it's been an explosive week for the oil industry; in addition to three fiery train derailments in the news, an Exxon refinery in Torrance California blew up and left the city covered in a ghostly white ash...and of a less explosive nature, five spills were reported by the frackers in North Dakota, including one "double spill" which the company responsible believes was sabotage, something we might see more of as the roughnecks and rig hands think they're getting shafted by the unannounced layoffs...
a West Virginia oil train derailment & explosion on the Kanawha River in Fayette County got the most national attention, maybe because of the explosive nature of the fireball, maybe because the Governor of West Virginia declared a state of emergency in two riverside counties within hours of learning that burning oil tankcars had entered the river, the water source for much of the state….we'll include a news clip here so you can get a sense of what that looked like...
one house burned and roughly 1000 residents were evacuated from the area, and another 2000 lost water as water intakes were shut down....the derailment of 26 tankcars was of a CSX train carrying 109 cars of explosive Bakken crude to a refinery in Yorkton, Virginia, and 19 of those tank-cars became involved in the subsequent fires, which were still burning 3 days after the derailment, as neither CSX nor West Virginia had capabilities to put the fires out...the cars that exploded were the newer CPC 1232 models that are supposedly safer than the old DOT-111s, and this train was just one of dozens carrying Bakken crude that passes through Ohio cities and other Midwest communities on the way to East Coast refineries each week...luckily, no one was killed or seriously injured this time...
another 100 car train carrying crude oil derailed and caught fire in a remote area of northern Ontario inaccessible by road early this week...29 tank-cars went off the tracks and nine were still on fire a day later when the derailment hit the news services...with below zero temperatures and no way to access the site, Canadian transportation authorities decided shut the corridor and to allow the fire to burn out before inspecting the scene, where it was reported that some of the rail cars were broken into pieces and scattered along the tracks in chest deep snow...the train had been visually inspected and went through a checkpoint that was supposed to automatically detect problems 20 miles before the trouble occurred, and the track had been visually inspected and cleared by a rail flaw detector in the week before the derailment...
earlier, a Canadian Pacific train carrying ethanol derailed on a river bank near Dubuque Iowa, and fifteen tankcars left the track, three of which erupted into flames and three of which rolled downhill, plunging into the Mississippi River...again, since local officials were unequipped to deal with a tankcar fire on an inaccessible hillside, they let the fire burn itself out before the Iowa DNR moved in to test the water for contamination...later assessment revealed that 8 of the old outdated DOT-111 single hulled tankers had split open and leaked their ethanol, noteworthy because 70% of the US oil tanker rolling stock is still of this design, including tens of thousands hauling Bakken crude, the same kind of oil and tankcars that exploded in Lac-Megantic, Quebec in July 2013, killing 47 people...
the number of train incidents over such a short span, including an 11 car derailment of a CSX crude oil train in South Philadelphia the prior weekend, has reignited the arguments that pipelines would be a safer way to transport oil than by rail....with fracking ongoing in several states, the volume of oil that is being shipped by rail has doubled since 2012 to 16,000 rail car loads a week...but pipelines aren't immune from their own disasters; recall that as recently as the last week in January, we were discussing two major pipeline ruptures within miles of each other on upper Missouri river tributaries....one of those pipelines leaked 3 million gallons of contaminated fracking wastewater on the North Dakota tundra over a period of more than 17 days before being noticed and shut off...this debate led to an examination of the comparative data by thinkprogress, who found that while oil trains spill more often, pipelines spill more...over the eight years examined, a period that included an 800,000 gallon tar sands oil leak into the Kalamazoo River, U.S. pipelines spilled three times as much crude oil as trains....so moving oil is dirty and dangerous any way we do it; pick your poison....
on Wednesday morning, an explosion and fire destroyed the gasoline processing unit at an ExxonMobil oil refinery in Torrance, California, injuring 4 workers and damaging surrounding buildings...although not directly related to the environmental issues surrounding fracking, the incident is noteworthy because we've been following the USW strikes at 11 US refineries for the past couple weeks, including a half dozen stories on them last week, where worker safety has been a major issue...the point is that lax safety standards at US refineries is an ongoing problem; 27 workers died in such refinery explosions over the past five years...after this accident, gasoline prices rose in the Los Angeles region and 4 more refineries joined those on strike...
of the five spills that occurred in North Dakota early this week, the first pair involved over 40,000 gallons of fracking wastewater that was released from two well sites in Williams county owned by Hess Energy; both impacted a wetlands area, and the company reported it as vandalism because valves were opened on storage tanks in both cases...in the second incident, 1,260 gallons of oil overflowed from a truck and spilled into an oxbow of Charbonneau Creek, which is a a tributary of the Yellowstone River, which was hit by a 50,000 gallon pipeline rupture just 4 weeks ago; it appears the operator just kept filling the truck after it was already loaded....the third reported spill occurred after a valve was left open as a truck was offloading diesel fuel at a tank farm, and resulted in 400 gallons of said diesel fuel flowing into a tributary of Lonesome Creek...finally, Murex Petroleum reported a pump leak caused 21,000 gallons of brine to spill in Divide County, but they manged to contain it on site....
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both oil production and crude oil inventories increased from last week's records again in this week's report, as the industry continues to drown itself in oil...the EIA reported US oil production reached a record 9,280,000 barrels per day in the week ending February 13th...that's up 13.9% from the 8,148,000 barrels of oil per day we were producing in the 2nd week of February last year...they also reported that U.S. crude oil inventories rose by 7.7 million to a record 425.64 million barrels in the week ended Feb. 13, a figure that excludes oil in the Strategic Petroleum Reserve, and that gasoline inventories increased by 0.5 million barrels last week, and are above the upper limit of the 5 year average range for this time of year...
meanwhile, the pace of the pullback in the oil patch slowed somewhat this week, as only 48 drilling rigs were taken out of service, in contrast to the 98 rigs that were idled last week...Baker Hughes reported the count of active drilling rigs on February 20th was at 1310, down from 1258 rigs on February 13th, with oil rigs down 37 to 1019, gas rigs down 11 to 289, and rigs classified as miscellaneous unchanged at 2...this was the least rigs idled in one week since 43 were shut down on January 23rd....the count of land-based rigs fell by 48 to 1250, two were removed from drilling operations on inland waters, leaving 6, while an additional two drilling platforms were added in US waters offshore, bringing the offshore rig count to 54...the count of active horizontal well drilling rigs was down by 46 to 979, the count of vertical well rigs fell by 7 to 203, while the number of directional well rigs rose by 5 to 128...this left the US rig count 461 rigs lower than the count from last February 21st when 1771 rigs were in use, with oil rigs down 406, gas rigs down 53, and miscellaneous rigs down 2 from a year ago...
also in contrast to last week, when half of the rigs idled had been operating in the Permian Basin, a smaller numbers of rigs were shut down in several US shale fields this week, with the decrease of 6 rigs in both the Permian and the Mississippian the greatest rig decrease from any one shale area...however, with rigs being shut in several Texas plays, that state again saw the greatest decrease at 22, leaving 576 still running, followed by Oklahoma,where the idling of 16 rigs left 155... North Dakota and Wyoming each saw 4 rigs shut down, leaving 119 and 35 operating respectively, while 3 rigs were stacked in Alaska, leaving 7...other states with less rigs working this week included Colorado, down 2 to 41, California down 1 to 15, and Utah, which was down 1 to 11...meanwhile, 6 rigs were restarted in New Mexico, where 12 were shut down last week, giving us a sense at how temporary and tenuous this weekly data can be...in addition, the rig counts of 11 in Arkansas, 18 in Kansas, 37 in Ohio, 54 in Pennsylvania and 17 in West Virginia were unchanged from a week ago...
in Canada, Baker Hughes reported 360 drilling rigs were still running during the week ending February 20th, which was 22 less than they reported a week earlier, as 184 Canadian oil rigs were running, 14 less than last week, and the count of Canadian gas rigs operating fell by 8 to 176....that leaves the Canadian rig count 272 rigs lower than last year, with oil rigs down 238, and gas rigs 34 lower than a year earlier...however, the Canadian Association of Oilwell Drilling reports somewhat different totals; they show 317 rigs drilling on February 17th, with 461 shut down, for an capacity utilization rate of 41%, down from 576 working and an operating rate of 71% last year...
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as you all know, the Ohio Supreme court ruled this week that the 5 Monroe Falls local ordinances related to oil and gas drilling in the city were preempted by the 2004 state law that turned the power to regulate gas and oil drilling in the state over to the ODNR, and that hence Beck Energy of Ravenna would be permitted to drill a gas well on residential property they had leased with the city...this ruling, like other such rulings in New York and Texas, was widely covered nationally, and a selection of articles on it are included below...you've likely all also read that this ruling was limited in scope and that it's possible other ordinances could be written which would get around those limitations and prohibit fracking in ways that dont conflict with ODNR authority....not being adept at reading and interpreting legalese, i am just basing that on what i've read; i did not attempt to read the judges opinions (pdf) myself...but we should at least note that as of today, there is still not a gas well in Monroe Falls, nor is there likely to be one in the near future....at the time when Beck Energy applied for the ODNR permit to drill in that city, benchmark natural gas prices had ranged between $4 per mmBTU and $5 mmBTU for a year and a half; prior to that, gas prices had only gone as low as $3 once, and had been as high as $14...while the case has been working it's way through the courts, natural gas prices fell as low as $2.03 in 2012 and have not been above $3.20 since Christmas, despite the colder than normal winter we've had with gas usage 4.4% above normal...while Beck may find it profitable to drill a conventional gas well likely targeting the Clinton sandstone at $4, it's highly unlikely they would risk major losses to drill in Monroe Falls with gas at $3 just to prove a point...
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Officials debate frack tax proposal - -- State officials continue to defend the governor's plan to increase tax rates on oil and gas produced via horizontal hydraulic fracturing. But Republican members of the House Finance Committee don't appear to be supporting the severance tax proposal, based on their questions and comments to the head of the Ohio Department of Taxation Thursday. "Baby steps do tend to be a little more acceptable than large steps," said Rep. Tim Derickson, R-Oxford, noting House Republicans backed a smaller severance tax increase package last session. "This does seem to be a rather large step for me compared to what we were proposing in the last general assembly." But state tax Commissioner Joe Testa countered that Ohio's severance tax rates remain too low -- 20 cents on a barrel of oil, 3 cents per thousand cubic feet of natural gas produced. "We think it's time," Testa said. "They've had almost four years of practically no severance tax."
Ohio court strikes down local fracking bans - Towns and cities in Ohio cannot regulate hydraulic fracturing on their own, the state’s Supreme Court ruled Tuesday. The court ruled 4-3 that Ohio’s legislature gave state agencies exclusive authority over all aspects of oil and natural gas drilling, including fracking, in a 2004 law, and any local ordinances would violate that exclusivity. “We have consistently held that a municipal-licensing ordinance conflicts with a state-licensing scheme if the local ordinance restricts an activity which a state license permits,” Justice Judith French wrote in the majority opinion. The remaining judges said Ohio’s “home rule” provision in its constitution gives municipalities great leeway in writing ordinances. “There is no need for the state to act as the thousand-pound gorilla, gobbling up exclusive authority over the oil and gas industry, leaving not even a banana peel of home rule for municipalities,” Justice Judith Ann Lanzinger wrote.
Ohio Supreme Court: local governments can't ban fracking - The Ohio Supreme Court ruled 4-3 Tuesday that local governments can’t ban fracking in their municipality, or institute zoning regulations that would supersede drilling activity, complementing current state law upholding such prohibitions. The decision also stated that governments could not enforce any current regulations or bans, as they conflict with the state’s “executive authority” regarding oil and gas drilling, which is overseen by the Ohio Department of Natural Resources. In 2014’s election, Athens residents overwhelmingly supported an initiative to ban fracking practices within city limits. A similar initiative nearly made it to the November 2013 ballot, though the Athens County Board of Elections denied the ban from appearing on the ballot, considering the state has sole power regarding drilling regulations. Councilman Jeff Risner, D-2nd Ward, said 78 percent of voters were in favor of the 2014 ban. Athens Mayor Paul Wiehl said Tuesday’s ruling was “unfortunate”, adding it’s unfair for the state to void Athens’ ban. “I guess that means the voice of the people doesn’t matter,” Wiehl said. “We said ‘We want local control,’ and then they take it away.” The lawsuit leading to the Supreme Court decision involved Munroe Falls’ zoning ordinances and local laws regulating oil and gas drilling coming to head with Beck Energy, which had obtained a state permit to drill into the city’s property. Wiehl said Athens residents will be the ones to experience negative effects of fracking, which involves injecting water and chemicals into the ground to extract fossil fuels. “We’re the ones who are going to suffer the pollution,” Wiehl said.
Court upholds Ohio's power to regulate oil and gas drilling — Certain local zoning laws aimed at limiting fracking can't be used to circumvent the state's authority over oil and gas drilling, a fiercely divided Ohio Supreme Court ruled Tuesday.In a 4-3 decision with three written dissents, the high court said that the home rule clause of Ohio's constitution doesn't allow a municipality to block drilling activities otherwise permitted by the state.The decision came in a case brought by the Akron suburb of Munroe Falls against Beck Energy Corp. over a 2004 state law that gives Ohio "sole and exclusive authority" to regulate the location of wells.Beck received a state-required permit from the Ohio Department of Natural Resources in 2011 to drill a traditional well on private property in Munroe Falls. The city sued, saying the company illegally sidestepped local ordinances.The lawsuit has been closely watched nationally, raising a question in cities and towns where lucrative oil and gas is trapped in underground shale: Can regulations put in place by states eager for the jobs and tax revenues that come with drilling trump local restrictions on hydraulic fracturing, or fracking, that communities are enacting to protect against haphazard development.Writing for the court's majority, Justice Judith French said, "The issue before us is not whether the law should generally allow municipalities to have concurrent regulatory authority, but whether (the law) and Home Rule Amendment do allow for the kind of double license at issue here. They do not."
Ohio Supreme Court rules Munroe Falls regulations on oil and gas drilling are improper -- The Ohio Supreme Court on Tuesday ruled that communities may not exercise their home-rule powers to regulate oil and gas drilling if they conflict with a state law that regulates drilling across Ohio. In its 4-3 decision, the court upheld an appellate court's ruling against the city of Munroe Falls that struck down regulations the community was trying to enforce against a driller, Beck Energy. Munroe Falls had won an injunction in Summit County Common Pleas Court that halted Beck from drilling, even though it had obtained permits from the state. It appealed to the Supreme Court after the Ohio 9th District Court of Appeals overturned that decision. Before the case was argued last February, Munroe Falls Mayor Frank Larson had said the case wasn't about oil and gas drilling. Rather, it was about communities fighting to preserve their constitutionally granted home-rule powers. A half dozen other communities, including Broadview Heights, Euclid and North Royalton, filed briefs in support of Munroe Falls' position. Ohio's home rule provisions in the state constitution permit communities to enact local rules and regulations so long as they do not conflict with general state laws. But in her majority opinion, Justice Judith French wrote that the Munroe Falls regulations, which were enacted between 1980 and 1995, clashed with a 2004 law enacted by the General Assembly that provided for general statewide regulation of oil and gas drilling.
Munroe Falls fracking rules are trumped by state regulations, Ohio Supreme Court rules - - Columbus Business First -- An Ohio community cannot use its zoning laws to ban fracking because state law trumps its home rule stance, the Ohio Supreme Court decided Tuesday. While the ruling in the 4-year-old dispute between the town of Munroe Falls and Beck Energy Corp. affirms a state appeals court ruling, it is unclear whether the question over the legality of local bans on hydraulic fracturing will continue. "It's a win for the oil and gas industry in this case, but I'm not sure that it actually answers the ultimate question of whether (state law) trumps all local ordinances that attempt to regulate oil and gas," said Matt Warnock, co-chairman of law firm Bricker & Eckler LLP's Shale Task Force. Chris Zeigler, executive director of American Petroleum Institute-Ohio, sees the decision as reaffirming what he already thought about local bans on fracking: "This certainly answers the question correctly with regard to outright banning campaigns," he told me. Comments from the justices implied the Ohio legislature could address some of the lingering questions over the local-versus-state debate. The court heard arguments a year ago over the dispute between the drilling company and Munroe Falls, near Akron. The dispute started when Ravenna-based Beck Energy prepared to drill a natural gas well on leased residential land in the town. The Ohio Department of Natural Resources approved a permit but the city sued, arguing Beck Energy violated the municipality's zoning and drilling rules.
