the major news coming out of the oil patch this week was that of the largest weekly drop in the number of oil rigs operating since national rig records were first kept in 1987; Baker Hughes reported that there were 1543 rigs operating on January 30th, the lowest rig count since June 2010, down 90 rigs from the 1633 rigs that were operating on January 23rd....the count of offshore rigs was down by 5 to 49, while land based rigs fell by 86 to 1,482 and one rig was added to the 11 that were drilling in inland waters last week...the number of rigs drilling for oil in the US fell by 94 to 1,223, while gas drilling rigs were up by 3 to 319, and one rig considered unclassified was also added this past week....that leaves the US rig count down 242 rigs from last January 30th's 1785 rigs, with oil rigs down 199, gas rigs down 39, and miscellaneous rigs down 4...since the OPEC decision 9 weeks ago not to cut production in the face of an oil glut, US oil drillers have shut down 377 rigs, leaving the current rig count down 386 from its peak on October 10th
once again, drilling activity in Texas took the biggest hit this week, as drillers there shut down 58 more rigs, leaving 695 still operating there; in addition, Oklahoma drillers idled 10 more rigs, dropping their active count to 183, and Mississippi drillers shut down 9, leaving 54...meanwhile, 4 rigs were idled in both North Dakota and Wyoming, leaving them with 143 rigs and 42 rigs running respectively, and Ohio drillers shut down another 3 rigs, leaving 41 running in the state...otherwise, most states dropped a rig or two, while Pennsylvania and California each added a unit and the rig count in Arkansas was unchanged at 12….north of the border, the Canadian rig count was down by an even greater percentage, dropping 38 rigs from last week to 394, with the Canadian oil rig count down 23 to 200 and their gas rig count down 15 to 194...they are now running 214 less drilling rigs than they were a year ago on the same date, with their oil rigs down 204, and their gas rigs down 10 from a year ago...
the release of the rig count data on Friday had the perverse effect of precipitating a rally in oil prices, as they rose from below $45 a barrel on Friday morning to close the day at $47.47...in the larger scheme of things, however, it was not a large jump, as oil contracts have been trading in a $44 to $48 a barrel price range over the past two weeks, with one price spike to $50.20 a barrel last Thursday before prices fell to $46.21 at the close the same day..remember, these oil price quotes are for light sweet oil at or delivered to the depot in Cushing Oklahoma; other prices may differ, depending on transportation costs, specific gravity and sulfur content…for instance, Williston Basin sweet crude from N. Dakota was quoted at $28.19 a barrel mid week, while Williston sour had dropped down to $19.08 a barrel...
meanwhile, natural gas prices continued to slump this week despite the above normal demand for heating....starting the week with a Henry Hub contract price at $2.88 per mmBTU, they rose to close Tuesday at $2.98, then fell continuously to end the week at $2.69, the lowest in three years...considering that much of the early Marcellus fracking was undertaken when gas prices were ranging between $6 and $8 per mmBTU, it's easy to understand why many operators in the area are in a world of hurt..
otherwise, it was a pretty busy news week in the US fracking patches, with reports of local issues coming from almost every state...one of the most interesting was from Oklahoma, where a lawsuit from a resident of Prague who was injured in the November 5.6 earthquake has made its way to the Oklahoma Supreme Court; the woman i question is using the peer reviewed study by the USGS and university scientists to establish that operation of specific injection wells were responsible for that quake, something the oil companies knew was possible, and thus their actions represented “wanton or reckless disregard for public or private safety.”...needless to say, if such a lawsuit would ever be found for the plaintiff, it would mean a sea-change in the ability of injection well operators to do business, and possibly by extension to frackers themselves, as no one would want to fund an operation with that kind of liability hanging over their heads...
