose 9.8 percent in the first half the year.

Pipeline Sales

PetroChina and it’s parent company, China National Petroleum Corp., have sold off some assets to shore up their balance sheets to weather the crash. The company announcedin November that it planned to sell a 50 percent stake in Trans-Asia Gas Pipeline Co., which builds and operates links between Central Asian countries to China’s western province of Xinjiang, to a unit of state-ownedChina Reform Holdings Corp. The company said Wednesday that it booked a 24.5 billion yuan gain from the sale.

CNPC said in July that it earned a profit in the first half of the year of 27.6 billion yuan, without providing details. The company will give priority to natural gas exploration and production in the second half the year and may adjust investment strategies depending on the change in oil prices, Chairman Wang Yilin in a statement last month.

The Changqing oil field, CNPC’s biggest domestic oil and gas producer, reported separately last month that it rebounded from losses earlier this year to turn a first-half profit on reduced spending. PetroChina posted a 13.8 billion yuan loss in the January to March period, its first-ever quarterly loss since listing in 2000.

http://www.bloomberg.com/news/articles/2016-08-24/petrochina-posts-79-drop-in-first-half-profit-on-oil-crash

The buyer’s market that the battered U.S. shale patch has become is so far luring more land purchases than takeovers as investors await a more solid crude price rebound before making bigger moves.

Handshakes between U.S. oil and gas explorers have had more to do with acquisitions of coveted acreage in the Permian Basin straddling West Texas and New Mexico, or Oklahoma’s Scoop and Stack areas, than agreements to share a head office and a logo.

“People are trying to find the bottom,” said Stephen M. Trauber, vice chairman & global head of energy at Citigroup Inc. “They would rather do a deal when they know they can pay for something and they know the price improves, versus declines.”

A two-year slump in crude prices has sent many producers into bankruptcy, while others slash spending and sell assets to stay afloat. Crude rebounded from a 12-year low earlier this year but is still lingering below $50 a barrel, less than half a 2014 peak. The Permian, the nation’s largest field, has led the biggest and longest revival in oil drilling since 2014 while producers remain more cautious in areas that are less profitable.

Of the $32.1 billion in deals U.S. oil and gas explorers signed this year as of Monday, 52 percent were asset sales, mostly land in the country’s hottest plays, according to data compiled by Bloomberg. But even in the case of deals that are tallied as takeovers, often it’s the acreage that comes along with the acquisition that drives the buy. To help pay for the bargains, producers have issued a record $20.59 billion in shares so far this year.

Concho Resources Inc. and Newfield Exploration Co. are among producers that boughtup areas in the Permian and Oklahoma to consolidate their hold on the lowest-cost shale plays. PDC Energy Inc. joined the race, announcing late Tuesday a $1.5 billion purchaseof two companies with holdings in the Permian. While technically a takeover, the deal was mainly about the combined 57,000 acres PDC is getting out of it.

Producers are looking to focus on areas in which they can operate more economically and increase drilling more efficiently, said Sean Coleman, chief credit officer at Franklin Square Capital Partners. At current price levels, that’s a strategy that makes sense, he said.

The asset sales have reached $16.7 billion so far this year, about 69 percent higher than a year earlier but less than half of the volume of sales during the same period of 2014, the data compiled by Bloomberg show. About $7.46 billion of transactions have been in the Permian, compared with only about $1.88 billion in the Eagle Ford, according to PLS data compiled by Bloomberg.

Scarce Funding

With debt markets practically closed off for many producers, financing constraints have been a large obstacle for mergers and acquisitions, according to the mid-year Oil and Gas Mergers and Acquisitions report from the Deloitte Center for Energy Solutions.

While a relatively better price environment won’t usher in “a tsunami of deals in the next several months,” we’ll likely see a gradual increase, said said Andrew Slaughter, executive director at the Deloitte Center for Energy Solutions.

The level of uncertainty among buyers and sellers is “probably the highest it’s ever been,” Slaughter said. The timing and extent of the recovery has been difficult to predict, which has made agreement on valuations even harder to come by, he said. And traditional debt markets “will be very slow to open up again.”

Executives at Hess Corp. have expressed a strategic but cautious approach to deals: If they can create growth by tweaking existing portfolios, there isn’t strong pressure to go out and buy.

M&A Window

“I think these people are looking at targets,” said Hugh "Skip" McGee, chief executive officer at Intrepid Financial Partners. “But I don’t think that they feel the window is about to close, and that they need to jump now.”

An increased level of interest indicates there will be a higher volume of mergers and acquisitions later this year into the next -- though likely not many mega-deals, Citigroup’s Trauber said. Consolidation “absolutely makes sense” given how fragmented the upstream industry is, he said. Those waiting on a surge are likely to see an uptick in activity.

In the meantime, the most sought-after assets remain pieces of land in the Permian and Oklahoma’s Scoop and Stack regions.

http://www.bloomberg.com/news/articles/2016-08-24/shale-land-grab-tops-mergers-as-buyers-await-better-oil-outlook

Oil refiners reeling from tumbling profits can expect some reprieve in the coming weeks as lower production will tame a huge global excess of gasoline and diesel.

Dozens of plants that will switch off for regular autumn maintenance will help slow the downward spiral in margins (the profit from refining crude into oil products) that have fallen to barely break even in 2016 from highs of around $11 a barrel a year earlier, analysts said.

Refining profits have been a vital bulwark for the likes of Royal Dutch Shell, BP, Eni and Repsol, helping to offset losses from crude oil production in a more than two-year price rout.

European refinery turnarounds are set to peak at around 1.1 million barrels per day (bpd) in mid-September before gradually tapering off throughout October, according to Reuters data and traders.[REF/E]

Though last minute maintenance announcements could increase the balance, it remains significantly lower than last year, when it peaked at around 2.3 million bpd.

Globally, maintenance is expected to be more significant, particularly in export hubs in the Middle East and Asia, taking off around 5 million bpd of capacity at the peak, roughly 7 percent of global refinery throughput.

"No one is seeing the same sort of margins we saw a year ago, but nor are they falling off a cliff," said David Fyfe, head of market research at Switzerland-based trader Gunvor, which owns three refineries in northern Europe.

EQUILIBRIUM

Unplanned outages in the U.S. Gulf Coast, a major export hub, including at ExxonMobil's 502,500 bpd Baton Rouge refinery, are further helping reduce the glut.

A cold winter would further eat into stocks of heating oil.

All this will likely help deplete brimming gasoline and diesel stocks, a result of excessive production earlier this year when prices of crude oil feedstock were low and demand expectations were high.

"We're approaching a state of equilibrium in the sense that demand is matching quite closely with what refineries can produce," said Jonathan Leitch, oil product markets research director at Wood Mackenzie.

The overhang in developed economies of middle distillates, which include diesel and heating oil, is at around 72 million barrels or around four days of consumption, a reasonable level given limited spare refining capacity, according to Fyfe.

Gasoline faces an overhang of 30 million barrels, roughly two days of forward cover.

Robert Campbell, head of oil products markets at consultancy Energy Aspects said refining margins, or cracks, are unlikely to surge even though European diesel stocks are expected to decline by 4 to 6 million barrels in September.

"All of this sounds very bullish, but a good deal of this story may already be priced in. European diesel cracks have rallied from their lows in recent weeks, but cannot realistically go much higher," according to Campbell.

"Margins don't look great going into September but maintenance, even if it is small, will keep people afloat for a while."

Chances for a new tidal wave of refined oil products once autumn maintenance is completed are diminishing as 2016 and 2017 will see far less new refinery capacity come on line compared to last year, Fyfe said.

http://www.reuters.com/article/oil-refineries-idUSL8N1B339E

Kenya has finalised an agreement with oil explorer Tullow Oil and its partners Africa Oil and A.P. Moller-Maersk for the development of a crude oil pipeline, as it bids to become an oil exporter, the president's office said.

Tullow and Africa Oil first struck oil in the Lokichar Basin in the country's northwest in 2012. The recoverable reserves are an estimated 750 million barrels of crude.

The two firms were 50-50 partners in blocks 10 BB and 13T where the discoveries were made. Africa Oil has since sold a 25 percent stake in those blocks to A.P. Moller-Maersk.

A statement from President Uhuru Kenyatta's office quoted Energy and Petroleum Minister Charles Keter as saying the three partners and the government had finalised the pipeline's development plan.

"He said the Government and its upstream partners, Tullow Oil, Africa Oil and Maersk Companies, have concluded a Joint Development Agreement (JDA) for the development of the pipeline," the statement said.

In April, Keter said the pipeline - to run 891 km between Lokichar and Lamu on Kenya's coast - would cost $2.1 billion and should be completed by 2021.

The government and the companies are pushing to start small scale crude oil production in 2017, at about 2,000 barrels per day to be initially transported by road.

"We have started and we are not moving back. We want to be at the top of the pile. So, we have set a path and by 2019, Kenya is going to be a major oil producer and exporter," Kenyatta said.

The statement said Tullow Oil had confirmed it would start production in March 2017 and quoted Paul McDade, its chief operating officer, as saying the company would be ready to start exports in June next year.

Neighbouring Uganda is also looking to build a pipeline to export its oil. Though it initially favoured a route though Kenya, Kampala has decided to build its pipeline through Tanzania instead.

http://www.reuters.com/article/kenya-oil-idUSL8N1B52NA

CNOOC Ltd reported a loss for the first half of 2016 on Wednesday and warned that headwinds will stymie a recovery in crude oil prices from the worst downturn in years.

The company, China's offshore oil and gas specialist, reported a net loss of 7.74 billion yuan ($1.16 billion) in the first six months of the year, compared with a profit of 14.73 billion yuan in the same period last year, it said. This is the first half-year loss the company has reported for data on Eikon going back to 2011.

Oil and gas sales in the period plunged 28.5 percent to 55.08 billion yuan from 77.03 billion yuan even as total net production rose 0.6 percent over the year-ago period to 241.5 million barrels oil equivalent.

The state-owned oil company vowed to continue to cut costs amid a "complex and volatile" market and said uncertainties remain in the global and domestic macro environment while a further recovery in oil prices faces headwinds.

Global crude prices rose by a third in the first six months of the year, recovering from their lowest in more than a decade of $27 a barrel in mid-January amid hopes that major producers would cut output, helping to erode a global surplus.

Prices are currently near $50 per barrel, but have struggled to sustain major gains.

The state-controlled firm said its realized oil prices during the January-June period fell 34.5 percent over a year earlier and its natural gas prices also dropped 16.2 percent during the same period.

CNOOC's Hong Kong-listed share prices were up 19 percent in the first half, outperforming the broader Hang Seng Index , which dropped 5 percent during the period.

http://www.reuters.com/article/cnooc-results-idUSL3N1B537P

A total of 12 onshore oil and natural gas blocks will be on offer in the second auction of Round Two of Mexico's energy reform, the energy ministry announced Tuesday.

The blocks include 39 fields that have already been explored. In all cases, licenses will be on offer.

A total of nine of the blocks lie in the Burgos Basin, across the US border from Texas, and the nation's main source of non-associated gas.

Production of gas from Burgos has fallen below 1 Bcf/d in recent months. The remaining three blocks comprise two in the Chiapas Fold Belt, and one in the southeastern basins in the states of Tabasco and Campeche. All three have potential for both oil and natural gas.

Speaking at a press conference, Pedro Joaquin Coldwell, the energy secretary, said that the main objective of Round 2.2 is to "extract both wet and dry gas so as to produce more ethane, propane and butane in order to benefit the petrochemical industry."