Ohio high court holds local ordinances preempted by state oil and gas regulations - [JURIST] The Supreme Court of Ohio [official website] on Tuesday ruled [opinion, PDF] in a 4-3 decision that local drilling and zoning regulations are preempted by state laws governing oil and gas drilling activities. In 2011 Beck Energy Corporation obtained a permit from the Ohio Department of Conservation and Natural Resources (ODNR) [official website] in order to drill a well within the city limits of Munroe Falls, Ohio. The city obtained a court order to stop the company from operating within its limits until the company complied with local law, notably one zoning ordinance and four ordinances related to oil and gas drilling. In Tuesday's opinion, the court ruled the local ordinances are not within a the city's home rule powers [Court News Ohio report], which allow cities and counties to pass laws to govern themselves. The court referenced the purpose of a 2004 law [1509.02, text] passed by the Ohio General Assembly [official website] that established DCNR has exclusive authority [Columbus Dispatch report] to regulate all aspects of drilling activity. Because the local ordinances directly conflict with state-wide regulations, the court held the city of Munroe Falls could not enjoin the company from drilling when the proposed drilling activity complies with state regulations.
Don’t Give Up on Home Rule in Ohio - Home Rule has been dealt a set-back in Ohio, but not a death blow. As Lady Chainsaw (aka Deborah Goldberg) explains, the court ruling did not negate a municipality’s ability to apply land use laws – zoning – to oil and gas activity – provided the ordinance is based on a comprehensive land use plan and is limited to land use zoning. The ruling just prevents towns from trying to regulate the activity of oil and gas drilling – what the court refers to as “double licensing” of the activity by the town as well as the state. No can do. Not in New York, not in Texas, not in New Mexico, not nowhere. As we have seen before, there are right ways to right zoning ordinances and there are wrong ways. Nutshell, the Ohio town took the wrong approach. “The press is overplaying the decision. We submitted an amicus brief on behalf of health professionals in the case. Our amicus brief argued strenuously that the Ohio Supreme Court should decide the case narrowly and not rule out the possibility of zoning that could work with state oil and gas regulatory law. The three-judge plurality ruled against the City, but in doing so, it stated: The issue before us is not whether the law should generally allow municipalities to have concurrent regulatory authority, but whether R.C. 1509.02 and the Home Rule Amendment do allow for the kind of double licensing at issue here. They do not. We make no judgment as to whether other ordinances could coexist with the General Assembly’s comprehensive regulatory scheme. Rather, our holding is limited to the five municipal ordinances at issue in this case. The one-judge concurrence stated: I write separately to emphasize the limited scope of our decision; “our holding is limited to the five municipal ordinances at issue in this case.” Lead opinion at ¶ 33. This appeal does not present the question whether R.C. 1509.02 conflicts with local land use ordinances that address only the traditional concerns of zoning laws, such as ensuring compatibility with local neighborhoods, preserving property values, or effectuating a municipality’s longterm plan for development, by limiting oil and gas wells to certain zoning districts without imposing a separate permitting regime applicable only to oil and gas drilling.
Beck Energy-1, Munroe Falls- 0, but does it matter? -- Now that Beck Energy Corp.’s case against Munroe Falls has come to the end, and the company walked away with the win, it may not pursue drilling the well that caused all the fuss in the first place. Back in 2011, Beck Energy had plans to drill a natural gas well on leased residential land located in Munroe Falls. The city sued Beck Energy claiming the well violated local zoning ordinances. The case made its way up to the Ohio Supreme Court where the court eventually ruled in favor of Beck Energy. Now with a victory, it is expected that the company begin drilling its well, but other factors are now weighing in on going ahead with operations. John Keller, the Vorys Sater Seymour and Pease LLP attorney who argued the company’s case in court, commented on one issue that is making Beck Energy rethink drilling: It needs to first of all determine if it makes economic sense to drill those wells … Prices have gone down since they first proposed this.
Company Presses Forward on Plans to Ship Fracking Wastewater via Barge in Ohio River, Drawing Objections from Locals -- A major dispute is brewing over transporting wastewater from shale gas wells by barge in the Ohio River, the source of drinking water for millions of Americans. On January 26, GreenHunter Water announced that it had been granted approval by the U.S. Coast Guard to haul tens of thousands of barrels from its shipping terminal and 70,000-barrel wastewater storage facility on the Ohio River in New Matamoras, Ohio. Outraged environmental advocates immediately objected to the news. But the company's announcement was in fact made before the Coast Guard completed its review of the hazards of hauling shale gas wastewater via the nation's waterways – a process so controversial given the difficulty of controlling mid-river spills and the unique challenges of handling the radioactivity in Marcellus shale brine that proposed Coast Guard rules have drawn almost 70,000 public comments. GreenHunter's move drew a sharp rebuke from Coast Guard officials. “The Coast Guard has not taken final agency action on GreenHunter’s 2012 request to transport shale gas extraction wastewater and has not classified this cargo for shipment,” the Coast Guard said in a statement responding to the announcement. So how can the company move forward with plans to ship wastewater in the Ohio River? The answer may come down to whether the waste the company hauls is classified as “shale gas extraction waste” or “oilfield waste.” GreenHunter officials now say they consider their wastewater “oilfield waste.” The company told the Ohio Beacon it had received a letter on October 2 from the Coast Guard stating it could ship “oilfield waste.” Citing that authority, company officials said they intend to move forward with shipments.
Marcellus horizontal well activity - marcellus.com: Activity in the Marcellus Shale hasn’t changed much, but Governor Tom Wolf’s decision put in place a natural gas severance tax has caused an uproar within Pennsylvania. Wednesday of last week, Wolf shared his proposed 5 percent state severance tax on natural gas production. The tax would balance out the impact of shale drilling in counties located in Northeast Pennsylvania. Wolf claims that the tax is reasonable and has the potential to generate $1 billion that would mostly go towards public education by the 2016-2017 fiscal year. According to spokesman Jeff Sheridan, along with his proposed severance tax, Wolf also plans to replace the already existing driller impact fee that was adopted in 2012 with unclear impact funding for local governments. Debate regarding Wolf’s severance tax is heated and only time will tell what will happen to natural gas operations in Pennsylvania. The following information is provided by the Ohio Department of Natural Resources through the week of February 7th. DRILLED–16 DRILLING 1 PERMITTED -15 PRODUCING –12 TOTAL - 44. Forty-four horizontal permits were issued through the week that ended Feb. 7th, and twenty-nine wells were drilled in the Marcellus Shale.
Oops! Marcellus did it again - Drilling companies in Pennsylvania did it again and broke another production record. According to data released by the Department of Environmental Protection (DEP), last year shale gas production increased by 30 percent. Marcellus drillers alone produced over 2 trillion cubic feet of gas during the second half of 2014. Throughout the entire year, drillers produced 4 trillion cubic feet, equivalent to 16 percent of what the nation uses on an annual basis. Frank Macchiarola of the industry trade group, America’s Natural Gas Alliance commented on the natural gas supply that Pennsylvania has generated: “Economic growth from natural gas production has translated into increased disposable income for families and more profitable businesses … Pennsylvania also is supplying the rest of the country with abundant natural gas helping to power America.”Leading the way again, Cabot Oil and Gas’s operations in Susquehanna County, Pennsylvania, are the most productive wells. The most gas producing county in Pennsylvania is Bradford, followed by Washington, Susquehanna, Lycoming and Greene counties. Consisting of parts of Pennsylvania and West Virginia, the Marcellus Shale area is the most productive natural gas formation in the U.S., reports the U.S. Energy Information Administration (EIA). The EIA tracks drilling productivity monthly and releases graphs explaining the data gathered. The following is the regional production chart released on February 9th, the next graph will be available on March 9th.
Cabot downsizes in the Marcellus Shale -- In its 2014 end of the year report, Cabot Oil & Gas announced its plans to eliminate two of its five rigs in the Marcellus Shale by the end of the second quarter. During the fourth-quarter of 2014, Cabot’s net production in the Marcellus reached 1,491 million cubic feet (Mmcf) per day, an increase of 27 percent compared to 2013’s fourth-quarter report. The company’s growth is credited to its well performance in the Marcellus, which was highlighted in data provided by the Pennsylvania Department of Environmental Protection. The results showed that Cabot had the top 16 performing wells in the state by cumulative production during the last six months of 2014. However, due to lower energy prices, Cabot is making a few changes for this year; Chairman, President and Chief Executive Officer Dan. O. Dinges explained the company’s plan: However, in light of weaker than anticipated price realizations this winter and expectations for this price environment to persist throughout the year, we are taking a more measured approach to our production levels in 2015 with a focus on maximizing price realizations and returns while at the same time managing growth … As a result, our plan is to reduce our originally budgeted level of activity; however, given the low-capital intensity of our operations in the Marcellus Shale, we can remain flexible to accelerate our pace of operations if market conditions and new takeaway capacity warrant.Currently, Cabot has five rigs operating in the Marcellus, and by the end of the second quarter this year, the company plans to drop two rigs. For 2015, the company intends to drill an estimated 70 wells in the Marcellus and place 65 to 70 wells on production, while ending the year with about 45 wells waiting on pipeline or waiting to be completed. This year, the average drilling and completion cost is estimated between $6 million and $6.5 million per well with an average length of 5,300 feet.
Congressional Democrats Seek To Step Up Fracking Oversight – Democrats on a congressional oversight panel are stepping up their investigation into how well states are regulating the disposal of oil and gas waste, citing continuing public concern about the potential environmental and health risks of hydraulic fracturing.Rep. Matt Cartwright, D-Pa., the lead Democrat on a health subcommittee of the House Committee on Oversight and Government Reform, says he will be pressing environmental agencies in Pennsylvania, Ohio and West Virginia for fuller answers to his panel’s questions on their level of inspections and enforcement actions. Republicans on the committee, including subcommittee chairman Jim Jordan of Ohio, have not yet taken a position on whether to join the investigation, citing in part jurisdictional questions.Of particular concern is making sure their waterways are not contaminated by waste from fracking, which uses millions of gallons of high-pressure water mixed with sand and chemicals to break apart rocks rich in oil and gas. That process leaves behind a host of chemicals, sludge and other potentially toxic fluids.Cartwright is also asking for a state accounting of how complaints from local residents about health effects are handled.He said state replies so far have been disappointing, mostly listing state regulations without discussing enforcement. Cartwright said the responses did little to allay questions about potential gaps in state oversight that the federal government may need to address. Currently, federal regulations on hazardous waste generally exempt those fluids related to fracking.
States Drag Their Feet on Congressman's Frack Waste Investigation - A Pennsylvania congressman wanted to know how his state and two neighboring states oversee the disposal of the often toxic waste generated by fracking oil-and-gas wells. Now, Matthew Cartwright has some answers, and he finds them late–and lacking.Cartwright, a Democrat from eastern Pennsylvania, launched the investigation in his state last October. A month later, he expanded his inquiry to Ohio and West Virginia. Responses from two states failed to provide substantive, detailed information to the congressman while one state has ignored the request. Among the issues Cartwright raised:
- How each state inspects oil-and-gas waste facilities.
- What information the states require to pinpoint what's in the waste.
- An explanation of the process for handling complaints regarding fracking waste disposal.
Answers to those questions are important for both residents and the environment in regions that are disposing of huge quantities of fracking waste, Cartwright said in an email interview. "States continually argue that this is a state's issue and they can best handle it," Cartwright said. "We believe that these states may not be adequately disposing of potentially hazardous waste." A representative of the Ohio Environmental Protection Agency did not respond to InsideClimate News calls and questions about why the agency has failed to reply to Cartwright. The agency was given a Dec. 3 deadline.
Rice Energy downsizes for 2015 -- On Tuesday, Rice Energy Inc. announced it will be joining the long list of companies that are cutting back on 2015 drilling operations. The company said it will be reducing its capital budget by 19 percent compared to its 2014 spending, bringing it down to $890 million. Of the $890 million, $680 million will go toward developments in the company’s Marcellus and Utica assets. The remaining funds will be invested in the company’s Ohio gas gathering system and its freshwater distribution center. Even with the reduction in spending, Rice Energy says its production will increase by anywhere between 64 percent and 72 percent, equivalent to between 450 and 470 million cubic feet per day. The company’s number of rigs will drop from four to three this year. Rice Energy plans on letting one Ohio rig go once the contract reaches its expiration date, which is sometime in mid-2015. The stated the following regarding its exploration and production plans in its press release: In Pennsylvania, we expect to spud 43 gross (39 net) horizontal Marcellus wells (100% operated) and turn to sales 31 gross (26 net) horizontal Marcellus wells with an average lateral length of 7,100 feet. . In Ohio, we expect to spud 19 gross (12 net) horizontal Utica wells and turn to sales 12 gross (7 net) horizontal Utica wells with an average lateral length of 9,500 feet. On our non-operated properties in Ohio, we expect to spud 38 gross (9 net) horizontal Utica wells and turn to sales 15 gross (2 net) horizontal Utica wells with an average lateral length of 7,200 feet.
Court Tosses Illegal Gas Lease Extension - A Pennsylvania court has tossed Cabot’s attempt to unlawfully extend gas leases. Bravo: This from Lady Chainsaw (aka Deborah Goldberg) at Earth Justice: “We submitted an amicus brief on behalf of small landowners in a PA case, in which Cabot attempted to extend its lease term after an unsuccessful lease challenge by landowners it had duped. The case was filed in federal court, but the Third Circuit certified the question to the PA Supreme Court, which today rejected the claim that the lease should be “equitably extended.” There is a long quote from our brief on page 10 below. Hooray for the PA Supreme Court, which continues to push back against oil and gas industry overreaching.”
Abandon ship: Southern Tier New York looks to defect to Pennsylvania over fracking ban -- Despite the fact that it rests upon a wealth of resources, New York Gov. Andrew Cuomo is sticking by his pledge to ban the practice of the hydraulic fracturing of shale to extract natural gas (fracking) in the Empire State. He flipped on his opposition to the practice while seeking reelection after facing significant resistance from his environmentalist left flank. As a political maneuver, Cuomo’s decision makes sense. In any other context, though, the decision to ban fracking in New York is asinine. For the party of science, opposition to fracking technology is strictly the result of adherence to an article of faith.But not only is New York’s opposition to fracking not based in an objective assessment of its environmental impacts, it is also economically hazardous and a nightmare for the state’s badly neglected upstate residents. Well, between the fracking ban, high property taxes, and general meddling from Albany, New York’s Southern Tier has had enough. According to a report, those cities along the Pennsylvania border are investigating the prospects for seceding from New York and joining the Keystone State. “The Southern Tier is desolate,” said Conklin, New York supervisor to a reporter with WBNG. “We have no jobs and no income. The richest resource we have is in the ground.”There are 15 towns interested in the secession, according to the Towns Association. These towns are in Broome, Delaware, Tioga and Sullivan counties. The association declined to name the towns without their permission and also declined to comment on specifics at this time. As of now, research is ongoing. The group will be updating Action News with all of their findings in the coming weeks.The association said it’s comparing taxes and the cost of doing business in the two states. It says the facts show there is a huge difference between the two.Also being considered are things like workers comp, surcharges, unemployment and health insurance. The association’s understanding is that the secession would have to be approved by the New York State Legislature, the Pennsylvania State Legislature and the U. S. government.
Condem Nation: Landowners Fight Pipeline Condemnation - Evidently some landowners got the memo that it is better for them to opt for condemnation: at worst they get more money than an outright sale. Typically 100% more if they play their cards right. At best the pipeline does not get built or gets built somewhere else. This is the story of the Holleran family in Pennsyvlanai – who did not roll-over and play dead for a gas pipeline company. Yesterday, we accompanied Susquehanna County, PA landowners to the hearing on “quick take” eminent domain condemnation Constitution Pipeline is seeking against them. The pipeline company is a joint partnership led by Williams Partners LLC, also owner of the proposed Atlantic Sunrise Pipeline in Pennsylvania. Partners in the project include Cabot Oil & Gas and Washington Gas & Light. Constitution Pipeline via their law firm Saul Ewing is asking Judge Malachy Mannion, of the 3rd Circuit Federal Court of Appeals, for “quick take” power to condemn seven properties where landowners have refused an easement agreement for the 100-foot wide pipeline right of way. The Fifth Amendment of the US Constitution requires that “just compensation” be given for any private property seized by eminent domain. If Constitution Pipeline is successful, eminent domain condemnation would occur before the amount of “just compensation” is determined by the court, as hearings on that have not yet occurred. There was no ruling on the preliminary injunction yesterday, which means that Constitution cannot access those properties on February 16th (Monday) like they were seeking to do. Judge Mannion extended the time for written briefs and arguments to February 24th, after which he will make a ruling. The attorney for the landowners made a very good argument that the Fifth Amendment would be violated with “quick take”.