a Washington Post graphic on the Oklahoma quake situation, also published this week, shows that the circumstantial evidence that injection wells are causing the quakes is pretty clear....on the map of Oklahoma below, the locations and amounts of fracking flowback water in millions of barrels that were injected underground between 2011 and 2013 is shown as mustard colored cubes of various shades; superimposed on the same map is the location of all the earthquakes over 3.0 on the Richter Scale that occurred in the state since, with the graphic correctly representing a 5.0 quake as 100 times as large as a 3.0...considering that before 2008, the entire state was only seeing 2 earthquakes a year, it's hard to believe that anything other than those injection wells could be the cause...
across the state line in Kansas, the increase in earthquakes in that state was also the subject of an inquiry by the legislature there, as the state had gone from one felt earthquake a year to 115 over the past two years..in the widely covered testimony from the director of the Kansas Geological Survey, he attempted to make it clear that the increase was not caused by fracking itself, but that the disposal of the brine byproduct of the process could be the cause of increased seismic activity in the state...south of the Oklahoma quake swarm, anincrease in earthquakes in the Dallas area, all under 4.0 on the Richter Scale, was also the subject of a boisterous public meeting late last week...the Dallas suburb of Irving Texas has felt 26 earthquakes over the past month..
to the west of those states, Colorado, which has also seen an increase in fracking related quakes, is seeing a move by Republican legislators to compensate mineral rights owners when local governments ban fracking, which you'll recall has happened in several Colorado towns...Coloradans had already seen five oil & gas related spills large enough to be reported to the state conservation commission in the first 14 days of the month, including one near Gill that covered an area of 300 feet long by 100 feet wide with a fine oil mist...meanwhile, the largest gas fracker in the state has instituted a freeze on wells already drilled in the Piceance Basin of that state....WPX Energy has about 20 wells already drilled and awaiting the fracking necessary to release the gas in those formations, and presumably they'll hold off on that till prices are better...since some companies operating in the Marcellus and Utica shales are also doing the same thing, it appears there's a lot of gas out there waiting to go to market...hopefully, there wont be a stampede for the door by all of them at the same time...
to the north the Wyoming Oil & Gas Conservation Commission agreed to strengthen fracking chemical disclosure requirements in response to citizen pressure..to that end, they reached an agreement with Halliburton, which will now resubmit applications covering their use of 24 chemicals...and in Washington state, regulators are upset that they've been kept in the dark about an oil spill from a railroad tank car that arrived at the largest refinery in the state 1,611 gallons short...apparently it had leaked that oil somewhere along the train’s 1,200-mile trip from North Dakota to the BP refinery near Ferndale on the west coast..
North Dakota itself has had a plethora of issues, including seeing their accidental oil patch death count already reaching last year's level in this fiscal year, boosted by 4 deaths in the first few weeks of January....you'll recall last week that they had discovered that 3 million gallons of fracking wastewater had leaked from a 4 inch pipeline 15 miles north of Williston in the heart of the Bakken oil patch, and that a large portion of that had flowed downstream to the Missouri river..this week the EPA reported that they've pumped a 4 million gallon mixture of fresh water, brine and oil from the area, which they conveniently intend to dispose of in injection wells…they also report that they’re building underflow dams, which allow water to flow underneath to contain oils that float on water’s surface, around the area in case water levels rise...another report on that same spill from the state industrial commission indicates that the pipeline that leaked had never been inspected, basically because the state can't afford to pay qualified inspectors what they'd get for similar jobs in the oil industry....meanwhile, in Williston, where they were also dealing with effects of the oil spill upstream in the Yellowstone River, the city found the water safe to drink despite the fact that it smells and tastes of oil...the hydrocarbon content of their water measured 3.39 parts per billion, and apparently it would have had to reach 5 parts per billion before it was considered dangerous enough to shut down the intakes...by the way, sonar indicates that 50 feet of that breached pipeline that leaked that oil into the Yelllowstone still lies exposed on the riverbed...it was supposed to have been buried 8 feet below the river...