Mexican gas demand has averaged just over 8 Bcf/d over the past three months, peaking at 8.05 Bcf/d in June, according to Platts Analytics' Bentek Energy data. This represents a year-on-year build of 330 MMcf/d or 4%.

A substantial proportion of that demand is now being satisfied by a growing network of pipelines linking the US to Mexico.

Joaquin Coldwell said the Round 2.2 blocks are, at 340 to 480 square km, much bigger than those of similar blocks in Round One. He added that the ministry hopes to attract $5 billion from investment in 2.2.

Bids on Round 2.2 are to be placed on April 7, 2017. Results will be announced two days later.

Round 2.1 consists of 15 shallow-water southern Gulf of Mexico blocks on production sharing contracts, the ministry recently announced. Bids on 2.1 are to be presented on March 22.

Round One will be completed on December 5, when 10 blocks in the 1.4 auction are being auctioned in the deepwater Gulf of Mexico, including the Perdido Fold Belt. A total of 26 companies, including the majors, have applied to bid and the government expects to bring in $44 billion in investment.

http://www.platts.com/latest-news/natural-gas/mexicocity/mexicos-round-22-auction-features-12-blocks-gas-21329669

---

Attached Files

In the rolling country of central British Columbia, Michael LeBourdais’s Whispering Pines Indian Band is looking forward to a cash injection from a new pipeline proposed by Kinder Morgan Energy Partners LP. He’ll be seeking compensation for his band if it doesn’t go through.

Meanwhile, 400 kilometers (250 miles) away near the pipeline’s terminus in Vancouver, the Tsleil-Waututh First Nation is battling the expansion, saying it will lead to oil spills on their tribal land and in the waters of Burrard Inlet.

Into this breach will step Prime Minister Justin Trudeau, who must decide on the C$6.8 billion ($5.4 billion) Trans Mountain pipeline expansion, which oil companies say is vital to get increased output from Canada’s oil sands to global markets via the Pacific Coast.

The conflicting native views underscore the delicate balance Trudeau must strike as he seeks to fulfill his promises of upholding aboriginal rights and responsible resource development while sparking growth in an economy reeling from plunging oil prices.

Trans Mountain brings together “in one file” the biggest priorities for Trudeau and his Liberal Party government, with political implications that set environmental issues against the “cold, hard facts” of economic development, said pollster Nik Nanos, chairman of Ottawa-based Nanos Research Group. The scale of the decision may even force the prime minister to slow down the process and delay a ruling, currently set for the end of the year, he said.

This is “very tricky because of some of the conflicting priorities,” Nanos said. The decision will “be a big signal nationally and internationally and indicative on how the Liberals convert talk on the environment.”

Pipeline Expansion

Kinder Morgan plans to triple Trans Mountain’s capacity to 890,000 barrels a day by twinning the existing 1,150 kilometer line that runs through the mountainous Canadian province. The system, in operation since 1953, is the only pipeline from Alberta to the Pacific Coast and connects the oil sands directly to a port with reach to markets outside North America.

Input from stakeholders during Kinder Morgan’s 159 workshops and open houses as well as other feedback has “improved” the project, the company said in an e-mailed response to questions. The Houston-based pipeline operator has changed the route to avoid sensitive areas and made the pipeline thicker in some locations, it added.

In deciding Trans Mountain’s fate, the government is adding its own review of the project following the National Energy Board’sgreen light in May, subject to 157 conditions. The expansion probably won’t add to the climate impact of the country’s oil production, the Canadian Environmental Assessment Agency said in a separate report.

Still, even with the conditions and additional review, opposition to the pipeline remains stiff, especially near Vancouver with its beaches and environmentally-conscious residents. Mayor Gregor Robertson in June submitted a request for judicial review of the NEB’s decision. The expansion is “not in Vancouver or Canada’s economic or environmental interest,” the mayor said.

Chief LeBourdais at Whispering Pines, meanwhile, says he wants compensation if Robertson and other opponents succeed in blocking the pipeline, which would provide his band with a “very large sum of money” following years of negotiation with the company.

“If you’re going to say no, that’s ok, but then somebody owes me the value of that negotiated agreement,” he said.

And at a recent public meeting in Burnaby earlier this month as part of the federal government’s review on Trans Mountain, Burnaby Mayor Derek Corrigan summed up the challenges for Trudeau -- using the prime minister’s own words.

“Justin Trudeau said governments give permits but communities give permission,” Corrigan told the panel. “Well, we don’t.”

Canada’s oil companies have struggled to win new outlets for their increasing volumes of petroleum, especially from the oil sands where output may rise 50 percent to 3.7 million barrels a day by 2030, according to the Canadian Association of Petroleum Producers. With Enbridge Inc.’s permit for Northern Gateway recently revoked by a federal court and TransCanada Corp.’s Keystone XL approval rejected last year by President Barack Obama, the industry has pinned its hopes on Trans Mountain after years of disappointments.

“There is no question that a decision on the Trans Mountain pipeline is of significant national impact,” said Jeff Gaulin, vice president at the Canadian Association of Petroleum Producers, an industry lobby group in Calgary. “It will be a watershed moment for the development of Canada’s energy resources to reach more international markets.”

Trans Mountain will be the first test of Trudeau’s approach to Canada’s resource-heavy economy and highlights how the government is unprepared with policy to support decisions on individual energy projects, said Monica Gattinger, a University of Ottawa professor and director of the school’s Institute for Science, Society and Policy. A policy framework that provides direction on climate, aboriginal relations and cumulative effects is needed to help resolve opposition to such projects, she said.

“We have a number of policy gaps around energy that frankly extend well beyond the remit of any individual energy project decision-making processes,” she said. “Are governments really trying to make climate policy one pipeline at a time? That’s putting the cart before the horse.”

Trudeau wants to remake Canada into a low-carbon society while balancing natural resource development in an economy that relies on commodity exports, making the country more dependent on resources for economic growth than other large wealthy nations. His government is currently developing a climate strategy, including a national price on carbon, in coordination with the provinces.

“All projects are reviewed individually based on science, evidence and the traditional knowledge of indigenous peoples,” Natural Resources Canada said in an emailed response to questions about the Kinder Morgan pipeline.

http://www.bloomberg.com/news/articles/2016-08-24/trudeau-faces-split-aboriginal-groups-in-kinder-morgan-ruling

PDC Energy Joins Permian Oil Rush With $1.5 Billion Acquisition

PDC Energy Inc. joined the parade of companies buying into the U.S.’s biggest oilfield, announcing a $1.5 billion purchase of two companies with holdings in Texas’ Permian Basin.

PDC agreed to buy two closely held companies with a combined 57,000 acres in the Permian, the Denver-based explorer said in a statement Tuesday. The driller will pay $915 million in cash and give about 9.4 million of its shares to Kimmeridge Energy Management Co., a New York-based private equity fund that manages the two Permian companies.

Drillers including Pioneer Natural Resources Co., Parsley Energy Inc. and Concho Resources Inc. have all announced deals in the Permian this year, expanding their presence in one of the few North American oil regions where production is profitable at current prices. Until now, PDC has concentrated on wells in Colorado and Ohio, according to its statement.

The privately negotiated transaction includes about 57,000 acres in Reeves and Culberson counties in Texas, which currently produce the equivalent of about 7,000 barrels of oil a day. The company intends to fund the cash portion of the purchase though “potential equity and debt financings," PDC said. The deal is expected to close in the fourth quarter.

http://www.bloomberg.com/news/articles/2016-08-23/pdc-energy-joins-permian-oil-rush-with-1-5-billion-acquisition

U.S. EPA links Texas quakes to oil work, echoing research

Federal regulators have concluded that recent earthquakes in North Texas are likely linked to wastewater disposal wells used by the oil and gas industry, echoing findings from researchers at Texas universities.

EPA officials made the comment in a letter to the Texas Railroad Commission, which regulates the oil industry in the top crude-producing state.

Quakes have been tied to the injection of saltwater, a normal byproduct of oil and gas drilling, into deep disposal wells and underground caverns.

The Railroad Commission has in the past questioned the causal link found in university studies.

"EPA believes there is a significant possibility that North Texas earthquake activity is associated with disposal wells," said the Aug. 15 letter reported by the Texas Tribune on Tuesday.

The EPA said it was concerned about seismic activity in the Dallas-Fort Worth area because of its potential to affect underground sources of drinking water.

On Tuesday, the Railroad Commission said it has subjected new disposal well applications to greater scrutiny, participated in technical hearings about so-called induced seismicity, and supported installation of more earthquake monitoring stations so more data can be collected to better understand seismic activity in Texas.

Regulators in Oklahoma have ordered dozens of disposal wells to be shut in to curb a spate of quakes in that state.

The use of disposal wells intensified during the fracking boom, although U.S. oil and gas drilling has slowed recently on the worst price crash in years.

http://www.reuters.com/article/fracking-quakes-texas-idUSL1N1B41RN

The American Petroleum Institute reported a 4.464 million barrel increase in U.S. crude oil inventories in the biggest build in crude supplies in four months.

These figures are in stark contrast to a survey by Reuters earlier today, which showed an expert consensus for a 0.5 million-barrel draw in crude oil inventories. Similarly, Zero Hedge’s sources expected an 850,000 barrel draw this week, while analysts polled by S&P Global Platts expecteda 200,000-barrel rise in U.S. crude inventories. No estimates expected the massive increase in inventory.

Gasoline inventories decreased by 2.2 million barrels – and if confirmed by tomorrow’s EIA figures, this would be the fourth weekly draw for the energy source in a row. Distillates also experienced an 834,000 barrel draw.

West Texas Intermediate prices fell lower after the release of the new data, in light of the high inventory build-ups. However, the actual supply numbers will be released tomorrow in a report by the federal Energy Information Administration.

In light of the new energy supply configuration, analysts at Goldman Sachs predict that even if the Organization of Petroleum Exporting Countries (OPEC) agree on a production freeze next month, the move will be self-defeating as net energy importer nations begin buying energy supplies en masse to hedge against higher prices.

This week, supplies at the storage facilities at Cushing increased by 417,000 barrels according to the API figures, against a more conservative expected 200,000-barrel build. In the week prior, crude inventories at the site were down by 680,000 barrels according to actual EIA data.

http://oilprice.com/Latest-Energy-News/World-News/Oil-Tanks-After-API-Reports-Massive-Build-In-US-Crude-Stocks.html

U.S. LNG player Cheniere Energy has shipped the first cargo produced from the second train at its Sabine Pass export facility in Lousiana, according to gas shipping giant BW.

“BW GDF Suez Everett loaded the first cargo from Sabine Pass Train 2 last week,” BW LNG, a unit of the Singapore-based company said in a short statement through its social media channels.

The 2003 built 138,028-cbm LNG tanker left the Sabine Pass facility on August 18 and is currently located in the Caribbean Sea, according to AIS data provided by the vessel tracking website, MarineTraffic.

LNG World News contacted both Cheniere and BW seeking comment on the matter. We will update the article once we receive a response.

Cheniere said in the latest Sabine Pass construction update it expects first Train 2 cargo late August, with completion of the second liquefaction unit expected at the end of September. Train 2 started producing the chilled fuel on July 27.

Cheniere’s Sabine Pass plant in Louisiana, first of its kind to ship U.S. shale gas overseas, started exporting LNG from Train 1 in February this year.