A Forest’s Family Roots Stand in a Pipeline’s Path - Known as Charlotte Forest , it is a sanctuary of woods and wetlands that the family has maintained for nearly seven decades. In 1947, Mr. Kernan’s father, Henry Kernan, a Yale-trained forestry expert, and his wife, Jody, bought nearly 1,000 acres of forest and wetland property straddling Delaware and Otsego Counties . Since then, the land has remained under the close stewardship of the Kernan family, the parents passing it down to their five children as the proud centerpiece of a family of naturalists. The forest has been intensively studied and documented by environmentalists and ecologists, including Henry Kernan, who wrote about it in two books and in numerous conservation articles. But now, the family says, the forest is threatened by the construction of the Constitution Pipeline, a $700 million, 124-mile conduit designed to transport natural gas from the Marcellus Shale fields of northeast Pennsylvania to Wright, N.Y., 80 miles southwest of Albany, where it will connect with two other pipelines to serve markets in New York and New England. The project calls for workers to clear a mile-long, 75-foot-wide swath through the forest, and for the path to be kept clear for perpetuity, at 50 feet.
Pooling legislation would ease development of shale gas wells - Legislation moving through the West Virginia House of Delegates seeks to allow lease integration for deep well horizontal drilling. House Bill 2688, introduced by Energy Committee chairman Delegate Woody Ireland, R-Ritchie, would allow property owners to come together and agree to allow gas companies to drill deep horizontal wells on their properties. Under current law, one holdout can prevent development and royalties for all other rights owners. Lease integration, also referred to as forced or fair pooling — depending on which side you’re on — would take care of that. It already exists for shallow Marcellus shale wells, but Ireland said this legislation would allow companies to take advantage of the abundant Utica shale, which lies deep under much of West Virginia. “It would encompass not only the shallow wells, which is the Marcellus, but also the deep wells — the Utica,” Ireland said. Lease integration, or forced pooling as it’s commonly known, works like this: Property owners agree to allow gas companies to drill under their land. The company works to get property owners of joint tracts of land to agree to lease their rights to the company into what’s known as a unit of production. But if the owner of one tract of property encompassed in the larger tract doesn’t want to sign over his or her rights, a supermajority consisting of 85 percent of property owners in that tract can force the holdout to participate. That allows all property owners to reap the economic benefits of leasing to the gas company and earning royalties on gas extracted from beneath their land. Under the proposed bill, gas companies must make multiple, good faith efforts through letters or phone calls to get the holdout to agree to lease before a pooling hearing takes place.
Seneca Lake Propane Export Scheme? - The promoters of the Seneca Lake Propane Bomb in a Partially Collapsed Salt Cavern have been telling locals that pumping millions of gallons of highly explosive propane into a partially collapsed salt cavern was going to dramatically lower their propane costs. In a word, frack no. Since propane if fungible, its price does not vary much in the US. Moreover, since the US is now a net exporter of propane, the domestic price is likely to go up – as exports rise. If the propane is worth more on the export market, not only will it go overseas, but local deliveries will be curtailed as they were last winter – which lead to a midwinter shortage of propane “for the locals” – some of whom froze to death as a result. Because it was more lucrative to export it. Bill Huston blogged about it – how the reversal of the propane supply lines – engineered not only a price spike, but a curtailment of domestic supply where it was needed most – in the north – in midwinter. Debbie Dogskin is dead. She was found in her Fort Yates, North Dakota, mobile home frozen to death with an empty propane tank. [1] [2] What was the cause of the propane shortage which caused prices to rise and supplies to dwindle in the northern midwest and the northeast this winter? Short answer: It was an engineered gamble by industry seeking to maximize profits.To be plain: These are the kind of sick fracks that are behind the Seneca Lake Propane Export Scheme.
W.Va. county health board opposes natural gas pipeline - The Board of Health in West Virginia’s Monroe County is taking a stand against the proposed Mountain Valley Pipeline, which would run from northwestern West Virginia to southwest Virginia. In an open letter, the county’s health officer says the proposed natural gas pipeline poses a “significant and substantial risk” to residents. Dr. J. Travis Hansbarger notes that the pipeline would pass close to a public school and a long-term care center. The Bluefield Daily Telegraph reports that the letter cites as a primary concern the potential for groundwater contamination during the pipeline’s construction. The pipeline is a joint venture of EQT Corp. and NextEra Energy. It would transport natural gas at high pressure through a buried, 42-inch-diameter steel pipe. It still needs regulatory approval.
W.Va. train derailment sends oil tanker into river — Emergency crews and state environmental officials are responding to a train derailment in West Virginia that sent at least one tanker car containing crude oil into the Kanawha River. Media reports say the derailment occurred Monday afternoon of CSX train in Fayette County, which is north of Beckley. Public Safety spokesman Lawrence Messina said responders at the scene said the tanker is leaking crude oil into the river. Messina said at least one and possibly more tanker cars went into the river. He also said the derailment sparked a house fire.
Update: CSX train hauling North Dakota oil derails, cars ablaze in W. Virginia - A CSX Corp train hauling North Dakota crude derailed in West Virginia on Monday, setting a number of cars ablaze, destroying a house and forcing the evacuation of two towns in the second significant oil-train incident in three days. One or two of the cars plunged into the Kanawha River, said Robert Jelacic of the West Virginia Department of Homeland Security and Emergency Management. CSX said the train was hauling 109 cars from North Dakota to the coastal town of Yorktown, Virginia, where midstream firm Plains All American Pipelines runs an oil depot. It said one person was being treated for potential inhalation of fumes. No other injuries or deaths were reported. As of 9:30 p.m. local time, billowing flames could still be seen coming from several rail cars and something appeared to be burning on the partially frozen river. Clean-up was expected to take several days, as the fires burn themselves out, said Joe Crist, Fayette County fire coordinator. About 200 residents were evacuated. Crist said West Virginia American Water was testing to see if Kanawha River water had become contaminated.
West Virginia In State Of Emergency After Massive Oil Train Explosion - Crude oil is pouring into a river that supplies drinking water and approximately 1,000 people have been evacuated from their homes due to an oil train derailment and explosion in southern West Virginia on Monday, according to media reports. The train, owned by CSX Corp., was carrying more than 100 tankers of crude oil from the Bakken shale in North Dakota when it derailed at about 1:30 p.m., the L.A. Times reported. Officials estimated that approximately 14 of those tankers were involved in the derailment and subsequent fire, which as of 9 p.m. was still raging. Gov. Earl Ray Tomblin declared a state of emergency at around 5:40 p.m. One home has so far been confirmed destroyed, and at least one person has been sent to the hospital for inhaling smoke. CSX put out a statement Monday night saying it would provide hotel rooms for displaced residents.Concerns have also been raised about the potential contamination of local water-treatment facilities, after officials noted that at least one of the derailed tanker cars fell into the Kanawha River. The area is about 30 miles from the location where 10,000 gallons of a coal industry chemical called crude MCHM spilled and tainted the drinking water supply a little over one year ago. Response efforts have so far been hampered by heavy snow. The area has been under a winter storm warning, according to the Associated Press, and is expected to get anywhere from 5 to 10 inches of snow tonight.
Breaking: Shale Oil Bomb Train Explodes in W Virginia Neighborhood - Wiping out at least one house, so far. 14 tank cars are ablaze. The new normal. You live next to a railroad track at your peril. This train was hauling tank cars of North Dakota shale oil – which is highly explosive – right through a residential neighborhood – a long way from North Dakota. No local firefighters are equipped to deal with a shale oil bomb train. All they can do is evacuate the blast area and wait for it to blow itself up, one tank car at a time in a series of BLEVE explosions. How many of these Shale Oil Terror Trains do you want in your home town, in your state ?
Oil train ablaze in W.Va. passed safely in Ohio - Dozens of trains like the one that wrecked near Montgomery, W.Va., Monday afternoon cross northwest Ohio weekly to deliver oil from North Dakota’s Bakken Shale oil fields to terminals along the East Coast, and the CSX line through Defiance is, according to data released recently by a state agency, Ohio’s busiest. “Obviously we’re concerned,” said Tim Bowling, the assistant fire chief in Defiance. If a train like that were to derail and catch fire in town, he said, “You’re not going to spray a couple of hoses on that and put it out.” “It scares the bejeezus out of me,” Ken Chapman, Fostoria’s fire chief, said of the oil trains through that city, where the CSX line crosses a Norfolk Southern track that also handles some oil trains. “I don’t care if you’re Columbus, or Fostoria, or any city in between: nobody’s fully prepared for it.” It may take months to determine the cause of the West Virginia derailment, where about 25 of 107 loaded oil tank cars, each carrying about 30,000 gallons of oil, jumped the tracks. About 20 caught fire.
Montgomery customers lose water service due to plant shut down; Company establishing water distribution sites – West Virginia American Water is alerting all its customers in the Montgomery area that as a result of a train derailment just east of Montgomery, its water plant was shut down earlier this afternoon. West Virginia American Water expects that approximately 2000 customers in the Montgomery area will lose their water service within a few hours if the plant remains shut down. The company is awaiting confirmation from DEP and emergency responders as to whether or not crude oil migrated into the Kanawha River from Armstrong Creek, which is the tributary impacted by the derailment. . While awaiting further information, West Virginia American Water is sourcing local bottled water supplies as well as working to secure larger supplies of water and safe distribution sites for their impacted customers. As soon as the sites are identified, the company will issue updated information via the media, its website and social media.
Train Cars Still Burning near Montgomery; Water Plant Restarted: -- West Virginia American Water has reopened the intake at the Montgomery plant following tests showing no crude oil in the Kanawha River. WVAW restarted the Montgomery water treatment plant at 1 p.m. Tuesday. The plant was shut down for nearly 24 hours following a train derailment that happened Monday afternoon. 26 of the 109 cars carrying Bakken crude oil derailed, causing explosions and fire, as well as oil leaking from several of the cars in Armstrong Creek. Officials shut down the Montgomery intake, which is three miles downstream of the spill, until they could test the water to determine if oil made it to the intake. . "Multiple water samples taken at different locations in the river and at the plant showed non-detectable levels of the components of crude A boil water advisory is in place for nearly 2000 customers in Montgomery, Smithers, Cannelton, London, Handley and Hughes Creek. The company expects that all affected customers should see their full service restored within one to two days, depending on the elevation of their locations.
Derailed CSX train in West Virginia hauled newer-model tank cars | Reuters: (Reuters) - An oil train was still on fire and leaking in West Virginia on Tuesday, a day after it derailed and erupted in flames, according to CSX Corp, which said the train was hauling newer model tank cars, not the older versions widely criticized as prone to puncture. The train, which was carrying North Dakota crude to an oil depot in Yorktown, Virginia, derailed in a small town 33 miles southeast of Charleston, causing 20 tank cars to catch fire. Several were still leaking oil on Tuesday. All the oil tank cars on the 109-car train were CPC 1232 models, CSX said late Monday. The CPC 1232 is the newer, supposedly tougher version of the DOT-111 car manufactured before 2011, which was faulted by regulators and operators for a number of years. U.S. and Canadian authorities, under pressure to address a spate of fiery accidents, are seeking to phase out the older models. The U.S. Transportation Department has recommended that even these later models be updated with improved braking systems and thicker hulls. The fires, which destroyed one house and resulted in the evacuation of two nearby towns, were left to burn out on Tuesday, CSX said in a statement. No serious injuries were reported. CSX said the cleanup of oil will begin when it can safely reach the site. In the meantime, delays are expected on the line. None of the 25 tank cars that derailed fell into the nearby Kanawha River, CSX said. On Monday, officials said at least one car had entered the river. Water tests along the Kanawha River have so far come up negative for traces of oil, according to a spokeswoman at the West Virginia Department of Environmental Protection. A nearby water treatment plant has been closed, she said.
Towns evacuated after crude oil tankers derail, explode in West Virginia YouTube
Bakken crude more volatile than other oils, report said -- The type of crude oil involved in Monday’s train derailment in Fayette County was more volatile and likely to ignite than other types of crude, which has led to increased scrutiny of its shipment by the federal government. The CSX train that derailed and filled the sky with fire near Mount Carbon was hauling 107 rail cars of filled with crude oil extracted from North Dakota’s Bakken shale to a refinery in Virginia. The Bakken region has been key to the United States’ resurgence in oil production in recent years, and its increased output has led to a surge in domestic oil shipments by rail. According to the Association of American Railroads, rail shipments of oil peaked at more than 16,000 rail car loads a week in the fall of 2014, nearly double what was being shipped at the beginning of 2012. But that increase in volume has also brought on a resurgence of accidents along those rail lines. According to government data analyzed by ProPublica, there were eight major incidents involving crude oil rail shipments in North America between 2012 and 2014. The U.S. has seen recent major train explosions in Aliceville, Ala., in November 2013; Casselton, N.D., in December 2013 and in Lynchburg, Va., last April. The Lynchburg incident occurred on the same CSX shipping line involved in Monday’s incident. Federal regulators have been looking at the increased rail shipments from the Bakken region since at least September 2012, according to a timeline from the Pipeline and Hazardous Materials Safety Administration, an agency under the U.S. Department of Transportation. Part of its initiatives included unannounced inspections, sampling and data collection on the Bakken crude and its delivery systems.
ND state officials blamed following fiery derailment -- The recent train derailment in West Virginia that resulted in a fiery blaze and the evacuation of two cities has some North Dakota groups accusing state leaders of failing to act quickly on oil conditioning standards.According to a report by The Bismarck Tribune, the recent derailment and explosion is the sixth incident involving Bakken crude oil since 2008. On Tuesday the Dakota Resource Council released a statement blaming state officials for refusing to enforce oil conditioning standards prior to shipment. Officials investigating the derailment in West Virginia have yet to determine what caused the accident. In the statement the organization said, “Responsibility for this explosion is squarely at the feet of North Dakota officials from Gov. Jack Dalrymple on down for their inept handling of regulating oil extraction in North Dakota. [Dalrymple’s] administration is putting people’s lives and property at risk here and across the continent.” The Tribune reports that Dalrymple’s spokesman Jeff Zent said the Council’s statement suggests that the groups is uninformed or decided to not acknowledge the progress made by the state. He referred to the Industrial Commission’s order which includes strict guidelines for the temperatures and pressures in which Bakken oil is transported. Some critics, however, are arguing that the commision’s recommendation of limiting tank car pressure to 13.7 pounds per square inch (psi) is not enough given that the majority of the oil produced in the Bakken is already shipped below that threshold. The Bakken crude that was carried on the train that derailed in Lac-Megantic, Quebec, which killed 47 people in 2013, was shipping the product at 9.3 psi vapor pressure according to the Canadian transportation board.
Massive West Virginia Explosion Highlights Problems With Oil Train Regulation - A full day after a still-unknown amount of oil spilled from a 109-car oil train in West Virginia, portions of Kanawha and Fayette counties are still on fire. The sight is becoming less abnormal. Across the United States and Canada, there’s been a string of fiery accidents involving oil trains. The accidents have involved these same unit trains containing 100-plus cars of light crude oil from North Dakota’s Bakken shale. Just this weekend, a train derailed and spilled Bakken oil in Ontario, Canada. Last year an oil train derailed on a bridge over the Schuylkill River in Philadelphia, and 13 cars tipped over along the Penobscot River in Maine. Two summers ago, a derailment in Lac Megantic, Canada, killed 47 people. These accidents have been the product of a 40-fold increase in crude-by-rail shipments since 2008 — an unprecedented jump that has so far seen no concurrent upgrade in federal safety requirements. In the wake of Monday’s disaster in West Virginia, rail safety advocates are drawing attention to what they see as huge problems with the way oil trains are currently regulated. The most basic problem is that current safety regulations were never meant to handle the enormous loads and speeds at which oil trains are operating today. That’s at least according to Fred Millar, a rail safety consultant who has spent 30 years lobbying for accident prevention around the country. “There was no such thing as oil trains two years ago, at least the way we see them now,” Millar said, noting that before the Bakken boom, crude oil was mostly shipped by pipeline and occasionally in mixed freight. “But now, with the Bakken oil, they’re pumping it out of the ground so fast with the fracking that the pipelines are all congested. The infrastructure is not ready for this.”