on the other side of the Mississippi river, landowners in Illinois are complaining that they missed out on all the fracking fun because of the oil price bust…it was just a few months ago that the permitting process was in place in the state, and not a single company has applied for a fracking permit...facing budgetary problems, the state had hired 36 employees and five lawyers to handle the expected rush of applications, and only one company even inquired...the Illinois bureaucrats had been anticipating a oil boom that would create 10,000 jobs and related revenues...
closer to home, officials in West Virginia are having a bit more success auctioning off the rights to drill for oil and natural gas beneath state-owned lands, including waterways and a wildlife management area; just one deal has been finalized: a $6.2 million deal letting Antero drill below 518 acres at the Conaway Run Wildlife Management Area; but they've also already received bids on various tracts of the Jug wildlife land, 134 acres under Fish Creek and adjacent land in Marshall County, and under another 2-mile section of the Ohio River, south of the panhandle section of the river that they'd auctioned off previously….all this despite that on Monday, a gas pipeline in Brooke County just north of there exploded into a massive fireball shooting hundreds of feet into the air, large enough to register on National Weather Service radar screens, and melting the siding on nearby homes…like US the killing of civilians in Pakistan, West Virginia officials apparently consider explosions such as that expected collateral damage…
and while there were no gas explosions of note in Pennsylvania this week, there were a couple reports out by or concerning fracking in the state...first, the state Department of Environmental Protection released a long awaited study on radioactive matter produced by fracking, which found among other things that radium was a serious problem and should be added to the Pennsylvania spill protocol to ensure cleanups, that more studies of use of brine for dust suppression, de-icing and road stabilization should be conducted, and that the mining, drilling and burning of fossil fuels produces more hazardous radioactive waste material in a matter of days than the nuclear energy does in a year ..the upshot of this study is that they've decided to send it all to Ohio cause we'll take anything...then a new report from the Environment America Research & Policy Center showed that all types of frackers, from Chevron to the small firms, continuously violate rules intended to protect human health and the environment, citing several examples...compiling violation data for Pennsylvania frackers between January 2011 and August 2014, they found that the top 20 companies violated rules in such a way as to pose serious risks to workers, the environment and public health 1.5 times per day on average...
also in Pennsylvania, new governor Tom Wolf fulfilled a campaign pledge and issued an executive order banning fracking in state parks and forests...however, a closer reading of his writ reveals that it only applies to new leases, which leaves most of the state parks and forests already opened up by his frack happy predecessor Tom Corbett still at risk...for the time being, low prices may serve the same purpose as an order from the governor, for in addition to the Marcellus drilling cuts noted last week, Chevron announced this week that they'd cut 23% of ther Pennsylvania workforce "due to activity levels."..
in Ohio, we saw governor Kasich roll out his state budget proposal for the coming fiscal year, which included a proposal to eliminate income taxes for businesses which would be paid for by an increase in severance taxes on gas and oil...although the latter is probably the only Kasich proposal i'd support, it seems unlikely it would get through the gas and oil owned state legislature...also in the news was the letter to the US EPA that was drafted by Teresa Mills and signed by representatives of 40 Ohio environmental groups challenging the ability of the Ohio Department of Natural Resources’ (ODNR) to manage chemical reporting and emergency response of the state’s oil and gas industry that they work for...specifically, the letter note that Ohio law contradicts federal reporting requirements for hazardous chemicals and cites examples of occasions when the ODNR was asleep at the switch while unknown fracking chemicals were being spilled onto Ohio properties and into Ohio waterways....the letter calls on the U.S. EPA to allow hazardous chemical reporting to additional state agencies and specifically not to keep that information secret from the State Emergency Response Commission, as Ohio has done.
in another widely reported story, the state responded to a request for information from the AP on Bakken crude oil being transported on rail lines through Ohio each week, after earlier refusing to disclose it...as you'll recall, crude oil from the Bakken is very light and volatile and has a large percentage of highly flammable compounds, and a derailment of a train carrying that crude was responsible for 47 deaths in the Quebec city of Lac-Mégantic...according to these reports, railroad records indicate that up to 137 million gallons of Bakken crude oil come through Ohio each week on the way to East Coast refineries....since that's coming from North Dakota and most of it is heading for New Jersey, it's fairly likely that it passes through our area...