The majority of these exports went to South America, followed by the Middle East, Asia, and Europe.

Cheniere is developing and constructing up to six trains at Sabine Pass. Each train is expected to have a nominal production capacity of about 4.5 mtpa of LNG.

http://www.lngworldnews.com/cheniere-ships-first-cargo-from-sabine-pass-train-2/

Oil Search Ltd. said development of a second standalone liquefied natural gas export terminal in Papua New Guinea is unlikely with Exxon Mobil Corp. and Total SA expected to favor cooperation to expand the existing PNG LNG project.

The Sydney-based company owns 29 percent of the Exxon Mobil-led PNG LNG project and a 22.8 percent stake in the Papua LNG development operated by Total and co-owned by explorer InterOil Corp. Exxon Mobil, after prevailing over Oil Search in the $2.5 billion battle for control of InterOil Corp. in July, said it will funnel gas from the Papua project into an expansion of PNG LNG.

“A greenfields development for Papua LNG is highly unlikely based on the share of equity that will reside across the various projects at completion of the InterOil transaction with Exxon Mobil,” Oil Search Managing Director Peter Botten said on an earnings call.

Botten was speaking Tuesday after Oil Search posted a 89 percent fall in first-half net income to $25.6 million as a drop in energy prices offset increased output. The result compared with expectations for $38 million, according to the average of three analysts surveyed by Bloomberg.

The price Oil Search received for oil and condensate fell 27 percent from the year before while liquefied natural gas prices dropped 40 percent. Oil Search slashed its interim dividend to 1 cent from 6 cents a share.

Oil prices have likely bottomed and the company is in the midst of an eight week strategy review after losing out in its battle for InterOil, according to Botten. The study, which will be completed by the fourth quarter, will focus on cooperation between the PNG LNG and Papua LNG projects to determine what strategies hold the most value for all stakeholders, Botten said in a statement.

The company delivered a higher than expected dividend, Macquarie Group Ltd. said in a note. “Based on the increasing volumes and revenue as well as further lowering of costs at PNG LNG, we anticipate this higher dividend will be the first of many,” according to the note.

Oil Search last month said revenue fell 33 percent even as production climbed 4 percent. Brent oil averaged about $41.20 a barrel for the first half, more than 30 percent less than the corresponding period in 2015.

Oil Search’s realized price of $5.23 per million British thermal units for its gas in the second quarter is lower than rival Woodside Petroleum Ltd., according to data compiled by Bloomberg.

http://www.bloomberg.com/news/articles/2016-08-23/oil-search-profit-plunges-89-after-slump-in-energy-prices

Argentina's government may consider raising natural gas bills on households by less than a previously proposed 400% as it seeks to rebuild gas production to reduce imports, Cabinet Chief Marcos Pena said.

The government will pursue "the best scheme for gradualism" in raising gas tariffs, Pena said Saturday on Cadena 3, a radio broadcaster.

The government called the public consultation last week after the Supreme Court annulled its 400% hike implemented April 1, on grounds that hearings must come first to allow users a chance to voice their concerns before changes are made in what they are charged.

This was a blow for the right-of-center government of President Mauricio Macri, only nine months in office. His government wants to rebuild gas production and end chronic energy shortages, helping to reel in foreign investment to pull the economy out of recession.

To encourage drilling, Macri has doubled the wellhead price to an average of $5.20/MMBtu and kept in place an incentivized price of $7.50/MMBtu for output from new developments, like in shale and tight plays.

With higher gas distribution and transport tariffs, the government wants to cover more of the wellhead price from consumers, helping to reduce the strain on public finances through subsidies.

With more gas production, the government is seeking to cut imports, which hit a record of nearly 50 million cu m/d in June. The goal is to end purchases of liquefied natural gas -- half of total imports -- by 2021-22, the government has said.

Argentina's gas production rose 6.8% to an average of 121.4 million cu m/d in the first five months of 2016 from a 10-year low of 113.7 million cu m/d in 2014, according to Energy Ministry data.

http://www.platts.com/latest-news/natural-gas/buenosaires/argentina-to-consider-less-than-400-natural-gas-21315572

Iraqi Oil Minister Jabar Ali al-Luaibi on Tuesday asked foreign oil companies to increase oil and natural gas production and exports in order to maximise the OPEC nation's revenue, ministry spokesman Asim Jihad told Reuters.

Luaibi, who took over the ministry earlier this month, held a meeting in Baghdad with oil companies operating in Iraq.

"The minister reaffirmed support for the operations of international companies in order to increase the production and export rates of crude oil and natural gas," Jihad said.

http://www.reuters.com/article/us-iraq-oil-foreign-idUSKCN10Y0XI?utm_campaign=trueAnthem:+Trending+Content&utm_content=57bc2dde04d301708f405888&utm_medium=trueAnthem&utm_source=twitter

---

Attached Files

China's crackdown on alleged tax evasion in the oil industry will target independent refineries and follows complaints by state energy giants, in the first major sign of growing tensions between established players and their upstart rivals.

In a statement on Tuesday, the National Development and Reform Commission (NDRC) said it will ban crude imports for up to a year or, in certain cases, cancel import licenses for any companies found guilty of tax fraud.

It did not give any further details, identify which companies it was targeting or provide the reason for the announcement.

But industry sources in China familiar with the matter say the government launched an investigation earlier this year into complaints by government-owned firms that the nation's independent refiners, known as teapots, are not paying enough sales taxes.

Officials from the NDRC and the State Administration of Taxation have visited some teapots, they said.

"(The probe) was triggered by strong complaints from state oil companies that local refineries were paying much less fuel tax compared to them," said a senior official with the China Petroleum & Chemical Industry Federation, a semi-official agency. He declined to be named due to the sensitivity of the issue.

Inspectors from the NDRC are also looking into allegations that refineries with import licenses are selling foreign crude oil to companies without, breaking rules set by Beijing when it started granting the quotas a year ago, according to four industry officials with knowledge of the inspections.

The complaints illustrate how the rapid rise of the teapots, which are mainly privately owned and nimbler than their state-run rivals, like Sinopec and PetroChina, has roiled the domestic industry since Beijing granted the import permits a year ago.

Any steps to curb their imports would be a major blow to this small but fast-expanding group, which have grabbed a growing slice of the domestic market by selling diesel and gasoline at discounts to state-run majors, and forcing them in turn to sell their excess into a saturated global market.

"Previously, state refiners have been (turning) a blind eye on teapots, because they are not a big enough threat. Now things have changed. Big SOEs are quite sensitive over teapots' business practices," Lin Boqiang, energy researcher with Xiamen University.

When asked about the probe last week, Sinopec spokesman Lu Dapeng said he had no knowledge of the government's inspections, and would not comment further.

Rancor over taxes has been brewing for months, according to local media reports and traders.

Before they had access to foreign crude, teapots mainly refined fuel oil and whatever excess crude they could pick up from the state-owned players.

"A (teapot) plant of five million tonnes of annual capacity pays less than half of that of a state-owned refinery," Li Tianshu, a PetroChina refinery manager was quoted as saying by the 21st Century Business Herald in July.

"Competition from teapots forced us to lower operations, they are now the biggest challenge to our profitability," the paper cited a second state refinery official as saying.

In an apparent response to growing criticism, Shandong Dongming Petrochemical Group, the country's largest teapot operator, last week said via a social media post that it paid a record amount of taxes totaling nearly 1.28 billion yuan ($193 million) between January and April to the government of Heze, where it is headquartered.

That's nearly 40 percent of total tax revenue for the city of 9.6 million people, it said on wechat.

An executive with a leading teapot refiner said independents were paying lower taxes because many were configured to treat heavier crude oil that yields a smaller amount of gasoline and diesel versus more sophisticated plants.

Many produce heavier products like bitumen that are not subject to consumption levies, he added.

http://www.reuters.com/article/china-teapot-tax-idUSL3N1B0213

China's oil refining, petrochemical and chemical companies will propose a plan to benchmark their carbon dioxide (CO2) emissions as the first step toward setting up an emissions market for the sector, the group's industry association said on Tuesday.

The China Petroleum and Chemical Industry Federation (CPCIF), China's oil industry lobbying group, plans to make a proposal by September on how to set benchmarks for the CO2 produced while manufacturing products ranging from diesel fuel to benzene, it said in its China Chemical Industry News newsletter.

The benchmarks will be used to set CO2 emissions caps for nearly 2,400 companies in the sector under the national carbon market that will start next year, the CPCIF said.

China, the world's second-largest oil consumer, will need to benchmarks to help create reduction targets for its large petrochemical and chemical factories that are responsible for up to 70 percent of the sector's CO2 emissions, the CPCIF said.

The number of the petrochemical and chemical companies participating in China's domestic carbon market will account for one-third of the total number of companies participating nationally, said Li Yongliang, a CPCIF official, as cited by China Chemical Industry News.

China plans to bring in up to about 8000 companies in eight industries into its national carbon trading programme, including from the power, steel, cement and transportation sectors.

The CPCIF will propose benchmarks for 23 products including refined oil products, ethylene and aromatic hydrocarbons such as benzene. The final cap will be set based on the benchmarks at the best-performing facilities.

Sinopec Group, China's biggest oil refiner, said earlier this month that it would cut its carbon intensity 51 percent below 2005 levels by 2020 as a part of the company's five-year plan.

China's oil companies have been trading carbon in the seven local carbon exchanges since the start of the pilot trading phase in 2013.

http://www.reuters.com/article/china-carbon-oil-idUSL3N1B42QY

The ExxonMobil-operated US$19 billion PNG LNG project is looking at multi-year contracts for spot sales of the chilled fuel as the project is producing above the nameplate capacity, according to Oil Search that has a 29 percent share in the JV.

The PNG LNG project is producing 7.7 million tonnes per annum (mtpa), 12 percent above the nameplate capacity of 6.9 mtpa. It is currently in the recertification process for all of the PNG LNG fields, which according to Oil Search will result in a larger reserve base that could underpin long-term contracts for future spot LNG cargoes.

“At the moment, as we go to the recertification process for all of the PNG LNG fields, those are relatively short-term type of spot sales that we are looking at which may cover four to eight cargoes,” Julian Fowles, Oil Search’s executive general manager for PNG, told analysts on a conference call on Tuesday after the company announced its first-half results.

However, with a positive outlook on the recertification, the JV would “certainly be looking at longer term strips of sales – contracts that would be potentially a number of years that would cover a substantial portion of the spot volumes that we have since we are currently producing above nameplate capacity,” Foyles said.

PNG LNG sold eight spot cargoes in the first half of this year, out of which six were delivered to Japanese customers, Fowles said,  adding that this reflects the “desire of our premium customer for our high heating value gas.”

“We have also been selling spot cargoes to other customers beyond our long-term contract customers that have traditionally been our primary buyers of spot cargoes. We have other customers now becoming used to PNG LNG product, and that is also good for future marketing of longer-term spot cargoes.”

The PNG LNG project commenced production of LNG in April 2014 and since then it had delivered 205 cargoes of the chilled fuel.

The LNG project includes gas production and processing facilities in the Southern Highlands, Hela, Western, Gulf and Central Provinces of Papua New Guinea.

There are over 700 kilometres of pipelines connecting the facilities, which includes a gas conditioning plant in Hides and the two-train liquefaction facility near Port Moresby.

According to Oil Search, there is enough gas for two more LNG trains, and also a third one if the next drilling campaign is successful.