After fiery West Virginia train derailment, is oil by rail safe? (+video) - — Fireballs erupted in West Virginia Monday after an oil train derailed, setting ablaze tank cars full of North Dakota crude and threatening the local water supply. One derailed oil car went up in flames after hitting a house. Another ended up in the Kanawha River, threatening drinking water. Of the train’s 109 tank cars, about 25 derailed, each loaded with up to 30,000 gallons of oil. The derailment occurred near Mount Carbon, W.Va. as heavy snows began blanketing the south-central portion of the state Monday afternoon. Though no serious injuries were reported, hundreds evacuated as the derailed cars exploded and shot flames into the air. Tank cars were still burning Tuesday afternoon. Monday’s blast comes as the US Department of Transportation and the Obama administration finalize new rules, first proposed last summer, requiring safer tank cars and limiting train speeds. A string of crude by rail catastrophes – like the fiery derailment that rocked Casselton, N.D., last year – has increased public scrutiny on a growing form of transportation. All told, shipments of crude by rail in the US have increased 400 percent since 2005, prompting many to call for updated safety standards in the industry. But CSX, the rail firm whose train derailed Monday, said the tank cars involved were the newer and supposedly tougher CPC 1232 models – not older model cars many say are too easily punctured in rail mishaps. Environmentalists say the derailment with new tank cars proves that any kind of oil by rail is too dangerous, and confers too much risk on those who live near railways that ferry crude oil across the US.
Two More 'Bomb Train' Explosions Should Be 'Wake-Up Call to Politicians to Stop These Dangerous Oil Trains' » Within the last several days, two trains carrying volatile crude oil derailed and caught on fire. These accidents highlight the danger of government foot-dragging over train safety and show that towns seeking to ban these trains coming through their area aren’t just being contentious and “anti-business.” Yesterday a 109-car train carrying fracked oil from the Bakken shale formation in North Dakota derailed in Fayette County, West Virginia, with several cars catching on fire and at least one plunging into the Kanawha River. A house was consumed by fire, two towns were evacuated and West Virginia governor Earl Ray Tomblin declared a state of emergency for two counties. The West Virginia Department of Health and Resources posted on its website: “The West Virginia Department of Health and Human Resources Bureau for Public Health today announced water intakes in Montgomery and Cedar Grove have been closed following a train derailment that occurred in Fayette County. The train was carrying crude oil, some of which has spilled into the Kanawha River. While the intakes are closed, customers are urged to conserve water.” Saturday evening, a 100-car train carrying tar sands oil from Alberta derailed in a remote area near Timmins, Ontario and caught fire. According to Canada’s Globe and Mail, “The train was visually inspected and went through a checkpoint that automatically detects mechanical problems 20 miles before the derailment. The track was visually inspected on Saturday and cleared by a rail flaw detector in the past week.”
U.S. oil trains are taking high-stakes risks with lives -– Five hundred and ninety one days have passed since a train carrying crude oil derailed and incinerated the town of Lac Megantic in Quebec. In that time, the U.S. Department of Transportation (DOT) has still not finalized new safety rules on tank car standards and operational controls for trains carrying highly flammable liquids. DOT started working on new rules in April 2012 — more than a year before the devastating fire at Lac Megantic in July 2013, which claimed the lives of 47 people — so the process has so far taken 1,041 days. DOT has now sent a draft to the Office of Management and Budget (OMB) for final review and revisions but does not expect the final rule to be gazetted until May 12. Even then, new tank car standards could be phased in over several years by 2017/18, and oil shippers are pressing for an even longer transition period. If the timetable now sticks, it will have taken at least six years to implement new standards for tank cars that were recognized as necessary back in 2012. It is an astonishing example of regulatory failure. This is unacceptably slow. While regulators, lobbyists and lawyers for crude shippers have been sparring in Washington over whether new standards are necessary, and how long the industry should be given to comply with them, crude-carrying trains have been derailing and catching fire with frightening frequency.
Fiery derailment near Dubuque involved outdated tank cars — A train derailment Wednesday near Dubuque that caused three tank cars to erupt in flames and three others to plunge into the icy Mississippi River involved outdated cars prone to punctures and spills. The Canadian Pacific freight train headed southeast derailed around 11:30 a.m. Wednesday in a remote area north of Dubuque. Eleven cars left the track, with 10 of those carrying ethanol, officials reported. Three of those cars caught fire and three slipped into the river. “I can confirm that DOT-111s were involved, how many of the derailed cars were DOT-111s I am not sure yet,” Canadian Pacific Spokesman Jeremy Berry reported Wednesday evening. DOT-111s, black, tubed-shaped tank cars, make up about 70 percent of the U.S. tank car fleet. The outdated cars have been blamed for explosions and spills during derailments across North America. In the worst of these crashes, 47 people died when a runaway train of crude oil in DOT-111 cars exploded in Lac-Megantic, Quebec, July 6, 2013.
Striking New Report Finds Oil Trains Put 25 Million Americans at Risk -- As officials probe the two latest explosive oil train derailments in Ontario and West Virginia, the Center for Biological Diversity released a report yesterday offering striking new details on the broad range of unchecked risks to people and the environment posed by the largely unregulated escalation in U.S. rail transport of oil. The report, Runaway Risks: Oil Trains and the Government’s Failure to Protect People, Wildlife and the Environment, reveals that:
- An estimated 25 million Americans live within the one-mile evacuation zone recommended by the U.S. Department of Transportation;
- Oil trains routinely pass within a quarter-mile of 3,600 miles of streams and more than 73,000 square miles of lakes, wetlands and reservoirs, including the Hudson, Mississippi and Columbia rivers, the Puget Sound, Lake Champlain and Lake Michigan;
- Oil trains also go through 34 national wildlife refuges and within a quarter-mile of critical habitat for 57 threatened or endangered species, including the California tiger salamander, California red-legged frog, piping plover, bull trout and several imperiled species of salmon, steelhead and sturgeon.
“As we’ve seen in West Virginia and Ontario, these oil trains pose a massive danger to people, wildlife and our environment, whether it’s trains passing through heavily populated areas or some of our most pristine landscapes,” . “The federal government has failed to provide adequate protection from these bomb trains. We clearly need a moratorium on crude-by-rail until the safety of our communities and the environment can be ensured.”
Data: Oil Trains Spill More Often, But Pipelines Spill Bigger -- Which is safer: pipeline or rail? The question’s been hot on bloggers’ minds since Monday, when a train carrying 3 million gallons of crude oil derailed and exploded in West Virginia. And it’s not a bad one to ask, considering recent political discussion has been dominated by a debate over whether a certain pipeline is in the national interest. Many blogs, this one included, have pointed out that oil train disasters are on the rise. In 2014, oil trains in the U.S. spilled more oftenthan any other recorded year. These accidents have happened as crude-by-rail shipments are soaring, increasing 40-fold since 2008. And compared to pipelines, rail incidents are occurring more frequently — according to U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) data, rail incidents outnumbered pipelines two to one over the period of 2004 to 2012. A lot of people have used this data to argue that transporting oil via pipelines is safer than rail. And that’s true, if your idea of safety is defined by the frequency of accidents, regardless of how large the accidents are. If, however, you think massive releases of oil into the environment pose a greater risk to human health, than pipelines are the greater evil. According to the same PHMSA dataset, compiled and analysed by theInternational Energy Agency, U.S. pipelines spilled three times as much crude oil as trains over that eight-year period, even though incidents happened much less frequently. And that eight-year period was dominated by large pipeline spill events, including one that saw800,000 gallons of Canadian tar sands crude spill in and around the Kalamazoo River, and another 63,000 gallon pipeline spill into the Yellowstone River. There are numerous other factors at play. When a pipeline bursts, it can be harder to contain than a leaking oil tanker — only a certain, contained amount can spill out of a single punctured rail car. A pipeline can just keep spilling until the operator shuts down the flow, and will usually continue to gush until it’s empty. But when a rail car tips over while traveling at 40 to 50 miles per hour, it has a much larger chance of exploding. That’s a more immediate threat to human life if it happens in a populated area, not to mention the smoke and fumes that are released into the air from the open burning of hydrocarbons.
Offshore fracking is headed to the courtroom - The use of hydraulic fracturing in offshore projects, particularly off of California’s coast, has become a heated topic recently. Now the issue has become so hot that the Center for Biological Diversity filed a lawsuit today, naming the U.S. Interior Department as the defendant. According to the Center’s press release, the suit asserts that the Interior Department violated three federal laws by “rubberstamping offshore fracking off California’s coast without analyzing fracking pollution’s threats to ocean ecosystems, coastal communities and marine wildlife, including sea otters, fish, sea turtles and whales.” Fast-tracking permit approval for offshore fracking—known more specifically as categorical exclusion—has been one of the biggest concerns in the debate. While it boosts industry growth and is favored by officials in oil and gas, many are concerned that it exempts offshore drilling from a full environmental review. There are also flaws in the Environmental Protection Agency’s general wastewater permit, which allows for the discharge of limited amounts of fracking fluid. In its press release, the Center purports that the oil and gas industry, through this permit, is given permission on a federal level to dump over 9 million gallons of wastewater and fracking fluid into the Pacific Ocean off California’s coast each year.
Refinery blast at Exxon facility in Torrance, Calif., injures 4 - An explosion and fire ripped through a gasoline processing unit at an Exxon Mobil refinery in Torrance, California, near Los Angeles on Wednesday, slightly injuring four workers and shattering windows of surrounding buildings, authorities said. The cause of the blast, shortly before 9 a.m. PST (1700 GMT), was under investigation, but there was no evidence of foul play, said Torrance Fire Captain Steve Deuel. “All personnel have been accounted for,” Exxon said in a statement. “Four contractors have been taken to Long Beach Medical Center for evaluation for minor injuries.” Torrance Mayor Patrick Furey told local television station KNBC in an interview that people who live near the refinery should take precautions. “The most important thing is to shelter in place, stay indoors, no outdoor activity, turn the air conditioners off, keep the windows closed,” Furey told the station. Cory Milsap, an electrical contractor at the plant, said many workers were sent home after the explosion.
Huge Explosion Rips Through California Oil Refinery, Adding Fuel To Oil Worker Strike -- A huge explosion occurred at the ExxonMobil oil refinery in Torrance, California on Wednesday morning, shaking the homes of residents miles away and injuring at least three people. No serious injuries or deaths have been reported, and authorities are still looking into the cause of the explosion. Aerial photos of the refinery following the incident showed considerable damage. Large metal structures were ripped apart and nearby vehicles were destroyed. A good portion of the refinery was covered in grey ash. Though fire from the explosion was quickly extinguished, Torrance residents are still being told to remain inside in part due to a resulting gasoline leak. “The most important thing is to shelter in place, stay indoors, no outdoor activity, turn the air conditioners off, keep the windows closed,” Torrance Mayor Patrick Furey told NBC. The workers at the Torrance refinery are represented by United Steelworkers (USW), the same union leading unprecedented oil worker strikesnationwide. Those strikes, the largest of oil workers since 1980, are in part because of what the union sees as dangerous conditions, including leaks and explosions. The union asserts that these dangerous conditions are often caused by improper treatment of workers — unsafe staffing levels, bad training, absentee managment, and “flagrant contracting” number among the union’s complaints. While the workers at the Torrance refinery were not striking, the local USW branch it is represented by — USW Local 675 — is, leading an ongoing strike at the nearby Tesoro oil refinery in Carson, California. . “And this is one hell of a way to have the point emphasized that we have been trying to make with these companies, trying to make with the public … these safety concerns that we have need to be taken seriously.”
Health Concerns Mount After Refinery Explosion Coats California City With White Ash - The white ash that rained on the city of Torrance, California after a refinery explosion on Wednesday has been deemed non-toxic by city officials, but some oil industry workers and community members are questioning that claim. Members of the USW Local 675, the union which represents workers at ExxonMobil’s Torrance refinery, believe that the ash contained chemicals that could be harmful to human health beyond general irritation of the eyes, nose and throat. The ash — something called “catalyst dust” — is made up from particles that come from a piece of refinery equipment called a fluid catalytic cracking unit, which converts crude oil to gasoline. The unit produces a fine, almost volcanic-looking ash, which isusually made up of aluminum oxide and smaller amounts of nickel and vanadium. NBC News is reporting that the explosion occurred in an electrostatic precipitator next to the FCC unit, where workers were doing maintenance. The precipitator is a device that removes dust from flowing gas. The machine reportedly removes about 15 pounds of small particulate matter every hour, which is then transported offsite in closed trucks. A spokesperson for ExxonMobil told ThinkProgress that it does not comment on the status of individual units, but acknowledged that the dust was a catalyst primarily composed of some metal oxides and amorphous silica. “The material is not expected to be hazardous to people or animals under the conditions it was released,” But USW Local 675 Secretary-Treasurer Dave Campbell is urging public health officials to take a closer look. His branch is one that is participating in unprecedented nationwide strike over dangerous conditions and worker safety through its workers at the Tesoro refinery in Carson, California. Workers at the Torrance refinery were not striking.
U.S. refinery strike enters 18th day as talks restart -- The largest U.S refinery workers strike since 1980 entered its 18th day on Wednesday as union and oil company representatives renewed face-to-face negotiations over safety and pay, after a week’s hiatus. More than 5,000 workers at 11 plants, including nine refineries accounting for 13 percent of U.S. production capacity, remained on strike. Talks between representatives of the United Steelworkers union (USW) and lead oil company negotiator Royal Dutch Shell Plc had been on hold as the company compiled a reply to an information request and a counterproposal from the union. On Monday, the union’s lead negotiator, International Vice President Gary Beevers, told Reuters that safe staffing levels at refineries and chemical plants remained a sticking point. The union also wants wage increases. The USW has issued no new strike notices since Feb. 6, when workers at plants in Whiting, Indiana, and Toledo, Ohio, were told to walk off their jobs the next day. On Wednesday, the USW sent a text message to members after an explosion at Exxon Mobil Corp’s 149,500 barrel per day Los Angeles-area refinery in Torrance, California. The union said the blast, which injured four contract workers, showed the urgency of its goal to negotiate safer working conditions. “As USW pushes life-saving safety improvements, explosion rocks Exxon Torrance,” the message read. “Some injuries, no fatalities. Safe refineries save lives.”
Oklahoma-based energy company to consolidate workforce - Enable Midstream Partners, an oil company with corporate functions in Oklahoma City, has announced that it will cut 10 percent of its workforce this year due to instability in oil and natural gas prices. The Oklahoman reports that Enable, which has about 2,000 employees, will consolidate some of its corporate staff in Oklahoma City and Houston. It does not know exactly how many of the employees will be affected. Lynn Bourdon, the president and CEO of Enable, says that the year will be a financially difficult time for the company. Enable was formed in 2013 when OGE Energy Corp.’s Enogex midstream assets and the interstate pipeline infrastructure from Houston’s CenterPoint Energy Inc. merged.
“Hidden Faults” Explain Frackquakes? -- Oklahoma, Ohio and Arkansas have experienced an unusually large number of earthquakes in recent years. The shaking is rising at the same time that oil and gas production have increased. But other states that are hotbeds for new drilling have stayed seismically quiet, such as Montana, North Dakota and South Dakota. Now, two new studies explain why some regions of the country are rattling more than others. In Oklahoma, hidden faults beneath the surface are primed to pop, reports a study published Jan. 27 in the journal Geophysical Research Letters. Some of these faults were previously unknown and threaten critical structures, such as huge oil-storage facilities, But the geology underlying Montana and the Dakotas is more benign, with fewer faults near their breaking point, according to a study published Feb. 10 in the journal Seismological Research Letters. In the first study, the U.S. Geological Survey (USGS) analyzed more than 3,600 recent Oklahoma earthquakes to precisely locate known and unknown faults. The majority of the faults are perfectly aligned to slip under pressure transmitted through the continent from faraway tectonic plate boundaries, the study reports. Oklahoma’s buried rock layers are squeezed in an east-west direction from forces at the Mid-Atlantic Ridge, San Andreas Fault and Juan de Fuca Ridge, McNamara said. But the underground faults identified in the study tilt to the northwest or northeast, creating an angle of about 30 to 40 degrees from this regional pressure. Oklahoma's faults are left over from pushing and pulling that occurred in North America some 300 million years ago. These faults are being awakened by oil and gas drillers who are injecting fluids into the deep underground rocks above the layers that host the faults, according to several previous studies..These fluids reduce pressure on the faults just enough for the rocks to slip apart, triggering earthquakes.
Small Earthquakes Linked To Fracking Could Lead To Major Ones, Government Scientist Says -- The earthquakes that have been linked to oil and gas development so far might be minor, but they could be putting states like Oklahoma and Kansas at risk for a major earthquake later on, new research indicates. The research, which hasn’t yet been published, was presented at the American Association for the Advancement of Science by U.S. Geological Survey scientist William Ellsworth. Ellsworth said that states in which small, hydraulic fracturing-related earthquakes are a fairly regular occurrence shouldn’t “expect a large earthquake tomorrow,” but they should know that these small earthquakes could increase the risk of a larger, more damaging one occurring eventually. “The more small earthquakes we have, it just simply increases the odds we’re going to have a more damaging event,” Ellsworth said.The process of extracting oil and gas has been linked by multiple studies to increased incidence of small earthquakes. Many of these studies blame the process of wastewater injection, a process in which oil and gas companies pump the wastewater used in fracking wells deep underground. The injection of the water can increase fluid pressure underground, making it easier for faults to slip and cause an earthquake. According to one study, nearly all of the 2,500 earthquakes that occurred over a five-year span in Oklahoma could be linked to the wastewater injection process. But fracking itself — which involves injecting water, chemicals, and sand underground to break apart shale and unlock natural gas deposits — has also been found to have triggered earthquakes: an October 2014 study concluded that 400 small earthquakes in Ohio were triggered by fracking.