you'll also note two reports below from marcellus.com that show the January 17 counts of new drilling permits, number of wells being drilled, and those producing gas and oil for both the Marcellus and the Utica shales...poking around, i found those reports are sourced from this ODNR site: http://oilandgas.ohiodnr.gov/shale which is currently showing the data for January 24th, and also links to the databases for all ODNR public information...for instance, it includes this: http://oilandgas.ohiodnr.gov/portals/oilgas/shale-activity/comprehensive/Utica_012415.pdf which is a 27 page list of the thousands of Utica shale wells that have been permitted, drilled or are producing in Ohio, including the drilling contractor and the geographical coordinates of the area they have or are intending to frack..
Kasich: Eliminate income tax for business owners: – Ohio Gov. John Kasich wants to eliminate state income tax for many business owners as part of the state budget he plans to unveil Monday. He also plans to increase the personal exemption Ohioans can claim on their state income tax return if they earn $80,000 or less each year. Ohio will be able to afford the tax breaks in part because of surplus tax revenue, Kasich aides said. The governor will outline other measures to pay for the plan on Monday. He's expected to call for an increase in other taxes, such as those on cigarette sales, business sales in Ohio and oil and gas obtained through fracking. Kasich has called for those tax increases before, as a way to pay for income tax cuts. Statehouse Republicans last year stymied the governor's proposals. On Thursday, they praised the governor's desire to cut income taxes for small business owners, but shot down any moves to pay for such tax cuts by increasing other taxes. "The House will not accept tax shifting. We just won't do it," said House Speaker Cliff Rosenberger, R-Clarksville, at a forum held by The Associated Press. "The Senate will not consider a tax reform plan that does not take a significant amount of revenue off the table for the state,"
American Petroleum Institute says low prices bolster argument for low severance taxes - The oil and gas industry's top trade group hopes the recent downturn in prices and activity spurs Ohio Gov. John Kasich to lessen his severance tax proposal. Kasich is expected to unveil his budget plan next week, and might give an idea of what his severance tax plan is at a conference this afternoon. Legislators and the governor couldn't agree last session on a compromise – the industry was OK with 2.5 percent, but Kasich said that was too lenient. Oil and gas prices have fallen precipitously since then, causing some drillers in eastern Ohio to pull back investment for at least 2015. That means, says the American Petroleum Institute, that the governor should relent. "The notion that some of these officials want to raise taxes on the industry doesn't make sense," said API chief economist John Felmy. API and the state-focused Ohio Oil and Gas Association always have said high severance taxes could cause drillers here to move elsewhere. But low prices, they say, have bolstered their arguments. "Anytime you have a lower price regime you have a lot of projects that become uneconomical," Felmy said.