Besides ExxonMobil and Oil Search, other JV participants are Santos, National Petroleum Company of PNG, JX Nippon Oil and Gas Exploration, Mineral Resources Development Company, and Petromin PNG Holdings.

http://www.lngworldnews.com/png-lng-eyes-multi-year-spot-contracts/

The flow of oil from U.S. shale fields is projected by government analysts to fall 14 percent by 2017, as the reverberations of the recent crash in crude prices are felt.

Production from those shale fields had increased exponentially over the past decade as hydraulic fracturing and horizontal drilling techniques were improved. Shale oil now accounts for more than half of the nation’s crude output.

But according to a report Monday by the U.S. Energy Information Administration, shale oil output – which peaked in 2015 at 4.9 million barrels a day – will fall to 4.2 million barrels by the end of next year.

The fall is “mainly attributed to low oil prices and the resulting cuts in investment. However, production declines will continue to be mitigated by reductions in cost and improvements in drilling techniques,” the report reads.

After 2017 government analyst are more bullish, predicting that by 2040 shale oil production will increase 45 percent from 2015 levels to 7.1 million barrels a day. U.S. natural gas production from shale would more than double to 79 billion cubic feet a day – with no drop off in production in the short-term.

Those predictions are predicated on analysts ability to predict future oil prices. In the report, EIA explains that fluctuations in oil prices could cause wild production swings. In the event of high prices, shale oil would reach more than 12 million barrels a day by 2040. If prices were low, production could fall close to 3 million barrels a day.

The EIA also predicts that by 2019 the Bakken formation, which spans North Dakota and Montana, will be the country’s largest oil field, surpassing the Eagle Ford field in South Texas. By 2040, analysts predict, the Bakken will produce 2.3 million barrels per day, almost a third of the nation’s shale oil output.

http://fuelfix.com/blog/2016/08/22/eia-u-s-shale-oil-production-to-fall-sharply-through-2017/

Cnooc Ltd., the country’s largest offshore producer, may consider a special dividend even as it’s forecast to report on Wednesday that it lost 8 billion yuan ($1.2 billion) in the first half of the year, according to China International Capital Corp. and Morgan Stanley. PetroChina Co., the country’s biggest oil and gas company, may pass on to investors the proceeds from selling stakes in Central Asia pipelines, according to Nomura Holdings Inc.

“At current oil prices, China’s big oil companies have basically nothing but reasonable dividend payouts to keep current investors and attract new ones,” Tian Miao, a Beijing-based analyst at North Square Blue Oak Ltd., said by phone. Payouts will add extra stress to cash flow, but they’re necessary for the companies to stay attractive or meaningful to financial and strategic investors, Tian said.

Oil companies have stayed committed to dividends in the face of the energy crash, with some of the biggest selling billions of dollars of bonds this year to sustain payouts. Exxon Mobil Corp. and Royal Dutch Shell Plc maintained dividends despite posting the lowest quarterly profits since 1999 and 2005, respectively. Chevron Corp. reported its longest earnings slump in 27 years, while BP Plc posted its lowest refining margin in six years and still kept the shareholder payout intact.

‘More Generous’

While shares of China’s so-called Big Three oil companies -- which includes China Petroleum & Chemical Corp., the world’s biggest refiner -- have recovered this year amid a rebound in oil prices, they’re all still down more than 30 percent since their peak in 2014.

PetroChina may break even in the first half of the year on the back of one-off gains, according to a July 15 research note by Citigroup Inc. analysts including Graham Cunningham, who has a sell rating on the company. The company may see a gain of at least 20 billion yuan from the sale of 50 percent in Trans-Asia Gas Pipeline Co. in November, according to Citigroup and Nomura.

“The improved balance sheet means that PetroChina has the capacity potentially to pay a special divided to reward investors,” Gordon Kwan, Nomura’s Hong Kong-based head of Asia oil and gas research, who has a buy rating on the stock, said in a report earlier this month. “We think PetroChina could become more generous in rewarding investors amid depressed oil prices and trigger out-performance for the stock. ”

Cnooc said in July that it expects a loss for the first six months of the year, compared with profit of 14.7 billion yuan in the same period in 2015, on the back of falling oil prices and an impairment on assets including its Canadian oil sands project. It would the first time the company reported a half-year loss since it began trading in 2000, according to data compiled by Bloomberg.

“Thanks to Cnooc’s competitive cash cost and strategy to reward shareholders, we think the company is highly likely to pay special dividend in first half of 2016 despite the loss,” Morgan Stanley analysts including Andy Meng, wrote after it announced the profit warning. He has an overweight rating on the stock, similar to a buy recommendation.

The exploration and production units of China’s energy giants will be hit by both the decline in oil prices as well as the slide in the country’s production due to an estimated 10 percent reduction in capital spending during the first half of the year, Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., wrote in an Aug. 1 report.

The country’s crude output in July tumbled to the lowest since October 2011 and has slipped 5.1 percent in the first seven months of the year, according to data from the National Bureau of Statistics. The drop contrasts with a 3.1 percent increase in natural gas output over the same period.

Profit at China Petroleum, known as Sinopec, is expected to drop about 40 percent to roughly 15 billion yuan -- compared with less than 200 million yuan for PetroChina -- as losses on its oil production units will be countered by its refining business, according to Bernstein’s Beveridge. The company’s domestic crude output, which makes up more than 80 percent of its production, dropped nearly 13 percent in the first half of the year, it said in a statement last month.

China’s oil production has a break-even price between $37 and $50 a barrel, Beveridge wrote in the report. Brent crude, the global benchmark, averaged about $41 a barrel during the first half of the year, compared with more than $59 during the same period in 2015.

PetroChina shares dropped 1.1 percent to HK$5.25 in Hong Kong as of 10:13 a.m., while Sinopec fell 0.7 percent to HK$5.56 and Cnooc slid 2 percent to HK$9.55. The city’s benchmark Hang Seng Index declined 0.4 percent.

http://www.bloomberg.com/news/articles/2016-08-22/china-oil-giants-seen-soothing-investors-with-post-crash-payouts

---

Attached Files

World’s largest energy consumer, China has on Monday received the first cargo of LNG from Cheniere’s Sabine Pass liquefaction and export terminal in the United States.

The cargo was brought onboard the 161,870-cbm Maran Gas Apollonia, chartered by the Hague-based LNG giant Shell, that was the first LNG tanker to transit the newly expanded Panama Canal connecting the Atlantic and Pacific oceans.

Maran Gas Apollonia is currently unloading the U.S. LNG cargo produced from shale gas at the CNOOC-owned Guangdong Dapeng LNG terminal in Shenzhen Dapeng Bay, according to AIS data provided by the vessel tracking website, MarineTraffic.

Cheniere’s Sabine Pass plant in Louisiana, first of its kind to ship U.S. shale gas overseas, started shipping the chilled fuel from Train 1 in February this year.

The majority of these exports went to South America, followed by the Middle East, Asia, and Europe.

Cheniere previously said it expects first cargo from Sabine Pass Train 2 in mid-August with substantial completion to be achieved in late September.

http://www.lngworldnews.com/china-receives-u-s-lng-cargo/

Genscape Cushing inventory: -187,197 bbls in week ended Aug.19

@zerohedge

Twenty wells at Britain's Rough gas storage site should be available for withdrawals from Nov. 1, Centrica Storage Limited (CSL) said on Monday, above the operator's previous estimate and easing concerns about record low gas stocks this winter.

Centrica, which owns British Gas, one of Britain's largest energy suppliers, imposed restrictions in March last year on how much gas could be stored at Rough as a safety precaution after identifying potential issues with well integrity.

Following investigations, Centrica shut down the facility for injections and withdrawals of gas in June this year and then said the outage would be extended until March or April next year.

However, it also said it hoped to be able to re-open at least four wells for withdrawals only by Nov. 1, 2016.

Britain depends on stored reserves to help manage winter demand spikes and to ensure security of supply. The Rough site accounts for more than 70 percent of the country's storage capacity, National Grid data shows.

There were fears Britain could go into next winter with very low levels of gas stocks, because if only four wells returned to service, the site would have a maximum withdrawal rate of around 5 million cubic metres (mcm) per day.

If 20 wells are available for withdrawals, the maximum withdrawal rate is around 35 mcm/d, based on CSL data earlier this month.

"It certainly eases concerns (about stocks). It has had an impact on the first quarter price and beyond and hopefully it will mitigate future issues if Centrica can address problems now," said Nick Campbell, an analyst at Inspired Energy.

The British gas prices for delivery this winter fell by 0.90 pence to 40.90 p/therm at 1122 GMT, having previously traded at a high of 42.20 p/therm earlier on Monday.

The Q1 2017 contract was down 0.40 pence at 43.70 p/therm.

However, CSL added it could not increase the reservoir pressure at Rough while it was doing its well testing programme, so no wells were currently available for injection.

http://www.reuters.com/article/britain-gas-rough-idUSL8N1B321G

Based on projections in the U.S. Energy Information Administration's Annual Energy Outlook 2016 (AEO2016), U.S. tight oil production is expected to reach 7.08 million barrels per day (b/d), and shale gas production is expected to reach 79 billion cubic feet per day (Bcf/d) in 2040. These values reflect Reference case projections, while several side cases with different assumptions of oil prices, technological advances, and resource availability have different levels of tight oil and shale gas production.

U.S. production of tight oil and shale gas has increased significantly from 2010 to 2015, driven by technological improvements that have reduced drilling costs and improved drilling efficiency in major shale plays, such as the Bakken, Marcellus, and Eagle Ford.

Production from tight oil in 2015 was 4.89 million barrels per day, or 52% of total U.S. crude oil production. From 2015 to 2017, tight oil production is projected to decrease by 700,000 barrels per day in the Reference case, mainly attributed to low oil prices and the resulting cuts in investment. However, production declines will continue to be mitigated by reductions in cost and improvements in drilling techniques. The use of more efficient hydraulic fracturing techniques and the application of multiwell-pad drilling, as well as changes in well completion designs, will allow producers to recover greater volumes from a single well.

As oil prices recover, oil production from tight formations is expected to increase. By 2019, Bakken oil production is projected to reach 1.3 million b/d, surpassing the Eagle Ford to become the largest tight oil-producing formation in the United States. The Bakken, which spans 37,000 square miles in North Dakota and Montana, has a technically recoverable resource of 23 billion barrels of tight oil that can be produced based on current technology, industry practice, and geologic knowledge. Bakken production is projected to reach 2.3 million barrels per day by 2040, almost a third of the projected U.S. total tight oil production.


Source: U.S. Energy Information Administration, Annual Energy Outlook 2016

Natural gas production from shale gas plays in 2015 accounted for 37.4 billion cubic feet per day (Bcf/d), or 50% of total U.S. natural gas production. Unlike production from tight oil, which declines in the near term before increasing later in the forecast period, natural gas production from shale gas plays is expected to increase through 2040 in the AEO2016 Reference case.

The two Appalachian shale gas plays, the Marcellus and Utica, have factors favorable for production: shallower geologic formation depths and proximity to consuming markets. Both Appalachian shale gas plays have remained resilient to the low natural gas prices and are projected to continue to drive total U.S. production in the long term. Shale gas production in these plays is expected to reach more than 40 Bcf/d by 2040, providing just over half of U.S. total shale gas production.