US geological agency calls for data sharing on fracking-induced tremors — RT USA: The US Geological Survey has called for more transparency and cooperation among “interested stakeholders” in order to monitor and mitigate the effects of fracking, a process widely blamed for the recent explosion of earthquakes in states like Oklahoma. A new USGS report, published in the journal Science, connected the increase of unnatural seismic activity in states targeted for oil and gas drilling -- including Oklahoma, Texas, Ohio, and Pennsylvania -- with the injection of wastewater vital to the process of hydraulic fracturing, or fracking. The USGS said it was currently working with stakeholders both in and out of the drilling industry to produce a “hazard model” for unnaturally occurring quakes in the US. The model would be updated often to track “changing trends in energy production.”
Natural gas drilling is causing earthquakes in Europe too - Shell and ExxonMobil, as well as the Dutch government, ignored for decades that drilling in Europe’s largest gas field was causing earthquakes that put human lives and property at risk. That’s the takeaway of a new report out this week from an independent group advising the Dutch government. As the natural gas beneath the Netherlands has dwindled in recent years, residents of Groningen County have experienced an increasing number of earthquakes. Last year, the area was hit with 84. The New York Times summarized what’s going on in a feature last summer: A half-century of extraction has reduced the field’s natural pressure in recent years, and seismic shifts from geological settling have set off increasingly frequent earthquakes — more than 120 last year, and at least 40 this year. Though most of the tremors have been small, and resulted in no reported deaths or serious injuries, they have caused widespread damage to buildings, endangered nearby dikes and frightened and angered local residents. Though the quakes started in the 1990s, the strongest came in 2012 when a 3.6 magnitude quake caused widespread damage to buildings in a region where structures were not designed to withstand seismic activity. It was only after that quake that the government and the drilling company started taking the welfare of residents into account, according to the recently released findings of a year-long inquiry by the Dutch Safety Board, a government-funded but non-governmental organization. “The Dutch Safety Board concludes that the safety of citizens in Groningen with regard to induced earthquakes had no influence on decision-making on the exploitation of the Groningen gas field until 2013. Until that time, the parties viewed the impact of earthquakes as limited: a risk of damage that could be compensated,” the report concluded.
Fracking is Depleting Water Supplies in America's Driest Areas, Report Shows: Of the nearly 40,000 oil and gas wells drilled since 2011, three-quarters were located in areas where water is scarce, and 55% were in areas experiencing drought, the report by the Ceres investor network found. Fracking those wells used 97bn gallons of water, raising new concerns about unforeseen costs of America's energy rush. "Hydraulic fracturing is increasing competitive pressures for water in some of the country's most water-stressed and drought-ridden regions," Without new tougher regulations on water use, industry could be on a "collision course" with other water users. . "We understand as a country that we need more energy but it is time to have a conversation about what impacts there are, and do our best to try to minimise any damage." It can take millions of gallons of fresh water to frack a single well, and much of the drilling is tightly concentrated in areas where water is in chronically short supply, or where there have been multi-year droughts. Half of the 97bn gallons of water was used to frack wells in Texas, which has experienced severe drought for years – and where production is expected to double over the next five years.
Pair of Houston-based companies among latest to announce cuts - A pair of Houston-based oil and gas companies have announced they will be making cutbacks in 2015 as a result of slumping oil prices. Noble Energy Inc. and Marathon Oil join a growing laundry list of O&G companies nationwide making similar announcements. Noble Energy, one of the largest companies in the Houston area, announced that it expects to slash its 2015 capital spending by 40 percent to $2.9 billion, according to the Houston Business Journal.Approximately 60 percent of Noble’s capital budget is in place for domestic onshore assets, with 35 percent in place for global offshore development and the remaining five percent for global offshore exploration. Noble also said it will focus its onshore investments in the DJ Basin and Marcellus shale plays. According to FuelFix, Marathon Oil Corp. said on Thursday that it would be cutting 350 to 400 jobs, or 10 percent of its workforce. Marathon says that most of the cuts will be in the United States. Lisa Singhania, a spokeswoman for Marathon commented: “These reductions will be focused largely on U.S. payroll employees, and will be weighted to be above-the-field and support services personnel. Our goal is to conclude this effort as quickly as possible to limit the period where our employees are certain of their standing and to minimize disruption. These types of actions are difficult and never taken lightly, but are necessary in the current environment.”
The Holdouts - Three Texas Families Who Took a Pass on the Fracking Boom: When the landman comes knocking, most people living in the Texas oil patch experience something like joy, or at least sweet relief. Here’s someone offering you money up front and the promise of hefty royalty checks in exchange for producing oil and gas from the ground. Imagine winning the lottery without even buying a ticket. Almost everyone takes the money. You’d be crazy not to. According to industry estimates, oil and gas companies paid more than $15 million in royalties to Texans across the state in 2012. That doesn’t include initial signing bonuses, which can be enormous. But across the shale plays—primarily the Barnett in the north and the Eagle Ford in the south—there are some who reject the landmen’s offers. Known in the industry as “holdouts,” these mineral rights owners dare to challenge Big Oil in Texas. It’s a kind of principled madness that often baffles neighbors, family members and the industry itself. Unlike many fracking foes, the holdouts stand to benefit personally from oil and gas drilling. Yet they risk much more than money fighting to keep the fossil fuels in the ground. Some lose their health, their homes and their faith in the government as an arbiter of competing rights. Rarely are they able to stop the companies from drilling. For this uncommon breed, no amount of money can buy peace of mind. These are the stories of three families who were willing to walk away from thousands of dollars—and battle loved ones, their communities and their government—to make a stand, even when facing insurmountable odds.
Peaking Over the Precipice: The Red Queen Comes to Shale Oil --The Red Queen Effect refers to the phenomena, courtesy of Lewis Carroll, of having to run faster to stay in the same place, or in the oil business, drilling more wells to maintain production levels. As Deborah Lawrence notes in a recent post, the two biggest shale oil fields in the US, the Bakken and the Eagle Ford are approaching that threshold – where 100% of the production from new wells are offsetting declines from older wells – not increasing the net output of the field. Meaning the productive capacity of the field may be peaking. The drop in drilling activity is price-driven, so the Red Queen Effect has not kicked in yet, but, at current prices, shale oil production has plateaued if not peaked. “Tight oil in the US is experiencing shocking deterioration in production vs. declines percentages just since November. Rig counts have plunged and though production overall is still rising, the amount used to offset the steep declines in older tight oil wells is skyrocketing. For instance, in the Bakken as recently as November 2014, 71% of all new production coming online was being used to do nothing but offset the declines in older wells. This was a very high figure. But over the ensuing three months as crude prices crumbled and capital expenditure has been slashed this figure has soared to 86%. The same thing is happening in the Eagle Ford where 72% of all new production was needed in November 2014 but has now risen to 89%. This is problematic because these figures are rapidly approaching 100% which means that the plays are quickly falling into decline. The amount of new production simply cannot keep up with the steep declines in older wells. Unfortunately “older” in shale gas and tight oil means a mere 4-5 years. These are not long lived wells.
Quicksilver Resources may seek bankruptcy protection – – Less than a week after laying off 10 percent of its workforce, Quicksilver Resources announced Tuesday that it may be on the road to seeking Chapter 11 bankruptcy protection after deciding to skip a crucial debt payment. Quicksilver announced it was not making a $13.6 million interest payment that was due Tuesday. The payment was tied to senior notes that come due in 2019. Under the terms of the debt, Quicksilver has 30 days to make the payment before it goes into default, the company said. If the company does not make the payment at the end of the grace period, the trustees or holders of at least 25 percent of the bonds may ask to be paid for the principal and the interest owed, triggering defaults under the terms of other Quicksilver debt, the company stated. While the company has hired outside help to restructure its debt, there are “no assurances” that it will be successful and could prompt the company to seek bankruptcy protection, something officials have avoided mentioning in previous announcements about its financial woes. “The company believes it is in the best interests of its stakeholders to continue to focus on actively addressing the company’s debt and capital structure and intends to continue discussions with its creditors during the 30-day grace period,” a company announcement said.
Texas Initial Jobless Claims Surge Higher As Continuing Claims Jump Most In 2015 - For the 9th week in a row, the smoothed average of initial jobless claims in Texas surged (Other Shale States - PA, ND, and CO also saw a notable rise in claims). While Tennessee's levels were estimated, the broad levels of claims send a mixed message. Initial claims beat expectations, fell from 304k to 283k with the trend now clearly flat since September. However, Continuing Claims jumped 58k to 2.425 million - the biggest jump in 2015, notably missing expectations. The trend of employmenmt has clearly changed...
Will Texas Survive The Downturn? - Texas alone produces about 20-percent of all oil and gas in the United States. The sum-total of Lone Star oil and gas produced in 2014 topped $100 Billion, according to the Energy Information Administration. That’s up from about $40 Billion in 2007, and had a substantial economic impact statewide. Last year there were 12.5 million employed workers in the state, which added 458,000 new jobs in 2014 alone according to the Texas Workforce Commission. During the census period of 2000-2010, Texas swelled by 4.3 million residents. Collectively, the state’s output in 2014 topped $1.5 trillion, second only to California and for thirteen years in a row, Texas led the nation in net exports at $290 billion last year. The obvious 900-pound gorilla in the room, then, is how much will the drop in prices affect the state’s jobs, revenue base and overall economy? Through a number of sources mostly related to oil and gas, the state government’s “rainy day fund” swelled from totally empty following the 2008 recession to a surplus of over $2 billion in 2014, mostly due to fracking and the shale oil revolution. Investment in oil and gas in the Barnett shale, the Permian Basin, the Eagle Ford shale and in other recoverable formations spackled around the state was the main reason. Like North Dakota, many remote Texas locales became overnight boomtowns. Of particular interest, analogous to what happened in the 1980’s, is the banking sector. With hundreds of millions of dollars in loans to various elements of the energy industry, the concern now is whether this dip lasts long enough to cause wide-spread bank problems should producers, suppliers and support industry businesses default on those loans. That was a big part of what knocked the Savings and Loan industry to its knees in the 80s.
Conservation Colorado maps out leases in Arapahoe County - An analysis by a nonprofit environmental group revealed oil and gas leases for sites close to schools, parks and housing developments in Arapahoe County, the Denver Post reports. Conservation Colorado used data and property records from the Colorado Oil and Gas Conservation Commission (COGCC) to map out the locations of the leases. Peter Maysmith, the group’s executive director, hopes the maps will “bring home that this heavy industrial activity can occur anywhere.” While the leases nearly fill the county’s less-developed eastern half, the maps indicate a peppering of leases in the western half among neighborhoods, golf courses and more than 40 schools. Colorado Senate Minority Leader Morgan Carroll (D-Aurora) feels that the spread of lease holdings is ominous of the county’s future: While not every lease will be developed, the fact [that] these leases were so recently filed and that the oil and gas industry owns the mineral rights under so much of Arapahoe County is clearly a warning sign for elected officials and residents.
Senate weighs payments to mineral owners over fracking rules - Mineral owners would get compensation from local governments that restrict fracking under a bill being considered by Colorado lawmakers.Whether more regulations over fracking are needed is expected to be one of the most hotly debated questions lawmakers will take on this legislative session. A task force assembled by Democratic Gov. John Hickenlooper will be delivering recommendations to lawmakers later this month about what to do to reduce land-use conflicts among local governments, homeowners, and the energy industry. The proposal being heard in a Senate committee Thursday would require local governments that impose fracking restrictions to compensate mineral owners if the regulations reduce the value of their property by at least 60 percent. The proposal has a good chance in the GOP-led committee.
High levels of benzene found in fracking waste water -- Hoping to better understand the health effects of oil fracking, the state in 2013 ordered oil companies to test the chemical-laden waste water extracted from wells. Data culled from the first year of those tests found significant concentrations of the human carcinogen benzene in this so-called “flowback fluid.” In some cases, the fracking waste liquid, which is frequently reinjected into groundwater, contained benzene levels thousands of times greater than state and federal agencies consider safe. The testing results from hundreds of wells showed, on average, benzene levels 700 times higher than federal standards allow, according to a Times analysis of the state data. The presence of benzene in fracking waste water is raising alarm over potential public health dangers amid admissions by state oil and gas regulators that California for years inadvertently allowed companies to inject fracking flowback water into protected aquifers containing drinking water.
Exclusive: Chesapeake Energy sues former CEO McClendon's new firm -- Chesapeake Energy Corp filed suit Tuesday alleging that its founder and former chief executive, Aubrey K. McClendon, stole confidential company data during his last months on the job in order to launch his new oil and gas empire. McClendon, 55, “misappropriated highly sensitive trade secrets from Chesapeake” and “subsequently used these trade secrets for the benefit of” a company he founded in 2013, American Energy Partners LP, according to the civil complaint filed by Chesapeake in Oklahoma County District Court. In the suit, Chesapeake claims McClendon asked his assistant to print maps and data about unleased acreage and that McClendon also sent himself blind copies of the same documents at a personal email address during his last months at the company. The company says it discovered McClendon’s actions through a forensic analysis of his Chesapeake email account. Chesapeake alleges that the information was used by McClendon and American Energy Partners to acquire drilling rights on land in the Utica Shale formation in four separate transactions.
US shale leader EOG Resources confidence no match for cheap oil – One of the strongest leaders of the U.S. shale revolution has been humbled by plunging oil prices. EOG Resources Inc slashed its 2015 budget on Wednesday amid cheap crude prices and said its output will not grow this year, mere months after confidently saying it was strong enough to weather the downturn without cutbacks. Its shares tumbled more than 7 percent late Wednesday. The move offers the clearest example to date of how the roughly 50 percent drop in oil prices since last June is roiling the U.S. energy industry, forcing once-confident players to make choices unimaginable just 12 months ago. EOG’s scaled-back outlook would mark the first time in years its crude and natural gas output does not jump more than 10 percent. EOG is not alone. Last week Apache Corp posted a multibillion-dollar net loss and slashed its 2015 budget while saying its output would be flat from last year. On Thursday, the number of rigs drilling in North Dakota fell below 130 for the first time in years, a level the state’s top official said is necessary to prevent output from falling. ConocoPhillips and Occidental Petroleum Corp , among many others, have taken similar steps. Many oil industry and market analysts have been waiting anxiously for the update from EOG, regarded as a bellwether for the shale patch. If even EOG – a firm renowned for its strong balance sheet, prime holdings in the sweetest shale spots, efficient drilling and good hedges – is brought low, output across the sector could stall more quickly than expected.
Saltwater spill contained on-site at Divide County oil well -: North Dakota regulators say a spill involving 21,000 gallons of saltwater was contained on-site at an oil well in Divide County. The state Oil and Gas Division says the spill at a well site about 5 miles south of Fortuna was reported Sunday. Murex Petroleum Corp. reported that 500 barrels of saltwater were contained and recovered on site. One barrel holds 42 gallons. Saltwater, or brine, is a byproduct of oil production. A pump leak was listed as the cause of the spill. A state inspector visited the site.
Four Oil-Related Spills Reported In North Dakota, The Latest In A Week Of Oil Mishaps - Four “significant” oil-related spills, including two that impacted wetlands, were reported by North Dakota state officials this week. It’s the fourth time this week that a big mishap involving the North American oil industry has occurred. On Monday, a train carrying 3 million gallons of crude oil derailed and exploded in West Virginia. On Wednesday, another explosion occurred at the ExxonMobil oil refinery in Torrance, California, injuring at least three people. And this weekend, a crude oil train derailed, spilled, and caught fire in Ontario, Canada. The spills in North Dakota began on Monday and spanned into Wednesday. The first was a double-incident reported by Hess Corp., which said that approximately 42,000 gallons of oil industry wastewater was released from two of its well sites in Williams County, located about three miles apart. Both of the waste spills were said to have impacted wetlands, though the extent of the damage has not been reported. The type of wastewater released is called produced water, which peer-reviewed research has shown to contain elevated concentrations of bromide, which can promote the formation of toxic disinfection byproducts. The next spill, reported Tuesday, was a 1,260-gallon oil spill in McKenzie County. In that incident, the oil overflowed from a truck and spilled into an oxbow of Charbonneau Creek, which is a a tributary of the Yellowstone River. The fourth incident saw 400 gallons of diesel fuel spill from an open valve of a truck and into an unnamed tributary of Lonesome Creek. NPR reports that in 2013, the state produced more than 13 billion gallons of oil and nearly 15 billion gallons of wastewater. But even with production falling, the state has seen its fair share of mishaps. In 2013, North Dakota experienced the largest inland oil pipeline spill in the U.S., a rupture that saw 865,000 gallons of crude sunk into farmland. Before February, already three oil-related spill incidents had been reported in 2015, including a 3 million gallon release of produced water and oil, cleanup of which isongoing.