Groups challenge ODNR authority to manage fracking chemical reporting - Today 40 Ohio community and environmental groups fired off a challenge to the Ohio Department of Natural Resources’ (ODNR) authority to manage chemical reporting and emergency response for the state’s oil and gas industry. The challenge, carried in a letter to U.S. EPA Administrator Gina McCarthy, is based on the fact that Ohio law appears to contradict federal law with respect to what agency should receive hazardous chemical information and also respond to chemical accidents and emergencies. The letter to US EPA seeks clarification of these federal requirements in order to forestall an oil and gas industry agenda in Ohio’s legislature to shift custody of the industry’s chemical use data from front-line emergency responders to the industry’s accommodating but unqualified supporters at ODNR. The federal Emergency Planning and Community Right-to-Know Act (EPCRA) states that authority to accept hazardous chemical information and respond to chemical accidents resides with the State Emergency Response Commission (SERC), as well as local emergency planning committees and fire departments. Indeed, every other chemical-intensive industry in the state reports to SERC and SERC coordinates and plans emergency response for them. Ohio law, however, carves out an exception for the oil and gas industry, diverting its hazardous chemical information and emergency response authority to ODNR. Furthermore, the group says that ODNR’s lack of expertise in emergency response puts public health and natural resources at risk. To back up its claims, the groups cite several recent incidents, including a June fire and chemical spill in Monroe County that dumped 54,000 gallons of hazardous chemicals into a tributary of the Ohio River. Gaps in reporting meant volunteer firefighters lacked information on what chemicals were stored on site and had to guess at the appropriate response. Despite being the current custodian of fracking chemical information, ODNR’s Division of Oil and Gas didn’t arrive at the scene until 3 days after the fire broke out and failed to share trade secret chemical information with other state and federal emergency responders until 2 days after that. By that time, 70,000 fish had been killed and the plume of contamination had reached drinking water intakes located downstream. The letter calls upon U.S. EPA to clarify that while the state might allow chemical reporting to additional state agencies, it may not divert that information from the State Emergency Response Commission, as Ohio has done.
Environmental groups complain to U.S. EPA about state fracking oversight - Columbus Dispatch - Dozens of environmental-advocacy groups are challenging the authority of the Ohio Department of Natural Resources to manage and respond to emergencies related to the oil and gas industry. The groups — including ProgressOhio, the Sierra Club and Ohio Citizen Action — sent a letter to U.S. Environmental Protection Agency Director Gina McCarthy today saying Ohio law contradicts federal reporting requirements for hazardous chemicals. Read the letter (PDF) The federal Emergency Planning and Community Right-to-Know Act was enacted almost 30 years ago to keep residents and emergency responders informed about the hazardous chemicals in their backyards. Congress passed the act in 1986 in direct response to a 1984 chemical leak in Bhopal, India, that killed more than 1,700 people. Under the act, companies must disclose the names of hazardous chemicals on each site as well as an estimate of the maximum amount of each chemical that was on the site in the previous year. They also must disclose how the chemicals are stored. The U.S. EPA oversees compliance, and the information that companies disclose must be made available to state emergency-response commissions, which then make that information available to the public and local emergency responders. In Ohio, the State Emergency Response Commission has been responsible for collecting that information for the past year or so. Before that, however, Natural Resources handled the information for the oil and gas industry. A bill introduced this past fall in the Statehouse would have brought control back under Natural Resources.
Director’s focus is improving parks Oil and gas safety and regulation, water quality on agenda - The Ohio Department of Resources is focusing its attention on improving state parks, oil and gas safety and regulation as well as the quality of the state’s water. “We were reappointed for another term,” James Zehringer, director of the Ohio Department of Natural Resources said. “We’re looking forward to carrying on the goals we’ve set, not only for 2015, but for the next four years.” The state offers 74 state parks to its residents in addition to nine lodges. Ohio is additionally one in seven states within the nation that offers free admission, and has done so since the parks’ beginning. The department hopes to set improvement projects relating to the state parks in motion within the next two years; the planned undertakings are currently within the bidding stages. “For the first time, we hired a project manager,” he said. “He’s going to make sure these projects are done on time and on budget, systematically too.” The department received $88.5 million to spend on state park updates, promotions and improvements, which include changes in the state parks infrastructure, improving shower houses and restrooms, maintaining lodging areas as well as providing additional necessities state parks may be in need of, such as playground equipment, splash pads, pools and camper and recreational vehicle pull through/turn-around areas and electricity. Zehringer said it was important that individuals are still able to utilize the parks as they are being constructed upon. Therefore, projects may be taken on in sections.