Two oil price side cases illustrate the effect of higher or lower global crude oil prices on production from tight formations. By 2040, the global benchmark Brent crude oil spot price averages $73/b in the Low Oil Price case, $136/b in the Reference case, and $230/b in the High Oil Price case. In the High Oil Price case, drilling activities increase tight oil production through 2026, after which it begins to decline. The opposite is true in the Low Oil Price case, where tight oil production declines slightly before increasing after 2026. Production of shale gas increases in both the High and Low Oil Price cases.


In the resource and technology side cases, the estimated ultimate recovery for shale gas and tight oil wells in the United States is 50% higher or 50% lower than in the Reference case. Rates of technological improvement that reduce costs and increase productivity in the United States are also 50% higher or 50% lower than in the Reference case. By 2040, these cases result in the greater differences from Reference case production values than do the alternative oil price cases.






Source: U.S. Energy Information Administration, Annual Energy Outlook 2016

http://www.oilvoice.com/n/Future-US-tight-oil-and-shale-gas-production-depends-on-resources-technology-markets/fc01c307bc6d.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

---

Attached Files

 OPEC has done it again.

Talk of a potential deal to freeze output helped push oil close to $50 a barrel and prompted money managers to cut bets on falling prices by the most ever. West Texas Intermediate, the U.S. benchmark, went from a bear to a bull market in less than three weeks.

OPEC is on course to agree to a production freeze because its biggest members are pumping flat-out, said Chakib Khelil, the group’s former president. Saudi Energy Minister Khalid Al-Falih said that the talks may lead to action to stabilize the market.

"This is all courtesy of some very well-timed comments from the Saudi oil minister," said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. "They’ve been successful over the last year in jawboning the market, and this is the latest example."

Hedge funds trimmed their short position in WTI by 56,907 futures and options during the week ended Aug. 16, the most in data going back to 2006, according to the Commodity Futures Trading Commission. Futures rose 8.9 percent to $46.58 a barrel in the report week and traded at $47.41 as of 11:16 a.m. in London on Monday. WTI is up 20 percent from its Aug. 2 low, meeting the common definition of a bull market.

"This was a very short market so we were bound to get some covering," said Stephen Schork, president of the Schork Group Inc., a consulting company in Villanova, Pennsylvania. "You probably won’t hear a lot from OPEC with prices up here, but if we get down to where we were a few weeks ago we can expect to hear more."

Informal Talks

The Organization of Petroleum Exporting Countries plans to hold informal talks to discuss the market at the International Energy Forum next month in Algiers. Russian Energy Minister Alexander Novak said that the nation -- not an OPEC member -- was open to discussing a freeze.

Talks to implement a production cap collapsed in April when Saudi Arabia said it wouldn’t take part without Iranian participation. Iran was restoring exports after sanctions over its nuclear program were lifted in January.  

Saudi Arabia, Iran, Iraq and Russia are producing at, or close to, maximum capacity, Khelil said in a Bloomberg Televisioninterview on Aug. 17. Saudi Arabia told OPEC that its production rose to an all-time high of 10.67 million barrels a day in July, according to a report from the group.

Ample Stockpiles

Declining crude and gasoline stockpiles in the U.S. also bolstered the market last week. Crude supplies dropped by 2.51 million barrels as of Aug. 12, Energy Information Administration data show. Gasoline inventories slipped 2.72 million barrels during the period. Stockpiles of both crude and gasoline remain at the highest seasonal levels in decades even after the declines.

"There’s a high level of uncertainty right now, so fairly small news can move the market a lot," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. "It still remains the case that we have a huge surplus of supply and aren’t going to see it disappear anytime soon."

Money managers’ short position in WTI dropped to 163,232 futures and options. Longs, or bets on rising prices, increased 0.1 percent, while net longs advanced 56 percent, the most since July 2010.

In other markets, net-bearish bets on gasoline climbed 54 percent to 1,970 contracts. Gasoline futures rose 5.7 percent in the report week. Net-long wagers on U.S. ultra low sulfur diesel increased more than fivefold to 10,835 contracts. Futures advanced 9.8 percent.

More Rigs

A backlog of drilled but uncompleted wells, or DUCs, helps support the bearish case, said Ed Morse, head of commodities research at Citigroup Inc. in New York. There’s also been an upsurge in drilling as prices have climbed. U.S. producers added oil rigs for an eighth week, the longest run since April 2014, according to Baker Hughes Inc. data on Aug. 19.

The EIA increased its domestic output forecast for 2017 to 8.31 million barrels a day from 8.2 million projected in July, according to its monthly Short-Term Energy Outlook released Aug. 10.

"In the U.S., DUC completion and the drilling of new wells are changing the production outlook," Morse said. "We might see U.S. production rise next year instead of falling."

http://www.bloomberg.com/news/articles/2016-08-21/-well-timed-opec-talk-forces-oil-bears-into-record-reversal

---

Attached Files

Petroliam Nasional Bhd., Malaysia’s state oil company, said profit dropped 96 percent last quarter after it was hit by oil prices that remained sharply lower than a year earlier.

Net income fell to 348 million ringgit ($86 million) in the three months through June, from 9.1 billion ringgit a year ago, the company said Monday. Revenue slid 21 percent to 48.4 billion ringgit.

“The first half of 2016 remained difficult for Petronas,” Chief Executive Officer Wan Zulkiflee Wan Ariffin told reporters in Kuala Lumpur. “The continuous volatility of oil prices means that we cannot let up, but instead continue to grow on the back of better operational efficiencies, more controllable" spending on operations, he said.

Petronas, as the company is known, said earlier this year a change in its business structure will result in the loss of about 1,000 jobs as it joined global oil majors including Royal Dutch Shell Plc in cutting spending as crude prices fell. The company had about 51,000 workers at the end of 2014. The company will focus on non-performers for any further headcount reductions, without aiming for a specific target, Wan Zulkiflee said.

No Debt-Raising

Petronas is planning to lower capital and operating expenditures by as much as 20 billion ringgit in 2016, with a planned reduction of 50 billion ringgit over four years, Wan Zulkiflee said in February. While Petronas has said that it may need to raise debtand tap its cash reserves to cover spending and dividend payments to the government, no debt-raising has been planned so far, Chief Financial Officer George Ratilal said Monday.

Brent crude, the global benchmark, averaged almost $47 a barrel in the second quarter, compared with about $63 during the same period last year. Petronas is sticking with its expectation for Brent to average $30 a barrel in 2016, Wan Zulkiflee said. The average oil price this year is still lower than 2015, he said.

Petronas will make a total review of its liquefied natural gas development in Canada after the government there finishes its own assessment of the project around September or October, Wan Zulkiflee said Monday. The company plans to revisit the cost, schedule and market conditions for the project before making a final investment decision with its partners after delays in securing regulatory approvals, he said.

The Canadian government is evaluating the company’s final submission for the C$36 billion Pacific NorthWest LNG projectbefore deciding if the company can proceed with its planto ship gas from the country’s Pacific Coast. Construction was originally scheduled to start in 2015, but the approval has been mired over concerns about the impact on fish, wildlife and the traditional ways of life of First Nation tribes in the region.

http://www.bloomberg.com/news/articles/2016-08-22/petronas-posts-96-quarterly-profit-decline-on-lower-oil-prices

Iran, Oman in subsea gas pipeline studies

Iran and Oman have intensified works on identifying the best route for a subsea pipeline that would carry Iranian gas to Oman.

According to Alireza Kameli, managing director of National Iranian Gas Exports Company (NIGEC), studies to select the best route have started, and two routes are being considered. These include deepwater and shallow water paths.

He reportedly said that the deepwater option would mean a shorter pipeline and no need for permission from a third country. However, the decision will be made after the studies have been completed.

The Iranian Offshore Engineering and Construction Company (IOEC) is conducting the offshore studies and Pars Consulting Engineers Company the onshore ones.

The land part of the gas pipeline extends for 200 kilometers from Rudan to Mobarak Mount in Iran’s southern Hormozgan province. The seabed section between Iran and Sohar Port in Oman will stretch for another 200 kilometers.

http://www.offshoreenergytoday.com/iran-oman-in-subsea-pipeline-studies/

A new China-Russia oil pipeline will help guarantee China's oil consumption and, cut its transportation costs, said Gao Jian, an oil analyst at commodities consultancy Sublime China Information Co Ltd.

Compared with other countries, Russia has oil of quite good quality, and its location near China makes it competitive in exporting oil to China, Gao said, adding that Russia will certainly become China's largest exporter of oil in the near future.

The European economic situation made Russia shift its oil export destinations to the Asia-Pacific region, while China, as one of the world's largest oil consumers, has the need to import oil from neighboring countries, according to Gao.

Construction of the second China-Russia crude oil pipeline started recently in northeastern China's Heilongjiang province, a move that expands the capability for oil transportation from Russia to China.

The pipeline, traversing the China-Russia border, is 940 km in length and 813 mm in diameter, with a capacity to transport 15 million tons of crude oil annually, according to China National Petroleum Corporation.

The Chinese section of the pipeline starts from the border city of Mohe in Heilongjiang, runs southward through the Inner Mongolia autonomous region and ends at Daqing in Heilongjiang.

The pipeline is expected to be put into operation at the beginning of 2018.

It will run parallel to an existing pipeline-the first China-Russia crude oil pipeline that was put into use in 2011, which can also transport 15 million tons of oil each year.

According to the CNPC Economics & Technology Research Institute, China imported 328 million tons of oil last year.

In 2015, Russia exported 41.04 million tons of crude oil to China, making China the country's largest oil importer, Russian media reported.

That means more than 12.5 percent of crude oil China imported last year was from Russia.

China and Russia signed a cooperation agreement on expanding bilateral trade in crude oil in 2013.

Following the agreement, CNPC signed a trade contract with Rosneft, Russia's largest oil producer, to expand the supply of oil for China.

Building a new pipeline is the main action under the contract.

http://www.chinamining.org/News/2016-08-22/1471845703d77111.html

Entirely comprising oil-directed units, the US drilling rig count increased by 10 during the week ended Aug. 19, according to data from Baker Hughes Inc.

Now at 491 rigs working, the overall count has risen in 10 of the last 12 weeks, adding 87 units during that time. Compared with Dec. 5, 2014, the week prior to the drilling freefall, the count is down 1,429 units.

Largely bolstered by increased oil-directed drilling activity in the Permian basin, last week’s overall 17-unit rise in the US was the country’s largest since July 24, 2015 (OGJ Online, Aug. 12, 2016). The basin has represented more than two thirds of the total US gain during the recent rally.

Meanwhile, US crude oil production during the week ended Aug. 12 jumped 152,000 b/d to 8.597 million b/d, down 751,000 b/d year-over-year, according to data from the US Energy Information Administration. The Lower 48 accounted for 100,000 b/d while Alaska contributed the remaining 52,000 b/d.

EIA also this week forecast a 3,000-b/d increase in output from the Permian during September after several months of declines (OGJ Online, Aug. 15, 2016). Overall US shale oil output, however, is expected to fall 85,000 b/d during the month.

The projected rise in the Permian comes as firms have been snatching up acreage and adding rigs in the Midland and Delaware basins (OGJ Online, Aug. 5, 2016). Over the past 3 months, Callon Petroleum Co., Pioneer Natural Resources Co., QEP Resources Inc., Laredo Petroleum Inc., SM Energy Co., Concho Resources Inc., and Parsley Energy Inc. have all moved to expand their positions in the Midland basin alone.

Among those planning to maintain higher rig counts during the second half in the Midland basin are Pioneer, QEP, Concho, and Apache Corp. Doing the same in the Delaware basin are Concho, Devon Energy Corp., WPX Energy Inc., and Anadarko Petroleum Corp.