Drop in oil prices leaves roughnecks at loose ends - The drive from Ken Mercer’s home in Tennessee to the oil fields of western North Dakota takes 20 hours if you drive straight through. Every month, Mercer, an Army veteran who served in Iraq, would make the trip as part of his two-weeks-on, two-weeks-off hitch with the Houston oilfield services company Patterson-UTI. Rotating 12-hour shifts aboard a drilling rig, Mercer worked day and night until it was time to go home, rest and do it all again. That was until one day he arrived at the equipment yard after driving from Tennessee to be informed along with 50 other workers that he was being let go, according to a lawsuit Mercer and another worker in Midland filed in federal court in Houston earlier this month. So goes an oil boom that is sending workers packing almost as quickly as it drew a couple hundred thousand of them back to the oil fields. In locales such as Odessa, Williston and Carrizo Springs, where not long ago a vacant apartment could command big-city rents, drilling rigs are piling up in equipment yards. As the layoff announcements mount — 6,400 at Halliburton, 9,000 at Schlumberger — a five-year-long hiring boom that earned workers six-figure salaries and had companies jumping over each other to hire even unskilled workers is collapsing. With oil prices half what they were seven months ago, the tables have turned. The Federal Reserve Bank of Dallas is predicting 140,000 jobs in Texas alone could be lost by next year if crude prices don’t rebound. The workers are claiming violations of a federal law requiring larger employers to give at least 60 days’ notice ahead of layoffs. Within the law, there is an exemption for layoffs caused by “unforeseeable business circumstances.” And the sudden drop in crude prices is likely to be a part of any defense.
Daily Bakken production over 1.2 million barrels - Last Friday, director of the North Dakota Department of Mineral Resources Lynn Helms expressed his confidence in oil price recovery and avoiding the large tax trigger. According a report by The Bismarck Tribune, the Department of Mineral Resources released state’s preliminary oil and gas production figures for the month of December. The numbers indicate that 1.23 million barrels of oil were produced per day, up from November’s final figures of 1.19 million barrels per day. Helms stated that the 39,000 barrel per day increase was likely due to year-end production goals and moderate weather. As reported by The Tribune, Helms said the month of “December was a tug-of-war” due to falling rig counts and companies trying to meet new flaring requirements. Drilling activity has now shifted to focus on the core counties of the Bakken formation (Dunn, McKenzie, Mountrail and Williams). With oil prices beginning to climb again, he said the chances of a gradual increase in activity is likely. He also said, “We’ve seen renewed confidence that the large trigger is likely not going to hit.” State law mandates that two oil price tax triggers be implemented in the event that oil prices, based on the West Texas Intermediate benchmark, remain below a certain level for an extended period of time. If this happens, the 6.5 percent extraction tax will be reduced until prices recover. The low tax trigger was put into effect at the beginning of the month after average prices remained below $57.50 per barrel the month prior. After dropping to near $40 lows, the price has stabilized and has risen above the $50 per barrel mark in the past week. If the large trigger price had been hit, the reduced tax rates potentially could have cost the state billions in oil tax revenue over the next two years.
North Dakota breaks export record - North Dakota has broken its export record for the year of 2014, according to the U.S. Department of Commerce. Last year the state exported $5.3 billion worth of commodities, a 42 percent increase from 2013. Last year overall U.S. exports increased by a mere 3 percent. With North Dakota’s 42 percent increase, the state had the second highest annual export growth among all 50 states in 2014. Not surprising is the value of mineral fuels and oil product exportation exceeded the value of other exported goods. The majority of it was shipped to Canada via pipelines. Mineral fuels and oil products netted $2.7 billion, more than double the 2013 amount. Next on the list was front end loaders, which saw an 8 percent increase from 2013 at $296 million. Wheat exports also increased by $141 million, or 28 percent, while soybean exports grew by $109 million, a 123 percent increase from the previous year. Related: U.S. oil export boom stalled by topsy-turvy market In a press release, Director of the U.S. Commercial Service office in Fargo Heather Ranck said, “Exports are up, and that’s good news for North Dakota businesses that are pursuing new export horizons. If your business has a good track record of selling in the domestic United States, it’s likely a good candidate for making overseas sales.”
Shale producers postpone oil well completions -- EOG Resources became the latest major shale producer to state that it would “delay a significant number of completions” when it announced fourth-quarter results. The company plans to end 2015 with 285 wells awaiting completion services, up from 200 at the end of 2014, it told investors during an earnings call on Thursday. Continental Resources has also announced plans to go slow on well completions in response to the slump in oil prices. Apache and Anadarko Petroleum are among other shale producers to announce a deliberate strategy of delaying completions. U.S. shale producers are postponing well completions to conserve cash and defer production until prices recover. There are a large number of wells that have been drilled but are awaiting the arrival of pressure pumping crews to fracture them and service companies to link them up to gathering pipelines. In North Dakota, there were an estimated 750 wells that had been drilled but not yet completed at the end of December, according to the state’s Department of Mineral Resources. Once these wells are completed, they will increase the number of producing wells in the state by more than 8 percent, from the current total of around 8,950. At recent completion rates, it would take another 3-4 months to clear the backlog even if no new wells were drilled in the meantime.
As Oil Prices Slip, North Dakota Struggles to Get a Firm Grip on Its Budget - Lawmakers in North Dakota have been suffering from dizzy spells lately, and there is only one thing to blame: the price of oil.For months, it has been in free fall, dropping from $100 a barrel in June to below $50 a barrel by January, casting worry over this state, the No. 2 producer of oil in the country. Even a small rally in the price was enough to cheer up legislators on a recent afternoon well into their 80-day session, which began in January. That volatility has set the stage for an unusually contentious legislative session, a change from previous years when North Dakota was enjoying the boom from richly productive oil fields in the western part of the state.The North Dakota Legislative Assembly meets only once every two years, so lawmakers here are now faced with a challenge: planning a two-year state budget while trying to anticipate how far the price of oil will drop, while also deciding how to split rapidly shrinking revenues among competing regions of the state. Even once popular proposals to cut taxes may be headed for defeat Last week, the House began to debate a measure known as the “surge bill,” which would provide more than $1 billion to counties primarily in the western part of the state. The money would go to infrastructure needs, construction projects and schools in the towns that have grown exponentially during the oil boom of the last decade.The legislature will also consider a bill that would give oil-producing counties in the west a greater share of future oil revenues.
Gas Burned Off at Oil Production Sites Is Equivalent to Emissions From 70 Million Cars - It’s like burning banknotes. Latest statistics from the World Bank (WB) indicate that the amount of gas flared each year is enough energy to supply electricity to several small countries or many millions of households. The flaring of 140 billion cubic metres (bcm) a year releases large quantities of greenhouse gases into the atmosphere—and that is not only bad news for the climate, but also for human health. The WB estimates that flaring results in total annual global carbon dioxide emissions of 350 million tones. Eliminating the burning of gas at hundreds of oil production sites round the world would be the equivalent, in terms of emissions savings, of taking 70 million cars off the road. Flared gas is often contaminated with toxic compounds and cancer causing carcinogens such as benzene. And in Nigeria’s Niger Delta—the country’s main oil production area and a region where flaring has been going on for several decades—villagers complain of skin diseases and breathing problems. Flaring has other impacts. Those living near flaring sites in Nigeria say agricultural yields have dropped due to contamination of the land by acid rain. The toxic chemicals in the flared gases are also blamed for corroding the metal roofs of houses in the area. The process of flaring takes place when there are no facilities to harness the gas that is produced along with oil—or when companies decide it is uneconomical to process and pipe the gas.
WOGCC cracks down on flaring - With its string of rejections to flaring requests, the Wyoming Oil and Gas Conservation Commission seems to be sending the state’s oil and gas industry a message to cut back on gas flaring. The most recent of the rejections occurred last week in response to a flaring request from Chesapeake Energy, according to the Star Tribune.. The company had asked for permission to flare 349,000 cubic feet of natural gas daily over the course of six months, far exceeding the state’s limit of 60,000 cubic feet per day. The Oklahoma-based company now has until May to reign in its flaring. This follows a similarly denied request from EOG Resources, which trimmed its slated flaring request from 23 wells to three. “The commission is being more diligent about their authority and requirements to prevent waste,” said Jill Morrison, an organizer at the Powder River Basin Resource Council who has frequently taken issue with the state’s industry regulation. “They take it very seriously. They want to see a definitive plan.” EOG representative Craig Newman said the message is one the company takes seriously, having spent $28 million to install pipelines and compressor stations to seize the gas.
Fracking has collapsed - The fracking-for-oil boom started in 2005, collapsed by 60% during the Financial Crisis when money ran out, but got going in earnest after the Fed had begun spreading its newly created money around the land. From the trough in May 2009 to its peak in October 2014, rigs drilling for oil soared from 180 to 1,609: multiplied by a factor of 9 in five years! And oil production soared, to reach 9.2 million barrels a day in January. That’s what real booms look like. They’re fed by limitless low-cost money – exuberant investors that buy the riskiest IPOs, junk bonds, leveraged loans, and CLOs usually indirectly without knowing it via their bond funds, stock funds, leveraged-loan funds, by being part of a public pension system that invests in private equity firms that invest in the boom…. You get the idea. That’s how much of the American shale-oil revolution was funded. Production soared for five years and eventually outpaced sluggish demand. Crap happened on the world scene, and suddenly the fracking boom, the biggest no-brainer in the history of mankind, turned into a terrible bust. On the drilling side, the bust began in mid-October last year, after the price had been plunging for over three months. At that time, 1,609 rigs were actively drilling for oil, according to Baker Hughes. Since then, week after week, drillers were idling rigs as fast as they could. In the latest reporting week, drillers idled another 84 rigs, the second biggest weekly cut ever, after idling 94 rigs two weeks earlier. Only 1056 rigs are still drilling for oil, down 443 for the seven reporting weeks so far this year and down 553 – or 34%! – from the peak in October. Never before has the rig count plunged this fast this far: The number of rigs drilling for natural gas in the last reporting week fell by 14 to 300, the lowest since May 1993, having collapsed by 81% since 2008:
Another rig(s) bite the dust - Global analysis company Wood Mackenzie, which is based in Scotland but has over 25 offices worldwide, published a news release Thursday that gave factual evidence to the reality that so many within the oil and gas industry had been waiting to unwillingly hear. According to the release, Wood Mackenzie expects a continued decline in rig utilization through Q1 and Q2 of 2015, with a leveling off by August at approximately 1,000 units. Over the course of the past five months, rig count numbers have fallen at a rapid pace. Baker Hughes’ weekly rig count totals reflect the sad reality of the rough patch the industry is currently battling through. Last week alone, nearly 100 rigs were idled in the United States. In January alone, rig counts saw a decline in count by nearly 200 to 1,616, down from a peak of 1,859 in November 2014. That pace has continued into the first two weeks of February with another 200 rigs coming off contract. “The oil price collapse is hitting onshore activity and rig operators, and drilling rigs are currently being stacked at an alarming rate,” said Scott Mitchell, Research Director at Wood Mackenzie. Wood Mackenzie’s projections come under the notion of oil prices recovering from the severe lows seen in early 2015 and bouncing back to an annual average of $64 per barrel for West Texas Intermediate (WTI). However, if prices are sustained in the $40-$50 per barrel range for WTI, then the impact on rig counts will be even more severe, dropping to less than 900 by the summer. This would represent a 50% cut in the number of operational US land rigs from the November 2014 peak and a 23 percent drop from this time last year. On February 14, 2014, the total U.S. rig count stood at 1,764, 406 more rigs than we have today. “The resulting impact on the rig market is a slow but steady recovery, averaging an additional 15 rigs per month through the end of 2016,” Mitchell said.
Bullock calls for deeper pipelines after oil spills - — Montana’s governor is calling on the Obama administration to strengthen rules that require oil pipelines to be buried just 4 feet beneath major waterways. The Democratic governor’s Friday request comes after two breaches spilled a combined 93,000 gallons of crude into the Yellowstone River. River scouring due to flooding or an ice jam is being investigated as a possible cause of a spill near Glendive last month. In 2011, an Exxon Mobil pipeline broke during flooding near Laurel and contaminated dozens of miles of river bank with oil. Bullock said Friday in a letter to Transportation Secretary Anthony Fox that he wants existing lines surveyed to determine how deeply they’re buried. Bullock also wants more federal inspectors in Montana, which currently has only one overseeing 3,800 miles of pipelines.
Oil Train Derails, Catches Fire In Canada - A train carrying crude oil derailed in northern Ontario, Canada late Saturday night, spilling oil and causing a fire. Twenty-nine of the 100 cars on the train went off the track near Timmins, Ontario, and seven of those cars were still on fire as of Sunday afternoon. The derailment prompted Canadian National Railway Co. to close its main rail line, a decision that could end up causing a delay in oil shipments in eastern Canada. That delay would add to the disruption Canada’s rail industry is currently experiencing due to the weekend strike of 3,000 Canadian Pacific Railway workers, who are at odds with their company over wages and benefits. The CBC reports that an “unknown amount” of oil spilled from the train, which derailed in a remote, wooded region. The derailed train had most recently been inspected on Saturday, the day the track was also inspected. The derailment caused no injuries, and officials are working to clean up the derailment site and determine the cause of the accident. The derailment is just one of many that have occured in the U.S. and Canada in recent years, as oil producers increasingly rely on rail to transport crude. According to a ForestEthics report from last year, oil train traffic in North America has surged by 4,000 percent over the last five years — traffic that’s mostly coming from North Dakota’s Bakken region and Alberta’s tar sands. With this increase in traffic, oil train accidents have also increased.
Another oil train derails, ignites fire in Canada - Another train carrying crude oil derailed and caught fire in Canada early Sunday, potentially putting pressure on the White House to accelerate its review of new regulations intended to improve the safety of hazardous rail shipments throughout North America.The 100-car Canadian National train left the tracks in a remote part of Northern Ontario around midnight, the Toronto Globe and Mail reported Sunday. Of the 29 cars that derailed, at least seven were on fire, the newspaper reported. The Transportation Safety Board of Canada is sending investigators to the scene, but they likely will face difficulties assessing the damage because the area is not easily accessible, and the temperatures are well below zero.No one appears to have been injured in Sunday’s derailment. But in 2013, a different part of Canada wasn’t so lucky. On July 6 of that year, an unattended crude oil train lost its brakes and rolled down in incline, smashing into the center of Lac-Megantic, Quebec. That derailment unleashed a torrent of burning oil into the heart of the town, killing 47 people and destroying dozens of buildings.
Can Alberta Sands oil be safely shipped on the St. Lawrence? --The St. Lawrence River is frozen solid right now, but when spring arrives tankers will begin their slow journey up and down the waterway. The tankers carry huge amounts of heavy raw materials like grain, iron, and coal to ports in the United States and Canada. Only a few shipments of crude oil from Alberta Sands in Canada and the Bakken in North Dakota have come through the seaway, but environmentalists and state official are concerned more will come. Lee Willbanks, director of Save the River said, “This is a huge issue because there is a lot of oil in different forms being extracted in the Midwest in our country and in Alberta Canada. And right now there is more oil coming out of the ground then has a conduit to a refinery." Gary McCullough, with the New York State Department of Environmental Conservation said, “Fundamentally my concern is that spills on the St. Lawrence River would be extremely challenging to clean up." Mcllouch said that is because the river’s current is really strong. “The oil will move on the water faster than we have the ability to contain it. If you lost a large amount of oil on Alexandria Bay, that oil has already transversed to Massena." McCullough mentioned the Nepco spill of 1976. A massive barge carrying thick motor oil ran aground and spilled 500,000 gallons. “You can still see oil strips on rocks up in Ogdensburg, Lisbon area,” he said. McCullough said much of that oil floated. The oil from the Tar Sands, on the other hand, is much heavier and may not float. Oil that sinks causes more damage because it is almost impossible to completely remove from a river floor.