Marcellus horizontal well activity - The cutting back and laying off trend has made its way to the Marcellus Shale formation– all because of low energy prices. Across the state of Pennsylvania, counties have seen drops in rigs, permits, jobs and budgets. Lou D’ Amico, president and executive director of the Pennsylvania Independent Oil and Gas Association, states that the main cause there is so little drilling activity in Indiana County, Pennsylvania, is the low natural gas prices. The price of natural gas in 2008 was $14 per 1,000 cubic feet. This past December, prices were less than four dollars. According to an article by the Beaver County Times, PennEnergy Resources LLC stopped drilling new wells in October of 2014. The company has leases located in Beaver, Butler and Armstrong Counties in Pennsylvania. Along with a scaleback in operations, reporting requirements, health concerns and fracking policies are hot topics in the Marcellus shale. The Marcellus Shale Coalition is in a battle with environmental groups over whether or not the oil and gas industry should have to disclose the release of potential pollutants. The environmental groups are strongly pushing for the industry to be added to the Toxic Release Inventory list. The inventory is a public database that keeps records of certain emissions from facilities in specific areas. The following information is provided by the Ohio Department of Natural Resources for the week ending on January 17th. The data is pertaining to the Marcellus Shale activity occurring in the state of Ohio.
- DRILLED: 16
- DRILLING: 1
- PERMITTED: 15
- PRODUCING: 12
- TOTAL: 44
Fourty-four horizontal permits were issued during the week that ended Jan. 17, and twenty-nine wells were drilled in the Marcellus Shale.
Utica well activity | marcellus.com - Drilling doesn’t seem to be slowing down in the Utica Shale. Even with several companies scaling back on spending and rigs, the Utica is still going strong and continuing to provide jobs for Ohio. Over the past years, the unemployment rate in nine Ohio Counties and the entire state has decreased, all thanks to gas operations in the Utica. The counties included are Carroll, Columbiana, Harrison, Belmont, Guernsey, Noble, Jefferson, Mahoning and Trumball. The state of Ohio saw a 5.6 percent drop from 2010 to today. While having $22.5 billion invested in the oil and gas industry, the nine counties have truly benefited from it when it comes to jobs and unemployment. For the week ending on January 17th, drilling and the issuing of permits continued to grow, and the numbers prove it. The following information is provided by the Ohio Department of Natural Resources.
- DRILLED: 307
- DRILLING: 282
- PERMITTED: 466
- PRODUCING: 723
- TOTAL: 1,778
Nine horizontal permits were issued during the week that ended Jan. 17, and 43 rigs were operating in the Utica Shale.
West Virginia, Ohio visitors seek guidance in North Dakota - — Government and economic development leaders from West Virginia and Ohio are visiting northwestern North Dakota to see firsthand what it’s like to deal with an energy boom. The residents from Parkersburg and Vienna, West Virginia, and Belpre and Marietta, Ohio, hope to apply lessons from Minot and Williston to what the mid-Ohio Valley will experience if and when an anticipated ethane cracker plant is built there. Such plants convert ethane from shale oil and natural gas into chemicals used to produce plastics, fertilizer and other products. The 13 officials arrived in Minot on Sunday night and were touring and visiting with officials through Tuesday, the Minot Daily News reported. In Williston, the population has doubled since 2010 and the city’s physical size has tripled. In Minot, on the eastern edge of the patch, the population grew 12 percent between 2000 and 2010, most of it in the latter part of the decade. Minot City Engineer Lance Meyer told the visitors while discussing long-range infrastructure planning. Minot has identified nearly $815 million in needed water, sewer, transportation, airport, landfill, buildings and flood control projects through 2019, he said. Parkersburg Mayor Bob Newell said his region already is seeing growth due to fracking in the oil and gas fields just to the east of his community. That growth will increase significantly if the $4 billion petrochemical complex is built. The project is expected to create thousands of jobs during construction and hundreds when operating, as well as generate jobs in related and supporting businesses.