West Texas horizontal wells

With another double-digit increase this week, US oil-directed rigs have added 90 units since May 27 to reach 406, which is down 1,203 units since their peak in BHI data on Oct. 10, 2014.

All but 1 of the 10 oil-directed units began operations on land, bringing that tally to 470. Rigs engaged in horizontal drilling counted 7 more units to 382, up 68 units since May 27. Directional drilling rigs edged up 1 unit to 45. One unit started work offshore Louisiana, lifting the overall US count to 18.

Texas paced the major oil- and gas-producing states, gaining 8 units this week to 238, up 64 units since May 27. As with last week’s 13-unit jump, all but 1 of the units to begin work this week were in the Permian. At 196 rigs working, the basin is up 59 units since May 27.

The last time the Permian recorded an increase as big as last week’s was Mar. 7, 2014. The basin peaked at 568 rigs working during October-November 2014 before plunging to a bottom of 134 in this past April-May.

A 1-unit increase in the Barnett to 5 was offset by a 1-unit decline in the Granite Wash to 9.

Pennsylvania posted the only other double-digit increase, rising 2 units to 17. The Marcellus jumped 3 units to 24. Oklahoma, Louisiana, and West Virginia each edged up 1 unit to 62, 43, and 8, respectively. The Cana Woodford rose 3 units to 32, while the Mississippian dropped a unit to 3.

New Mexico dropped a unit to 30, ending its recent warm streak at 6 weeks. Down 2 units to 27, North Dakota led the way in losses, mirroring the same tallies of the Williston.

Canada recorded its first rig-count decline in 11 weeks, relinquishing 5 units during the week to settle at 121, still up 85 compared with the week ended May 6. Oil-directed rigs, however, remained flat at 65. Gas-directed rigs lost 4 to 56 while the country’s only unclassified rig went offline.

http://www.ogj.com/articles/2016/08/bhi-oil-rigs-lift-overall-us-rig-count-by-10.html

Australian construction company CIMIC Group said on Monday it had started court proceedings in the United States against Chevron Corp and KBR Inc, seeking as much as A$1.86 billion ($1.42 billion) regarding a dispute over the jetty at the Gorgon LNG project in Western Australia.

CIMIC was commissioned to build the jetty there in 2009 and issued a notice of dispute regarding the work in February, following a disagreement over changes to the project.

The company said then that it was entitled to A$1.86 billion for the work.

"Negotiations under the contract continue," CIMIC said in a statement on Monday.

"The commencement of the proceedings has no effect on the negotiation process or CIMIC Group's entitlement to the amounts under negotiation," it added.

A Nigerian militant group, which has claimed a wave of attacks on oil facilities in the Niger Delta, said it was ready for a ceasefire and a dialogue with the government.

The restive southern swampland region has been rocked by violence against oil and gas pipelines since the start of the year, reducing the OPEC member's output by 700,000 barrels a day to 1.56 million bpd.

Any ceasefire agreement would be very difficult to enforce as the militant scene is divided into small groups dominated by unemployed youth driven by poverty, who are difficult to control even by their "generals".

"We are going to continue the observation of our announced ceasefire of hostilities in the Niger Delta against ... the multinational oil corporations," the Niger Delta Avengers said in a statement received by Reuters on Sunday.

"We promise to fight more for the Niger Delta, if this opportunity fails," it said.

The Niger Delta Avengers have claimed several major attacks but have been apparently less active in recent weeks, which has led to speculation about a ceasefire as the government has been trying for two months to reach out to the militants.

The group said it would support a dialogue "to engage with the federal government of Nigeria, representatives from the home countries of all multinational Oil Corporations and neutral international mediators."

It only said it wanted talks to focus on de-escalating the Niger Delta conflict. The group previously said it was fighting for oil revenues to drag the region out of poverty, floating even the idea of secession, a goal out of question for the government.

The statement was sent to Reuters by mail but it was not possible to contact the group which only communicates with the media via statements on social media, its website or sent by mail.

Like other militant groups, the Avengers has apparently split, making it difficult for the government to identify the right people to talk to.

The was no immediate statement from the government of President Muhammadu Buhari but a youth council representing the largest ethnic group in the swampland urged the government to seize the opportunity for dialogue.

"We welcome the conditional declaration of ceasefire by the Niger Delta Avengers if it is actually from them," the Ijaw Youth Council said in a statement.

"We call on the federal government, especially President Buhari, to take advantage of this ceasefire to aggressively dialogue with the people of the region to address the issues affecting the region."

http://www.reuters.com/article/us-nigeria-oil-group-idUSKCN10W0CT

Pipeline company TransCanada Corp is offering tolls as low as 82 Canadian cents per gigajoule on its natural gas mainline from western Canada if enough producers sign up to long-term contracts, a company executive said on Friday.

Stephen Clark, TransCanada's senior vice president for Canadian natural gas pipelines, said cheaper tolls are crucial if companies in areas like the Montney and Duvernay shale plays are to compete with U.S. gas producers in eastern markets.

The new toll would be a 42 percent cut from the current shipping price of roughly C$1.41 a gigajoule to go from Alberta and British Columbia to markets in Ontario, and depends on customers signing up to 10-year contracts to ship at least two petajoules of natural gas in total on the line.

Clark said the boom in U.S. shale, in particular the Marcellus play in Appalachia, meant more natural gas was flooding into the southern Ontario market and displacing traditional western Canadian supply.

While the remote Montney and Duvernay gas plays can compete with U.S. shale on cost of production, their greater distance from market increases delivery costs and the price of western Canadian gas in Ontario.

"If that market starts to acquire gas from other basins, they will essentially forgo western Canadian supply," Clark said. "Part of the reason we are doing this is we see a supply overhang in western Canada if we don't retain those markets."

TransCanada has been in talks with producers for the last three or four months and is hoping to launch an open season to formally gauge interest in the new tolling system in September.

However, Clark said the company would need to see sufficient interest from shippers in long-term contracts to go ahead with the open season.

"We would like to get into multi-hundreds of millions of commitments, and if we could get north of a billion cubic feet or a petajoule of commitment, that would certainly give us sufficient indication that we should go forward," he said.

Some producers are reluctant to commit because they are unused to 10-year contracts, Clark added, while others are unfamiliar with selling in the Ontario market.

TransCanada's current settlement in place with the Mainline shipper group expires in 2020.

http://www.reuters.com/article/transcanada-gas-tolls-idUSKCN10U22V

China's diesel, gasoline and kerosene exports surged in July from a year earlier, customs data showed on Monday, the latest sign the world's top commodities consumer can't cope with its domestic oversupply of fuel.

Diesel exports rose 181.8 percent to 1.53 million tonnes, gasoline shipments were up 145 percent at 970,000 tonnes and kerosene exports jumped 46 percent to 1.09 million tonnes.

The world's second-largest economy imported 1.6 million tonnes of liquefied natural gas, down 16.4 percent from a year earlier and increased its purchases of foreign kerosene by 15.2 percent to 340,000 tonnes.

http://www.reuters.com/article/china-fuel-trade-idUSB9N1AS00A

Now, InterOil Corp. has announced that it has filed and will begin the mailing to InterOil shareholders of the Management Information Circular (MIC) relating to the company’s special meeting of shareholders in order to vote on the transaction with ExxonMobil Corp. InterOil claims that the special meeting is due to take place on 21 September 2016 in New York City, US, and that shareholders of record as of 10 August will be able to vote at the meeting. In order to be counted, InterOil claims that all proxies must be received by 12.00 PM on 19 September 2016.

In its statement, the InterOil board has recommended that shareholders vote for the ExxonMobil transaction so that they receive significant and superior value for their investment in InterOil.

Oil Search had previously made a bid to acquire InterOil, but declined the opportunity to submit a revised bid following ExxonMobil’s superior bid.

http://www.lngindustry.com/liquefaction/19082016/InterOil-encourages-shareholders-to-vote-for-ExxonMobil-transaction-2929/

A number of factors affect the price of natural gas in general–and the price of natgas is always important, no matter which geography it is produced in.

One of the things that affects the price of natural gas is “associated gas” production. What the heck is that? When you drill a hole in the ground to extract hydrocarbons–like oil–other hydrocarbons come out of the ground along with that oil. Those other hydrocarbons are, first and foremost, methane–or natural gas. Propane, butane, ethane, and other hydrocarbons are also in the mix.

But the fact remains, when you drill for oil, you also (almost always) get at least some natgas along with it. That natgas, the stuff you weren’t necessarily drilling for but get anyway, is associated gas. It’s usually extracted in conventional oil drilling–found in deposits close to oil deposits

Perhaps you now begin to see how oil and gas–and their prices–are closely aligned. When the price of oil goes down and drillers quit drilling, the amount of associated gas being produced and brought to market also goes down–affecting the overall quantity of gas available for sale.

The less gas for sale, with demand remaining constant, prices go up. Got it? Good! Fitch Ratings recently published a short article on how associated gas from oily shale plays is on the decrease, and that means prices for natural gas everywhere is on the increase…

http://marcellusdrilling.com/2016/08/falling-associated-gas-volumes-means-natgas-price-on-the-rise/

LNG slump, cost cutting spur rare output curb at Australian plant

Spending cuts and weak global liquefied natural gas prices have forced the operator of the $18.5 billion Gladstone LNG project in Australia to consider running the plant at less than full tilt, an unusual move for the global LNG industry.

It's a sign of how the LNG market - long dominated by large plants with low costs running at maximum capacity - will evolve with exports from a new breed of projects, the world's first to be fed by coal seam gas in Australia and U.S. plants fed by gas from the grid.

Traditionally, LNG producers spend billions of dollars building large plants directly connected to conventional gas fields, with most of their output contracted to long-term customers. The running costs are low once built, which spurs them to run at full capacity to boost returns.

The plants fed by coal seam gas rely on hundreds of wells to be drilled each year, an ongoing cost which traditional plants don't face, and as a result they could become more like swing producers, said Saul Kavonic, head analyst for Australasia at consultants Wood Mackenzie.

Gladstone, which shipped its first cargo last October, is one of three new Australian coal seam gas-fed LNG plants that have started operating since early 2015 on the country's east coast.

Santos has been squeezed by a heavy debt load taken on to build the Gladstone LNG project and falling oil and LNG prices, sapping funds needed to drill its coal seam gas wells.

As a result it has opted to buy more gas from third parties to supply the plant in order to meet LNG contracts, and said on Friday it would be willing to run the plant, which has two production trains, below its full capacity of 7.8 million tonnes a year.

"We wouldn't be looking to ever mothball one train," Santos CEO Kevin Gallagher told analysts on a conference call after the company reported an inerim loss.

"But what I would say is that we will operate both trains potentially at reduced capacity to optimise the production across the facilities," he said, adding that would depend on market conditions and contract requirements.

He declined to say how much LNG Gladstone has contracted to supply, but analysts estimate it at 7.2 million tonnes per annum (mtpa), out of a capacity of 7.8 mtpa with the two trains.

"I view Santos' indications that it is considering operating the LNG trains below capacity - an iconoclastic approach for the industry - as a positive sign that value is being prioritised over volumes by Santos' new management," Kavonic said.

He predicted that U.S. LNG plants may eventually follow the same path, at times when U.S. benchmark Henry Hub prices climb above prices that would justify exports to Europe.

"At times we expect even half their LNG capacity could be shut," he said.