Keystone Bill Heads to Obama for Veto - Congressional Republicans achieved an elusive legislative goal Wednesday, sending a bill to approve the Keystone XL pipeline to President Barack Obama. Yet after three years of effort, the victory is somewhat hollow as falling oil prices and an improving job market conspire to weaken any practical or political payoffs. The U.S. House passed the measure 270-152, with 29 Democrats joining all but one Republican to support the bill. Obama has vowed to veto the measure and Wednesday’s vote was short of the two-thirds super majority needed to override the president’s rejection. The Senate passed the bill last month. Obama said he opposes the bill because it would circumvent his administration’s review of the $8 billion pipeline.
‘Anti-petroleum’ movement a growing security threat to Canada, RCMP say - The RCMP has labelled the “anti-petroleum” movement as a growing and violent threat to Canada’s security, raising fears among environmentalists that they face increased surveillance, and possibly worse, under the Harper government’s new terrorism legislation. In highly charged language that reflects the government’s hostility toward environmental activists, an RCMP intelligence assessment warns that foreign-funded groups are bent on blocking oil sands expansion and pipeline construction, and that the extremists in the movement are willing to resort to violence.There is a growing, highly organized and well-financed anti-Canada petroleum movement that consists of peaceful activists, militants and violent extremists who are opposed to society’s reliance on fossil fuels,” concludes the report which is stamped “protected/Canadian eyes only” and is dated Jan. 24, 2014. The report was obtained by Greenpeace. “If violent environmental extremists engage in unlawful activity, it jeopardizes the health and safety of its participants, the general public and the natural environment.”
DOE Used Gas Lobbyist Analysis to Greenlight LNG Exports - In order to approve the exportation of gas, the DOE has to weigh the economic benefit of exporting gas vs the increased cost of gas to American industry and consumers. The benefit of exporting the gas has to be much more than the increased cost of doing business to American companies – who use gas in manufacturing and power generation. And to American retailers and consumers, who use it in cooking and heating. So far so good. Turns out that the DOE used a gas industry lobbyist to run the numbers on that economic analysis. And guess what the results were. Simply put, these LNG export schemes are strictly by the 1%, for the 1% and of the 1%. And no one else. Not US consumers, not US manufacturers, not US workers. They are not in the public interest. Texan Dwain Wilder found this protest from a group of American manufacturers that will be disadvantaged by gas exports: “This petition from the Industrial Energy Consumers of America (IECA) to intervene in Pieridae Energy’s application to the Office of Federal Energy is a bombshell aimed right at DOE’s failings! I’ve just finished accessioning the document into the FrackFreeGenesee Library, and had to hand-type it, as the pdf was protected – so I got a close look at it indeed. I’ve never seen an industrial lobbyist quote Justice Brandeis before…Permit me to quote the first article of the Protest section in its entirety. I think you will find it touches on many matters of interest to us as we address FERC, DOE and the LNG and export industries. To be clear, this is an intervention from a manufacturing association that deals with methane as a feedstock. Yet it couches its claims on behalf of its members on a much larger basis. For instance it addresses matters such as the concern for income distribution in this country!
Scientists Working To Harness Energy Produced By Intense Fracking Debates - Hailing it as a promising potential fuel source with vast untapped reserves, researchers at the University of Texas revealed Wednesday that they are attempting to harness the abundant energy produced by the nation’s intense fracking debates. “We’ve been working tirelessly to develop a means of converting highly charged arguments from both advocates and opponents of fracking into a clean and efficient source of power,” said lead researcher Luke Hutchcroft, who noted that the combustible exchanges regarding the economic benefits of hydraulic fracturing and its environmental consequences are particularly prevalent in dispute-rich states such as New York, Colorado, and Pennsylvania. “While there are certainly significant outside factors to consider, including whether this energy supply is as inexhaustible as it appears to be, we may yet avert a climate catastrophe by learning to utilize the explosive force of this extremely potent controversy.” Hutchcroft added that the fuel source’s potential was rivaled only by the raw power that may one day be extracted from scientists’ urgent recommendations to adopt renewable energies.
U.S. shale on more sustainable course after price rally -- U.S. shale producers have responded even more quickly to lower oil prices than analysts expected, which should ensure shale production hits a plateau by May or June and is sustained rather than falling in the second half of the year. The number of rigs drilling for oil in the United States declined by another 84 last week, according to oil field services company Baker Hughes. The oil-directed rig count has now fallen by a total of 553, or 34 percent, since early October, the fastest decline since 1986. Some analysts have questioned whether the decline in rig counts will really result in a slowdown in oil output. The most basic lower rigs, those with the lowest horsepower and depth ratings, capable only of drilling vertically, are likely to be idled first, leaving more powerful units with horizontal capability still working. And drilling will pull back from speculative frontier areas to concentrate on the most productive parts of well-established plays to maximize new output per well drilled.
Is the oil crash over? - Gavyn Davies -- Oil prices have rebounded by $16 a barrel since the low point was reached at $45 a month ago, and investors are already wondering whether the worst is over for the energy sector. The bear market that started in 2011 has seen a peak-to-trough decline in overall commodity prices of 46 per cent, which is almost exactly the same decline experienced in the six previous bear markets, though this one has lasted 3.7 years, compared to an average of 2.3 years (according to JPMorgan). Based on the past chronology of commodity bears, the trough is now overdue.It will of course be impossible to pick the local bottom with any precision. Last year’s collapse in oil prices was not built into the forward markets. Nor was it predicted, even as an outside possibility, by economists and oil analysts. Few macro investors made any significant money from it, until trend-following funds entered significant short positions towards the end of the year. The inability of economists to forecast such an important event, not just for commodity markets but for bonds and equities as well, is certainly sobering. But almost without pausing for breath, we are faced with another urgent and unavoidable question: does the bounce in oil prices in the past month herald the end of the crash? After much debate, a consensus has now emerged about the main cause of the 2014 oil crash. As Jeremy Grantham of GMO wryly points out in the latest of his excellent pieces, sometimes the most obvious explanation is the right one. The prime factor was the unexpectedly rapid growth in fracking production in the US. This added about 4m b/d (4.5 per cent) to global oil production, at a time when global oil demand was rising more slowly than usual.
Oil Is Cratering. American Oil Production Isn't - Signs of the oil bust abound. The price of West Texas Intermediate crude has fallen in half in the past six months. The search for oil, which fueled a gold-rush mentality in North Dakota and Texas, is abating. According toBaker Hughes, there were 1,140 rigs drilling for oil in the U.S. on Feb. 6, down from a peak of 1,609 on Oct. 10, 2014. In Houston, the Wall Street Journal reports, oil companies are shedding jobs and vacating office space. And yet a funny thing has happened during the bust. Oil production in America has been rising, as this chart of monthly oil production from the Energy Information Administration shows. In November, the U.S. produced 9.02 million barrels of oil per day, up 14.5 percent from November 2013. The last time the U.S. pumped more than 9 million barrels of oil per day for two straight months was in 1986. This week, in its short-term energy outlook, the Energy Information Administration noted that the boom is continuing. Production in January 2015 rose to 9.2 million barrels per day. And even with WTI crude settling at a forecasted price of about $55 per barrel for the year, production for all of 2015 should come in at 9.3 million barrels per day—up 7.8 percent from 8.63 million barrels per day in 2014. That’s not what usually happens when the price of a vital commodity goes bust. Typically, producers react to supply gluts and falling prices by shutting down production—the better to bring supply in alignment with demand and support prices. It doesn’t make much sense to pump oil when the market price is below the so-called breakeven—the point at which pumping is profitable. And in fact, the rest of the world is effectively putting the brakes on production. The EIA expects global production to grow from 92.94 million barrels per day in 2014 to 93.76 million barrels per day in 2015—an increase of 820,000 barrels, or just .9 percent. The U.S., which accounts for just 10 percent of global production, is expected to supply 670,000 new barrels—82 percent of the globe’s total growth.
The Chilling Thing Devon Energy Just Said About the US Oil Glut - Wolf Richter - The oil-price plunge hit the industry when it was drunk on its own exuberance and awash in money. At the time, over-indebted junk-rated drillers had no trouble borrowing even more to drill more, efficiently or not. Dreadful IPOs flew off the shelf. Misbegotten spin-offs made Wall Street a ton of money. But in July, everything started to go awry. By October, it was clear that the oil-price plunge wasn’t a blip. By November, oil was in free fall. Soaring production in the US, reaching 9.2 million barrels per day in January, and lackluster demand have caused US inventories to balloon. The “oil glut” was born. So the industry adjusted by announcing waves of layoffs, whittling down operating costs, renegotiating prices with suppliers, and slashing capital expenditures. The number of rigs actively drilling for oil – a weekly gauge that indicates what’s going on in the oil field – has plummeted by 553 rigs, or 34%, since the peak in October. Never before has it plummeted this fast this far [The Fracking Bust Hits Home]. The crashing rig count was supposed to curtail production, and lower production would bring supply and demand into balance and allow the price of oil to recover. But the opposite is happening. And Devon Energy Corp. just told us why. CEO John Richels explained the phenomenon in the press release: We expect to sustain operational momentum in 2015 with the significant improvements we have seen in our completion designs and a capital program focused on development drilling. With strong results from our enhanced completions and a focus on core development areas, we expect growth in oil production to be between 20 and 25 percent in 2015, even with a projected reduction of approximately 20 percent in E&P capital spending compared to 2014. So, despite slashing the capital expenditure budget by 20%, the company’s oil production in 2015 would grow 20% to 25%. And in Q4 2014, production of oil, gas, and natural gas liquids from Devon’s “retained assets” had soared to an average of 664,000 oil-equivalent barrels (Boe) per day. This included record oil production of 239,000 barrels per day, up 48% year over year. While bitumen production in Canada grew more slowly, oil production from fracking in the US soared 82%! This chart shows Devon Energy’s oil production for the last five quarters:
Goldman Warns Over-Supply Means Oil Prices Will Be Much Lower -- In an effort to to disentangle demand from supply shifts, Goldman explores the drivers of the sharp drop in oil prices since last summer. They find that the vast majority of the decline in oil prices until November 2014 was driven by perceptions of improved supply. The continued sell-off in December and January was driven by perceptions of both improving supply and slowing demand. The latest rebound in oil--which started in late January--appears to be driven by a mix of demand and supply. However, Goldman concludes the new equilibrium price of oil will likely be much lower than over the past decade.
Could Oil Still Drop To $20? - Last week analysts at Citigroup slashed their forecast for crude oil to $20 a barrel before prices begin to recover. They see prices dropping to that point by the end of the first quarter or the beginning of the second quarter. The forecast is based on two points: the amount of crude oil in storage and the end of OPEC’s role as the so-called swing supplier. WTI crude oil for March delivery closed at around $44 a barrel on January 29th and at $52.65 this past Friday, about where it traded before Citi’s forecast was published. Crude dipped to around $49 last Wednesday before climbing back up on Thursday and Friday. U.S. crude in storage remains at an 80-year high and there have been reports that foreign producers have been leasing tankers to sail around in circles with cargoes of crude waiting for the price to rise. No one, apparently, wants to be the first to cut production, preferring instead to take a “wait-and-see” approach. In the U.S. shale drillers have been cutting back on rigs at a pace of more than 80 a week for the past several weeks. But the cuts to rigs are not being accompanied by cuts in production. Apache Corp. said last week that it expects to cut its rig count from an average of 85 rigs in 2014 to just 12 to 14 rigs in 2015 while maintaining equal production.
Why The Price Of Oil Is More Likely To Fall To 20 Rather Than Rise To 80 - This is just the beginning of the oil crisis. Over the past couple of weeks, the price of U.S. oil has rallied back above 50 dollars a barrel. In fact, as I write this, it is sitting at $52.93. But this rally will not last. In fact, analysts at the big banks are warning that we could soon see U.S. oil hit the $20 mark. The reason for this is that the production of oil globally is still way above the current level of demand. Things have gotten so bad that millions of barrels of oil are being stored at sea as companies wait for the price of oil to go back up. But the price is not going to go back up any time soon. Even though rigs are being shut down in the United States at the fastest pace since the last financial crisis, oil production continues to go up. In fact, last week more oil was produced in the U.S. than at any time since the 1970s. This is really bad news for the economy, because the price of oil is already at a catastrophically low level for the global financial system. If the price of oil stays at this level for the rest of the year, we are going to see a whole bunch of energy companies fail, billions of dollars of debt issued by energy companies could go bad, and trillions of dollars of derivatives related to the energy industry could implode. In other words, this is a recipe for a financial meltdown, and the longer the price of oil stays at this level (or lower), the more damage it is going to do. The way things stand, there is simply just way too much oil sitting out there. And anyone that has taken Economics 101 knows that when supply far exceeds demand,prices go down…
Rigged, manipulated and opaque: the $3 trillion oil market needs reform --- Igor Sechin is an uncompromising figure. The head of Russian energy giant Rosneft and right-hand man of President Vladimir Putin launched an extraordinary attack on the entire global system for the supply, pricing and control of the world’s energy resources during the recent IP Week gathering in London. According to Mr Sechin, energy markets are being manipulated by a powerful alliance of forces, from Washington to Riyadh and Vienna, which present a long-term risk to the global economy. In his speech last week to executives from the cream of the world’s energy companies, he took aim at the Organisation of the Petroleum Exporting Countries (Opec), the US Department of Energy and the specialist energy media, which ultimately determine how much we pay for a gallon of petrol when filling up, or for our quarterly electricity bill. Of course, Mr Sechin’s hyperbole must be taken with a pinch of salt. Russia’s economy is feeling the brunt of the oil-price war effectively launched by Opec last November when the cartel decided to keep its production quotas unchanged at 30m barrels per day (bpd) – roughly a third of global supply.The move was largely orchestrated by Saudi Arabia and a clutch of its close Gulf Arab allies within the Vienna-based grouping; it sent oil markets into freefall within seconds of the 12 oil ministers leaving the secretariat, which sits a short walking distance away from the city’s grand Liechtenstein Palace. Opec had “lost its teeth”, growled Mr Sechin in Russian last week, and had essentially conspired with the US and European powers to drive the oil price artificially lower in a unilateral economic assault on Russia and Iran. But he didn’t stop there. America, he said, was “protectionist” by maintaining a crude oil export ban since the 1970s, which he argued was distorting global markets.
Oil tumbles as huge supplies raise doubts about rally -- (Reuters) - The comeback rally in oil paused on Wednesday, with crude prices falling 5 percent or more after traders and investors were overwhelmed by the latest estimates for U.S. supply builds that came in nearly five times above market expectations. Benchmark Brent oil fell below the psychological $60 support and U.S. crude traded not far above $50 after industry group American Petroleum Institute estimated a supply build of more than 14 million barrels last week. A Reuters poll had expected a growth of just about 3 million barrels for the week to Feb. 13. Oil had rallied over the past month, with Brent rising 35 percent from a mid-January low on short-covering by traders fearing the market had hit bottom after a 60 percent price crash since June. Violence in Iraq and Libya, both important oil producers, added fuel to the rebound. But Wednesday's session showed that supply worries have gripped the market again. "We have more supply coming from here with the refinery maintenance season, and that's prompting some people at least to ask if the market has overstretched itself with the rebound,"
Get Ready for $10 Oil -- At about $50 a barrel, crude oil prices are down by more than half from their June 2014 peak of $107. They may fall more, perhaps even as low as $10 to $20. Here’s why. U.S. economic growth has averaged 2.3 percent a year since the recovery started in mid-2009. That's about half the rate you might expect in a rebound from the deepest recession since the 1930s. Meanwhile, growth in China is slowing, is minimal in the euro zone and is negative in Japan. Throw in the large increase in U.S. vehicle gas mileage and other conservation measures and it’s clear why global oil demand is weak and might even decline. At the same time, output is climbing, thanks in large part to increased U.S. production from hydraulic fracking and horizontal drilling. U.S. output rose by 15 percent in the 12 months through November from a year earlier, based on the latest data, while imports declined 4 percent. Something else figures in the mix: The eroding power of the OPEC cartel. Like all cartels, the Organization of Petroleum Exporting Countries is designed to ensure stable and above-market crude prices. But those high prices encourage cheating, as cartel members exceed their quotas. So the Saudis, backed by other Persian Gulf oil producers with sizable financial resources -- Kuwait, Qatar and the United Arab Emirates -- embarked on a game of chicken with the cheaters. On Nov. 27, OPEC said that it wouldn't cut output, sending oil prices off a cliff.