Santos rival, Woodside Petroleum, Australia's biggest LNG producer, said output cuts at Gladstone LNG would not have a huge impact on the LNG market, which is heavily oversupplied, but it would help with overall sentiment.

"Clearly every bit of capacity overhang that's not there is a help - more in the short to mid-term market, than the long term,"

A tanker sent by Libya's National Oil Corporation (NOC) began to load oil on Thursday at the country's eastern Zueitina port, after rival forces stationed in the area agreed to let it dock and take the oil to safety, a port official said.

The NOC expressed concern earlier this month after reports of possible clashes between the Petroleum Facilities Guard (PFG), one of Libya's many armed brigades, and forces loyal to eastern commander Khalifa Haftar, fearing these might damage the port infrastructure.

The PFG has signed a deal with the U.N.-backed Government of National Accord (GNA) in Tripoli to end its blockade of Zueitina and two other ports, but eastern forces loyal to a separate government in eastern Libya have threatened to block port loadings and exports.

Those forces recently mobilized near Zueitina and PFG positions, though there have been no reports of violence.

The port official stressed that the port was still closed, but the tanker had started emptying storage tanks and reservoirs.

The Zueitina storage tanks contain about 3.08 million barrels of crude oil and 180,000 barrels of condensate, the NOC said in a statement.

"NOC can confirm, that after considerable efforts, we have received the consent from all relevant parties to permit the Greek flag vessel New Hellas to enter Zueitina terminal in order that it will transfer a shipment to Zawiya refinery" in western Libya, the NOC said in a statement.

The NOC said the New Hellas would transport about 620,000 barrels of oil at a time to Zawiya, and that it would charter additional ships to finish the process as soon as possible.

"I want to express my appreciation to all sides for heeding our request," NOC Chairman Mustafa Sanalla said.

"It was the right thing to do and I think shows that when the opportunity arises, we Libyans can do the right thing. Instead of all being harmed, all will benefit."

Libya's oil output has been reduced to a fraction of the 1.6 million barrels per day (bpd) it used to produce before the uprising that toppled late dictator Muammar Gaddafi in 2011. Recently, output has been hovering at about 200,000 bpd.

The NOC has ambitious plans to revive production but political disputes, blockades, insecurity and damage to oil facilities have so far frustrated their efforts.

http://www.reuters.com/article/us-libya-security-oil-idUSKCN10U0ZN

U.S. gasoline consumption climbed in July to a record as low retail prices encouraged Americans to hit the highways.

Demand for gasoline rose 2.4 percent from a year earlier to 9.67 million barrels a day, the American Petroleum Institute said Thursday in a monthly report. Total fuel deliveries, a measure of consumption, climbed 0.8 percent to the highest July total since 2007.

"Gasoline deliveries, a measure of consumer demand, hit their highest level on record in July," Erica Bowman, chief economist at the API in Washington, said in an e-mailed statement. "With this indication of increased demand, it’s clear that consumers have continued to benefit from lower gasoline prices at the pump."

The average price of regular gasoline at the pump nationwide was $2.135 a gallon on Wednesday, down 20 percent from a year earlier, according to data from Heathrow, Florida-based AAA, a national federation of motor clubs. Retail prices touched $2.116 on Aug. 3, the lowest since April 20.

Refineries maximized gasoline production at the expense of other fuels. Gasoline output averaged a record 10.2 million barrels a day in July, up 1.9 percent from a year earlier, the API said. Output of distillate fuel, a category that includes diesel and heating oil, averaged 4.96 million barrels a day, down 2.5 percent from a year earlier.

Ample Inventories

Inventories of the motor fuel ended July at 237.1 million barrels, the most for the month since 1984, the API said. Crude-oil stockpiles stood at 519.6 million barrels at the end of last month, the highest July total since 1920.

Producers pumped an average 8.49 million barrels of crude a day in July, down 10 percent from a year earlier. It was the fourth-straight month that output slipped, leaving production at the lowest level since March 2014, the API said.

Output of natural gas liquids, a byproduct of gas drilling, rose 8.7 percent from July 2015 to 3.57 million barrels a day, a record for the month.

http://www.bloomberg.com/news/articles/2016-08-18/u-s-gasoline-demand-rises-to-record-in-july-as-pump-price-drops

OPEC Freeze Wouldn’t Be So Potent as Gulf Rivals Pump More

Even if OPEC strikes a deal with Russia next month in Algiers to freeze oil production, success will mean a lot less than when they tried and failed four months ago.

Oil has rallied more than 10 percent since the Organization of Petroleum Exporting Countries said that it will hold informal meeting in the Algerian capital, fanning speculation the group could complete a supply agreement with rival producers that sputtered in April. Iran may now drop its refusal to join a freeze after restoring most of the crude output curbed by sanctions, a development analysts say makes a deal more likely, but also less worthwhile.

“A freeze at 34 million barrels a day is not the same as one at 33 million barrels a day,” said David Hufton, chief executive officer of PVM Group in London, referring to the broker’s own estimate for total OPEC output. “It pushes the re-balancing process back at least a year.”

Saudi Arabia and Iran, whose political rivalry thwarted the previous negotiations, are together pumping about 1 million barrels a day more than in January -- the proposed level of the original freeze. That additional crude has prolonged a global oversupply, preventing the market from sliding into deficit this quarter, according to Bloomberg calculations based on International Energy Agency data.

Prices have struggled to go much higher than $50 a barrel. After the longest run of gains since March, Brent crude, the international benchmark, traded at $50.82 at 5:22 p.m. in London on Thursday.

Sixteen nations representing about half the world’s oil output gathered on April 17, but talks broke down because of Saudi Arabia’s last-minute demand that Iran must also participate. Iran wasn’t at the Doha meeting because it refused to consider any limits on its production, which had only been released from nuclear-related sanctions in January.

Record Production

Now that major producers including Iran are pumping at or close to capacity, they have little to lose by agreeing to a cap, Chakib Khelil, former OPEC president and Algerian energy minister, said in a Bloomberg television interview Aug. 17.

Iran produced about 600,000 barrels a day more in July than January as it restarted oil fields shuttered during almost four years of sanctions, according to the IEA. Saudi Arabia pumped an extra 410,000 a day, lifting output to a record as it met surging domestic demand and defended its share of global markets, the IEA said.

“All the conditions are set for an agreement,” said Khelil, who steered OPEC in 2008, the last time it announced a supply cut. “Russia, Iraq, Iran and Saudi Arabia are reaching their top production level. They have gained all the market share they could gain.”

There are still reasons to think Iran could be reluctant to join a freeze.

The nation will refuse to accept any limits as long as officials insist they can boost output further, said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. Iran is also trying to attract billions of dollars of investment from international oil companies to expand production capacity, which would conflict with submitting to a cap, said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA.

Iranian Oil Minister Bijan Namdar Zanganeh hasn’t decided yet whether to participate in the talks in Algiers, a spokesman said on Aug. 16.

Market Psychology

Other OPEC members who supported an agreement in April may now be less keen, or seek exemptions, because they are suffering output losses, said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland.

Nigeria’s production is near a 27-year low as militants attack oil pipelines while Venezuela’s output dipped to the lowest since 2003 amid an economic crisis. They may join conflict-hit Libya, who refused to freeze at reduced levels back in April, Jakob said.

Major producers have kept expectations low. Saudi Arabian Energy Minister, Khalid Al-Falih, said only that “there is an opportunity” to discuss “possible action that may be required to stabilize the market,” according to the Saudi Press Agency. Russia sees no need for a freeze at current crude prices, while leaving open the possibility for the future, Energy Minister Alexander Novak said Aug. 8.

Even with a deal, the extra oil OPEC is pumping means it would be less effective than the Doha proposal, said Algeria’s Khelil. Still, the demonstration of unity after a series of inconclusive meetings would improve the “psychology” of the market, he said.

“This time it’s more psychological because they will retain the surplus in the market,” said Khelil. “It would have been better before, but it’s never too late.”

http://www.swissinfo.ch/eng/new-opec-freeze-wouldn-t-be-so-potent-as-gulf-rivals-pump-more/42383726

LNG is considered a specialist commodity requiring particular care and the attention of experienced personnel. The technically complex and sophisticated nature of both the ships and terminals, as well as the highly regulated nature of the trade, requires the agent to be fully conversant with the unique characteristics of the LNG trade, including local and international regulations.

LNG carriers, ports and terminals have to meet exceptionally high safety standards. Therefore, it is a requirement, and there is an implicit understanding, that all responsible parties, including the agent, are trained and vetted to a high standard and act with a full working knowledge of the entire operation, and their role within it.

China

In December 2014, the Gaslog Chelsea, loaded with 150 000 m3 of LNG from Papua New Guinea, berthed at the Sinopec Shandong Qingdao LNG terminal in China. Its arrival marked Sinopec’s first LNG project in Shandong Province. The first phase of the project has a designed receiving and transport capacity of 3 million t of natural gas and is capable of meeting the demand of 22 million households per year.

Located at the new Dongjiakou port in the West Coast New Area, the Sinopec Shandong Qingdao LNG terminal was constructed and is operated independently by Sinopec. In the future, it will have a receiving and transport capacity of 10 million tpy.

In 2009, Sinopec signed a long-term deal to buy 2 million tpy from the PNG LNG project over a period of 20 years. Sinopec is the last of China’s three national oil companies to begin importing LNG, making a significant contribution to energy conservation and emission reduction in the country.

As agent, Inchcape Shipping Services (ISS) China has been involved in this project since 2010. It assisted Sinopec in developing know-how of terminal and ship operations, port tariffs, tug usage and other matters, such as assimilating and collating LNG terminal information and port manuals for China’s LNG terminals.As of December 2015, ISS Qingdao had acted as local agent for 13 LNG shipments at the new port.

Compared with other vessels, LNG carrier operations are demanding, commencing with the berthing operations at the yet to be finished Qingdao LNG terminal. Furthermore, it takes at least five working days to obtain relevant government permissions for berthing such vessels. The LNG commercial interests also require a high level of quality service.

As such, ISS Qingdao formed a team of specialised operational staff dedicated to the LNG business. The Qingdao LNG terminal is still in its construction and expansion phase and ISS continues to assist the terminal in all aspects of its marine business, including the incoming LNG vessels.

Papua New Guinea

In May 2014, the Spirit of Hela loaded the first LNG cargo out of Papua New Guinea bound for Tokyo Electric Power Co. in Japan. ISS PNG acted as the terminal agent for this historic shipment.

The ISS PNG agency team is on site at the terminal, located 20 km from Port Moresby, on a daily basis, with vessels loading every three to four days. As agents, ISS coordinates and communicates between the terminal and the carrier to handle arrival and departure, organise clearance procedures and ensure that there are no operational delays. ISS also fulfils its client’s cargo export documentation to meet customs requirements.

To date, having handled over 150 vessel calls, the PNG terminal is almost regarded as the home port for the regular LNG carriers. ISS has extended its services to these vessels for all husbandry needs, such as crew changes, immigration formalities, ship provisioning and spares, waste removal, etc. These husbandry operations are carried out through the terminal or over the seaward ship’s side, which ensures that loading operations are not disrupted.

ISS handles the coastal petroleum product tanker trade on behalf of a client in Papua New Guinea. With the commencement of the LNG trade, which is expected to produce more than 9 trillion ft3 of gas over the estimated 30 years of operations, ISS continues to strengthen its service delivery to its LNG clients.

Japan

Japan is currently the world’s largest importer of LNG, although its imports dropped to 85 million t in 2015.

In the early days of the LNG trade, all cargoes were delivered by vessels chartered by cargo vendors under Delivered Ex Ship (DES) terms. ISS estimates that more than 30% of cargoes are currently delivered by vessels chartered by Japanese buyers under Free on Board (FOB) terms, and this is a growing trend.LNG cargoes are imported by 17 buyers at 29 LNG receiving terminals around Japan. The number of both buyers and receiving terminals is expected to grow further in the year ahead.

Another feature of the trade in its early stages was the use of long-term contracts, typically for 20 years or more, with vessels deployed according to an annual delivery programme.

In recent years, the long-term contracts serving older LNG projects are expiring or are being renewed under new terms and conditions, while new LNG projects are appearing simultaneously.

As cargo sources have expanded, LNG buyers have started importing cargoes from various points of origin on spot, short-term or portfolio contracts, to meet peak demand or to cover the time gap between termination of old contracts and the commencement of new projects.

In particular, following the Tohoku earthquake and nuclear accident at Fukushima in 2011, electric power companies dramatically increased LNG imports on spot and short-term contracts, to cover the closure of nuclear power stations.

ISS expects LNG import volumes in Japan to remain stable for the time being, although the import sources are expanding.

Today, ISS Japan is working for nine projects supplying cargoes under long-term contracts, and for more than 30 owners and operators of LNG vessels who trade under spot and short-term contracts. In 2014, ISS attended 898 LNG calls at ports around Japan. The company’s role is not only to arrange port clearance, but to assist its clients in maintaining and developing business.

For owners and operators, it is important to comply with the requirements of each terminal and local regulations in addition to international rules. To this end, ISS assists its customers in meeting requirements, such as:

Customs verification to Custody Transfer Measurement System (CTMS): before trading to Japan, LNG vessels are required to have verification for accuracy of CTMS by Japanese customs authorities in order to determine the import quantity for taxation.
Confirmation of ship-shore compatibility: when the vessel calls at an LNG terminal for the first time, it is common procedure to hold a meeting at the terminal in order to confirm ship-shore compatibility, (e.g. interface of ship-shore connection, mooring arrangement, cargo operation procedures, etc.).
Local regulations: for LNG vessels, each port authority and terminal has the regulations for safety in port entry and cargo operations according to the particular conditions of each region.

LNG operators and officer personnel are required to study and understand those local regulations in advance, and to fulfil the necessary reporting and arrangements for escort tugs, watch boats, etc.

US

In early 2012, ISS noted in an article published by LNG Industry: “As an important footnote, the discovery of shale gas in the US has prompted existing as well as potential new facilities to be built with liquefaction capability, radically altering the balance of trade. Where several billion dollar facilities have been developed over recent years for the import of LNG based on the fear of shortages, these are now being transformed into export facilities with US government approval. This in turn has resulted in a transitional lull in business until conversion work is completed – still two years or more away.”1

Now, four years on, with much of the LNG market still in limbo or in transition from regasification to liquefaction, the authors can only speculate as to how the market will develop over the next year.

The transition from regasification to liquefaction is, of course, market driven. In respect of the US Gulf, the market underwent a drastic change in 2011 and has remained somewhat weak ever since. The development of LNG production in shale sites has dramatically changed the market, forcing many players to reverse direction or stop completely.

LNG movements that shipping agents such as ISS have handled include discharge operations at terminals such as CMS Trunkline LNG, Lake Charles, Louisiana; Sempra Marine Terminal, Hackberry, Louisiana; Cheniere Energy Inc.’s Sabine Pass, Louisiana; Golden Pass LNG, Sabine Pass, Texas; Freeport LNG, Freeport, Texas; Southern LNG, Elba Island, Georgia; and Dominion Cove Point LNG, Lusby, Maryland.

Several of these terminals are in the process of re-fitting, and many new start-ups are either breaking ground or are still in the planning stage.

Most of the projects referred to above will not have reached the US Federal Energy Regulation Commission (FERC) approval and financial agreement stage until later this year or into 2017. Completion of many of the conversion projects in the states of Louisiana and Texas are only forecast for 2017 to 2019.From the agent’s point of view, the operational learning curve to adjust to such change is minimal. However, the inherent volatility of the LNG market and the financial ramifications have been seen before.

http://www.lngindustry.com/special-reports/08082016/LNG-trade-an-agents-perspective-2873/

North Sea Oil Prices Rebound as Glut of Floating Crude Clears

The glut of crude oil stored in ships on the North Sea is finally starting to dissipate.

Demand for the commodity has increased as traders take advantage of remaining discounts before maintenance begins at the U.K.’s largest oil field. The result: a whittling away at the backlog of floating storage that has persisted for months.

The “timing is right” for buying interest in North Sea crudes to rise, David Reid, an analyst at Vienna-based JBC Energy GmbH, said by e-mail. Planned work at the 170,000 barrel-a-day Buzzard field, scheduled to begin in mid-September and last about a month, will curtail production and push up prices, he said.

Vessels storing crude on the North Sea are moving to port as oil demand rises.

The movement of crude-laden vessels to port reverses a floating-storage build-up that peaked at more than 11 million barrels in late July. Earlier in the summer, faltering demand spurred by unexpected refinery strikes led to excess storage of the fuel at sea. Now, with discounts vanishing, it’s more profitable to send the oil to shore.

Declining Volumes

Crude kept in North Sea tankers has declined by more than 50 percent, to five million barrels, within the last three weeks, according to ship-tracking data compiled by Bloomberg. Ships loaded with Brent and Forties oil, two of the region’s primary grades, discharged their cargoes in Germany and Rotterdam this week after being anchored for as many as four months.

Other factors helping to reduce the excess in North Sea storage include supply disruptions in Nigeria and an increase in crude purchases in Asia, according to Amrita Sen, chief oil analyst at London-based Energy Aspects. “Chinese buying in particular is returning slowly,” she said in an e-mail.

Forties crude, one of four grades used to price Dated Brent, the global benchmark, traded at a two-month high early this week. The grade last sold at a discount of 15 cents a barrel to that benchmark, versus 65 cents two weeks earlier, according to data compiled by Bloomberg. Meanwhile, the structure of derivatives used in the North Sea for speculation or hedging is shifting toward backwardation, an indication of a strong market where existing cargoes sell at higher prices than those for later delivery.

Brent futures on Thursday climbed above $50 a barrel into a bull market, capping a six-day run of price increases.

Price Rally

Crude moving out of North Sea storage is “consistent with what we’re seeing in the overall rally in prices,” Craig Pirrong, director at the Global Energy Management Institute at the University of Houston’s Bauer College of Business, said in a phone interview. An increase in demand will draw oil out of storage, and “it tends to come out in a run.”

Two supertankers and two smaller vessel loaded with Forties, Brent and Norwegian Oseberg crude remain off the U.K.’s shores. The two-million-barrel carrier Maran Thetis has been floating near Scotland’s Hound Point terminal since July 26. A similar vessel, the Front Ariake, is anchored at Southwold, England, after receiving Forties and Brent crude via two ship-to-ship transfers three weeks ago.

Loading disruptions and cancellations in the region may create more demand for any crude available, according to a survey of six North Sea traders. A Forties cargo was dropped from the September shipping schedule, and at least six cargoes had to defer their loading dates due to a slow restart of oil flows via the Forties Pipeline System, operated by BP Plc.

“You put stuff in storage for a rainy day,” Pirrong said. “The rainy day’s here, so you take it out of storage.”

http://www.bloomberg.com/news/articles/2016-08-19/north-sea-oil-prices-rebound-as-glut-of-floating-crude-clears

---

Attached Files

U.S. stocks of natural gas are rising much more slowly than normal for this time of year as a long, hot summer spurs record air-conditioning demand and gas burn by power generators.

Natural gas stocks exhibit strong seasonal behaviour, increasing between April and October, then drawing down during winter between November and March.

But working gas stocks increased by just 22 billion cubic feet (bcf) last week, which was less than half the average increase of 55 bcf at the same time of year between 2011 and 2015.

Stocks have increased by less than normal in 17 of the last 20 weeks. Inventories have risen by just 859 bcf since the start of April compared with a typical increase of 1,328 bcf in the last five years.

Part of the reason is that surging temperatures have spurred record demand for air conditioning and forced power producers to burn more gas to meet demand.

Temperatures have been consistently higher than normal in June, July and August across most of the United States.

Total air-conditioning demand so far in 2016 has been 4 percent higher than in 2015 and 12 percent above the long-term average.

However, even allowing for higher temperatures, natural gas consumption by power producers has been exceptionally strong, while natural gas production has lagged.

For any given level of temperatures and air-conditioning demand, stocks have risen more slowly each week in 2016 than in 2015 (tmsnrt.rs/2bqWz4C).

The market mechanism is working its magic and ultra-low gas prices are gradually forcing production and consumption back into balance.

Cheap natural gas has encouraged power producers to maximise gas-fired generation at the expense of coal and other fuels.

Meanwhile, low prices have discouraged the drilling of new wells. U.S. natural gas production has levelled off in recent months after growing strongly in 2014 and 2015.

Stocks started the year at a record and the oversupply was made worse by mild weather in February and March. By mid-March, gas stocks were 1,014 bcf (69 percent) above the same point in 2015.

But the excess has been whittled away by strong power burn. By the middle of August, stocks were just 312 bcf (10 percent) higher than at the corresponding point in 2015.

Stocks are still at a record for the time of year, around 2 percent higher than the previous peak and 14 percent higher than the five-year average.

But the continuing heatwave across the eastern United States should ensure another week of very low stock builds this week.

And low prices of natural gas will incentivise maximum consumption throughout September, ensuring the rebalancing continues.

http://www.reuters.com/article/usa-natgas-idUSL8N1B01WQ

Exxon, GT find way to cut carbon emissions for chemicals

Exxon Mobil and Georgia Tech researchers published findings of a breakthrough in the journal Science on Thursday, saying they had devised a way to slash carbon emissions from chemicals manufacturing by using reverse osmosis instead of heat to separate molecules.

Reverse osmosis, which has been widely used for decades in desalination plants that turn seawater into drinking water, has long been seen as having applications for the oil and chemicals industry.

Now researchers have finally come up with a specially treated polymer that can serve as the semipermeable membrane needed to do reverse osmosis for chemicals manufacturing at room temperature.

Current techniques use high temperatures and heat to break up molecules to create chemicals that are used in myriad products across the economy.

Exxon said it was too early to say when the new technology could be applied commercially, or how they might go about patenting and licensing the technology so that other manufacturers could use it.

But if applied globally, the chemical industry's annual carbon dioxide emissions could be slashed up to 45 million tons, which is about equal to the yearly carbon dioxide emissions of about of 5 million U.S. homes.

The fossil fuels industry is under pressure to curb emissions, especially in light of the Paris Agreement signed in December, in which 195 governments agreed that aims to limit the rise in global temperatures to 2 degrees Celsius (3.6 degrees Fahrenheit), raising the potential for regulatory crackdowns on carbon-based businesses.

“We need multiple solutions to reduce CO2 emissions,” said Vijay Swarup, Exxon's vice president of research and development.

Chemical plants account for about 8 percent of global energy demand and about 15 percent of the projected growth in demand to 2040.

Researchers said their next steps will be to develop a pilot project that, if successful, could be scaled up.

http://www.reuters.com/article/us-exxon-mobil-chemicals-emissions-idUSKCN10T1Z0