EIA Crude Inventories & Production Surge To Record Highs - Between European uncertainty and last night's massive API inventory build (14.3mm barrels), Brent and WTI crude was sliding into today's inventory data - well off the kneejerk highs at the US equity open (and back under $50). Market participants expected a US crude inventory build of around 3 million barrels but the number more than doubled that at 7.72 million barrels and production soared to new record highs. Idiot algos kneejerked higher (because 7.72 is lower than 14.3?) but that insanity is fading fast...Record high crude inventories For those banking on production slowing and inventories being drawn down at some point, we suggest you look away... Crude inventories in the last 6 weeks have risen at the fastest pace in 14 years and 2nd fastest pace in history... Production surged to record highs... It seems WTI is sitting at a crucial support level... This will do nothing to help the WTI-Brent spread which has soared to almost $10 (as the refinery strike and storage capacity limits in the US contest with Libya disruptions across the pond). Charts: Bloomberg
Oil falls below $59 on record-high U.S. crude stocks - (Reuters) - Brent crude oil prices fell below $59 a barrel on Thursday after U.S. government data showed crude stocks hit a record high last week. U.S. commercial crude oil inventories rose by 7.7 million to a record 425.64 million barrels in the week ended Feb. 13, said the U.S. Energy Information Administration (EIA). The build exceeded analysts' expectations of a 3.2 million-barrel rise. [EIA/S] Gasoline stocks rose by 485,000 barrels compared with analysts' expectations in a Reuters poll for a 167,000 barrels gain. Distillate stockpiles fell by 3.8 million barrels, versus expectations for a 2.1 million barrels drop. Crude stocks at the Cushing, Oklahoma, delivery hub rose 3.66 million to 46.26 million barrels, the EIA data showed. Benchmark Brent crude futures LCOc1 for April were down $1.83 at $58.70 by 1618 GMT, having hit an intraday low of $57.80 earlier in the session, extending declines from Tuesday's two-month high of $63. U.S. crude for March delivery CLc1 was down $2.05 at $50.09 a barrel after falling as low as $49.15. The contract expires on Friday.
US Oil Rig Count Tumbles To July 2011 Lows, Pace Slows -- For the 11th week in a row (2008/9 saw 20 weeks in a row), US rig counts fell and production hit record highs. Rig counts are tracking the lagged price of oil's decline almost perfectly, with total rigs having dropped 32% from the highs. Notably last week's rig count drop was the smallest in 4 weeks (down just 48 to 1310) with oil rigs dropping 37 to 1,019. Oil prices dropped on this news on worries at the slowing pace of rig count closure.
US rig count decreases 48 to 1,310 - (AP) — Oilfield services company Baker Hughes Inc. says the number of rigs exploring for oil and natural gas in the U.S. fell by 48 this week to 1,310 amid depressed oil prices. The Houston firm said Friday in its weekly report 1,019 rigs were exploring for oil and 289 for gas. Two were listed as miscellaneous. A year ago 1,771 rigs were active. Of the major oil- and gas-producing states, Texas' count fell by 22, Oklahoma lost 16, North Dakota and Wyoming each lost four, Alaska lost three, Colorado lost two and California and Utah each lost one. New Mexico gained six rigs while Louisiana gained one.Arkansas, Kansas, Ohio, Pennsylvania and West Virginia were unchanged.
U.S. rig count falls by 48 as market watches for signs of slowing output: The active U.S. rig count dropped by 48 drilling units this week, according to oil field service company Baker Hughes, in one of the smaller weekly declines in the past few months. Thirty-seven of those rigs were drilling for oil, bringing the number of idled U.S. oil rigs down by 406 compared to this time last year. It’s now at its lowest point in almost four years. Low oil prices continue to chase rigs away from the nation’s shale plays, but this week’s haul of idled rigs is around half the numbers reported in recent weeks. Friday’s count brought the number of active U.S. rigs down to 1,310, a figure that has plummeted by more than 460 compared to last year. Fifty-three gas rigs and 2 miscellaneous rigs were idled, Baker Hughes said. In Texas, oil companies stacked 22 rigs this week. The state’s rig count stands at 576, down from 907 in September. Since October, 65 rigs have gone silent in the Eagle Ford Shale in South Texas, while 196 rigs in West Texas’ Permian Basin and 70 rigs in North Dakota’s Williston Basin have idled. As oil prices have fallen in half since last summer, Baker Hughes’ rig count has become the crude market’s go-to leading indicator to gauge how much U.S. oil production may fall in coming weeks and months, which would be key to restoring petroleum prices. On Thursday, Wood Mackenzie forecast if oil stayed around $55 a barrel, 1,000 drilling units would be idled by the time the falling rig count stabilizes, which the energy research firm estimates will be sometime in August. Traders didn’t appear to like the news that only 37 U.S. oil rigs had idled, compared to the 84 oil rigs that were stacked last week, as U.S. oil prices slid below $50 a barrel in afternoon trading Friday shortly after the rig count appeared.
Fooling peak oil one more time: can we find new sources of liquid hydrocarbons? -The collapse of oil prices of late 2014 is an indication that the market cannot absorb the abundant - but expensive - unconventional oil that could be theoretically produced. The result is "peak liquids," arriving in a few years at most (according to Arthur Berman). But, just as it has happened in the past, the industry will not stand still. They will be actively seeking for new resources to keep production ongoing. Can peak oil be fooled once more, at least for some time? As well known, predictions are difficult, especially when they are about the future. But it seems evident that, out there, something is stirring up and new "solutions" are being explored to counter the inpending decline of combustible liquids. The emphasis on nuclear energy in the latest IEA report is a sign of the times. But nuclear does not produce liquid fuels and the costs and the associated complications make it an unlikely savior of the world. The same can be said of biofuels: inefficient and land consuming; they have already reached their practical limits. Rather, the oil industry has always been good at squeezing out flammable liquids out of the dirtiest possible sources. Tar sands remain a potentially large resource, but their exploitation is hugely expensive. Perhaps more likely, the new "miracle" could be found in the "coal to liquids" process.
With Oil Fields Under Attack, Libya's Economic Future Looks Bleak : NPR: The headquarters of the National Oil Corporation in Tripoli are gleaming, the floors marble, the offices decked out with black leather chairs and fake flowers. It seems far from the fighting going on over oil terminals around the country.But the man in charge looks at production and knows the future is bleak."We cannot produce. We are losing 80 percent of our production," says Mustapha Sanallah, the chairman of Libya's National Oil Corporation. ."Now we have two problems: low production and low price," he says. At the current rate, he expects that the country won't even earn 10 percent of the budget money Libya had in 2012, before militias started taking oil infrastructure hostage."If there is security in Libya, we can resume production within a few days," Sanallah says.If there's one thing that has a chance of keeping Libya from totally falling apart, it's oil. It provides nearly all the country's revenue. It's what militias are fighting over. And it's the prize coveted by the two rival governments — one in Tripoli, the other in Libya's east — that claim to be running the country.The Tripoli faction is seen as Islamist, the eastern government as anti-Islamist — but the fighting is mainly over turf and resources like oil, rather than ideology.
Oil steady as Libya, Kurdish worries offset by Greek woes (Reuters) - Oil prices were little changed on Monday after touching their highest nearly two months, as gains in the dollar following the collapse of Greek debt talks offset growing violence in Libya and concerns over exports from Kurdistan. The U.S. dollar index reversed early losses to trade higher by midday on Monday after talks between Greece and euro zone finance ministers broke down when Athens rejected a proposed six-month extension of its bailout. In thin activity, oil prices had earlier pushed to a new 2015 high amid supply worries in two big oil producers.
Iran will weather oil price slide, Saudi Arabia will suffer – Iranian President Hassan Rouhani said Tuesday that Iran can cope with the economic turmoil of falling oil prices, adding that Saudi Arabia and Kuwait will be harder hit. Rouhani said that while oil now only accounts for one-third of Tehran’s budget, some of the Gulf states are up to 95 percent reliant on it. “If Iran suffers from the drop in oil prices, know that other oil-producing countries such as Saudi Arabia and Kuwait will suffer more than Iran,” he said. He added that “Kuwait’s budget is 95 percent reliant on oil,” and 90 percent of Saudi Arabia’s “annual exports are related to oil.” Rouhani was addressing a crowd in the southern city of Bushehr – home to a nuclear power plant built with the help of the Russians, which became operational in 2011. He also said that falling prices for crude oil are the result of “a plot that will be overcome with unity and resistance.” “Those [countries] who have planned the oil price reduction against some countries should know that they will regret it,” he said, without elaborating on what countries he meant.
Saudi crude exports decrease in December - Saudi Arabia's crude oil exports declined in Decenber by 362,000 barrels per day to 6.934 million bpd from 7.296 million bpd in the previous month, official data showed, Gulf Daily News reported. In December, the kingdom maintained crude oil production little changed at 9.630 million bpd from 9.610 million bpd in November, data published by the Joint Organizations Data Initiative said. However, refineries processed 2.217 million bpd in December, up from 1.809 million bpd in November. Exports of oil products grew to 1.050 million bpd in December from 878,000 bpd in November.
Welcome to World War Three - Kunstler -- In case anyone didn’t get ISIL’s message from their latest video in which 21 Egyptian Coptic Christians have their heads sawn off, here it is: “We’re executioners, not warriors.” Those gouts of blood spilled on a Libyan beach amount to ISIL’s welcome mat to the mass execution of the Euro-American west. The dignity of a funeral is not even on the program. What we’ve got now with apocalyptic Jihadism spreading clear across the region from Pakistan to Morocco, and Europe blandly ignoring it across the Mediterranean, is an epochal face-off that will change the world. It comes at an odd moment in history, namely as the massive oil wealth of the Middle East and North Africa enters decline. It was that oil wealth that provoked a population spike in a desolate corner of the planet the past century. Now there is a huge over-supply of young men there with nothing to do but act out their angry psychodrama over having no future. When a whole peoples’ prospects for a decent life on Earth dwindle to zero, is it any wonder that they become preoccupied with end-times visions of feasts and virgins awaiting in an after-life? Partly what you’re seeing over there is an internal fight to control what’s left of the treasure. That battle has already had the strange consequence of disabling the oil production capacity in places like Iraq and Libya, where there is still a lot of oil, but not enough political stability to allow the complicated business of extraction and transport to take place. It’s self-evident now that ISIL would like to control as much of the remaining oil wealth as possible — though I doubt they have the competence to run it for long even if they appear to control the terrain. The Big Prize, of course, is the grand fortress of Saudi Arabia. The kingdom is surrounded by Islamic maniacs now, with Yemen recently fallen to the south, the ever-hostile Iranian Shi’a across the Persian Gulf, disintegrating Iraq and Syria to the north, and the festering human compost heap of Egypt and then Libya across the Red Sea. And, of course, along the saddle of the Levant there is Israel with all its enemies and problems. Arabia has a new King, 79, rumored to be weak in the head. The oil revenue is way down and the population still grows, and too many young men have nothing to do but marinate in Wahhabist fantasies. If Saudi Arabia falls apart, it’s game over for modern life as the West has known it (and much of Asia now, too).
LNG Tankers Lie Unused Around Singapore as Gas Downturn Turns to Crisis (Reuters) – Over a dozen liquefied natural gas (LNG) tankers are parked, many idle, in and around Singapore – one of the world’s biggest trading hubs for the fuel – in a sign that the slowdown engulfing world gas markets may be worsening into a crisis. With Asian spot LNG prices down by almost two-thirds since February 2014 as slowing demand combines with rising output, shippers are parking their tankers close to ports like Singapore where unused ships can be easily maintained and serviced until new orders come in. Leading ship brokers estimate over one-tenth of the global fleet of 400 LNG tankers is currently unused because of slowing growth in Asia’s biggest economies. The impact just in Singapore suggests the problem could be worse. “There are currently 30 to 40 (oil and gas) tankers sitting in Singapore, many without anything to do,” said Javier Moret, head of LNG origination at Germany’s biggest power producer RWE during a conference in Singapore this week. According to shipping data on Thomson Reuters, seven tankers have been sitting idle off the east coast of Johor, Malaysia, for over two weeks, and another two ships have been anchored south of Batam, Indonesia, for several months. Half a dozen LNG tankers are in Singaporean docks. The 15 ships have a combined capacity to carry 2.26 million cubic metres of LNG, about two weeks worth of Singapore’s gas demand. For ship owners, idled tankers mean a loss of $60,000 in daily chartering fees per vessel. The gas these 15 tankers can carry would be worth over $200 million in current market terms. Around a year ago, that amount of LNG would have been worth almost $600 million.
Supertankers Speed Up as Oil Prices Fall -- The world’s supertankers are moving at the fastest speeds in 2 1/2 years as a collapse in oil prices spurs demand for cargoes and drives up daily returns owners can make from deliveries. Very large crude carriers, each about 1,000-feet long and able to transport 2 million barrels of oil, sailed at an average of 12.57 knots this month, according to data from RS Platou Economic Research, an Oslo-based firm. The fleet, whose steel weight is about 27 million metric tons, last moved that fast in August 2012. Tanker rates have surged amid signals that China accelerated purchases of crude to fill its stockpiles after Brent crude, the global benchmark, collapsed last year. Prices plunged in part because OPEC pledged to keep pumping oil amid a global oversupply. The ships earned an average of more than $71,000 a day since the start of January, the best start to a year in Baltic Exchange data that begin in mid-2008. “Freight rates are high because there’s a lot of oil trade at the moment,” Frode Moerkedal, an Oslo-based analyst at Platou Markets, an investment adviser linked to the research company, said by phone on Thursday. “OPEC has refused to cut production so there’s more oil being shipped.” VLCC speeds from 14-to-16 Feb. were 6.7% higher than 14-to-16 Nov., according to Platou. The speed for the ships when voyaging without cargoes rose 10% over the same period to 13.31 knots. The daily average rate to hire a VLCC on the benchmark Middle East-to-East Asia route was $71,772 so far in the first quarter, compared with an average of $47,614 in the fourth quarter, according to Baltic Exchange data. VesselsValue, a London-based firm that provides shipping data, also estimates VLCCs are sailing at the fastest since 2012. The acceleration is in part because falling oil prices have cut fuel costs and made it more profitable for owners to transport cargoes, .
Chinese Oil Re-Stocking Is Over: Inbound VLCCs Drop To 5-Month Lows -- In October 2014, we noted the massive surge (amid a slowing economy) in VLCCs bound for China as they began rebuilding their Strategic Petroleum Reserve, buying the newly low priced crude providing 'artificial' demand not reflective of actual current activity. Crude prices continued to drop and China-bound tankers remained high. But, as Bloomberg notes, this week saw the number of supertankers heading to China drop to 62 - the lowest since September 19th (before China began its restocking efforts) - strongly suggesting that 'artificial demand' has been removed from the global oil market. As Bloomberg reports,The number of supertankers sailing to Chinese ports fell to the lowest in five months in a weekly snapshot of vessel movements compiled by Bloomberg. There were 62 very large crude carriers bound for the Asian country as of about 8:30 a.m. in London on Feb. 20, compared with 63 a week earlier, according to signals from the ships compiled by Bloomberg from IHS Maritime data. That’s the lowest since Sept. 19. The vessels would deliver 124 million barrels of oil, assuming each hauled a standard 2 million-barrel cargo. With production hitting record highs, and demand (at 2 million barrels per inbound VLCC dropping) one could be forgiven for thinking crude prices are set to drop further... and perhaps compress Brent-WTI...
China to crank up oil product exports, add to supply glut – Beijing has raised the initial volume of oil products that Chinese refiners can export this year, potentially adding to a supply glut just as new processing capacity in the Middle East is expected to pressure fuel prices and depress margins. China controls oil product exports through quotas to state-run refiners after assessing domestic needs. This year Sinopec Corp, CNOOC Ltd and PetroChina were given an oil product export quota of 9.75 million tonnes, up about 20 percent from the initial limit set for 2014, industry sources with knowledge of the matter said. The refiners will likely apply for more allowances once they exhaust the initial quotas as they run cheaper crude through the capacity added last year, and the final annual exports are expected to far exceed the opening levels. The first quota limit given to oil refiners in 2014 was for about 8 million tonnes, but by the end of the year China had exported 19.6 million tonnes of gasoline, jet fuel, diesel and naphtha, according to customs data. “With supply running ahead of domestic products consumption, increased exports from China is expected to exert some pressure on the regional cracks,” said Wendy Yong a senior analyst at oil consultancy FGE, referring to the profit margins for processing a barrel of crude into fuel. China added more than 600,000 barrels a day (bpd) in refining capacity last year, bringing the nation’s total to near 14 million bpd. The jump in Chinese exports is also coming just after new export-focused refineries have added 800,000 bpd of capacity at Yanbu and Jubail in Saudi Arabia, putting further pressure on Asia’s cracking profits. China’s demand growth is slowing, and with its big jump in processing capacity, that would typically mean a boost in diesel exports. But Chinese refiners have started producing more jet fuel and gasoline at the expense of diesel.