Bakken crude oil rolls over Ohio rails - Millions of gallons of some of the most volatile crude oil in North America are being transported on rail lines through Ohio each week, according to reports that the state had kept secret until this week. The railroad-company reports show that 45 million to 137 million gallons of Bakken crude oil come through Ohio each week from North Dakota oil fields on the way to East Coast refineries. Two million to 25 million gallons a week come through Franklin County alone. Bakken crude oil is desirable to oil and gas companies because it requires less refining than other shale oil to be turned into diesel fuel and gasoline. It also is highly flammable. Prompted by a 2013 train derailment and explosion that killed 47 people in Quebec and an explosion in Lynchburg, Va., last April, federal regulators began requiring railroads in May to report the average weekly number of trains carrying at least 1 million gallons of Bakken crude. Those reports are sent to state emergency-management agencies. The U.S. Department of Transportation has said the files don’t contain sensitive security details, prompting some states, including Virginia and Washington, to make the reports public. Despite requests from environmental groups, citizens and news outlets, including one from The Dispatch in July, Ohio would not release the reports, citing an exemption in the public-records law meant to prevent acts of terrorism.
Ohio reconsiders and discloses oil train records — More than a dozen trains loaded with over 1 million gallons of crude oil cross Ohio every week. Ohio officials released the information to The Associated Press Thursday after earlier refusing to disclose it. Federal transportation officials ordered the railroads last spring to notify states about trains carrying at least 1 million gallons of crude oil. CSX says it hauls 15 to 30 trains a week across some counties and only 1 to 5 trains a week in other places. Norfolk Southern transports 1 to 14 trains a week across 19 counties. Canadian Pacific hauls three trains a week across northwest Ohio. The crude oil trains are being scrutinized after several fiery derailments, including a July 2013 incident that killed 47 people in a small Canadian city in eastern Quebec.
Utica production soaring for Chesapeake - Chesapeake Energy reported lucrative production gains on its Utica shale properties today as part of its second-quarter earnings report. Oil and gas production rose 373 over the same time period last year, and 34 percent over the previous quarter, reports Shane Hoover of CantonRep.com. That sets Chesapeake’s production at around 67,000 barrels of oil equivalent per day, 60 percent of which was natural gas. 30 percent of this production was natural gas liquids, and the remaining 10 percent was oil. Chesapeake is by far the leading producer of energy in the Utica shale, operating 8 rigs and 48 wells in the region during the quarter. Overall, it owns 210 Utica wells in various stages of completion. The company earned $5.2 billion revenue in the quarter, up 10 percent from a year before. Utica shale production has amplified in recent months following raised production estimates and a rosy outlook for relaxed petroleum exports. Numerous companies, including PDC energy and former Chesapeake CEO Aubrey McClendon’s American Energy Partners, have recently announced expanded operations in the area.
Marcellus shale production hits record high - For the first time, natural gas production in the Marcellus shale has surpassed 15 billion cubic feet per day, the U.S. Energy Information Administration reported Tuesday. Even with July’s record-setting pace, EIA’s monthly Drilling Productivity Report estimates that production will increase by 247 million cubic feet per day this month. The EIA said “production from new wells is more than enough to offset the anticipated drop in production that results from existing well decline rates.” Production in the Marcellus since 2010 has steadily increased from 2 billion cubic feet per day, EIA reported. Marcellus now accounts for 40 percent of domestic shale gas production. The Haynesville shale region, which encompasses portions of east Texas, northwestern Louisiana and southern Arkansas, was second in daily production with 6.7 billion cubic feet per day, closely followed by the Eagle Ford region in Texas with 6.4 billion cubic feet per day. Rising Marcellus production has led to below-market prices in the Northeast, the EIA reported, citing prices in the Dominion South trading point in southwestern Pennsylvania. Production has exceeded demand for natural gas in the winter in Pennsylvania and West Virginia the last few years, but it is now anticipated to also meet demand in those two states as well as New York, New Jersey, Delaware, Maryland and Virginia.
Pipelines key to growth in shale industry - Natural gas producers struggling with prices that recently hit two-year lows are increasingly looking to pipeline builders for relief. They hope projects such as the Constitution Pipeline and Atlantic Sunrise being built by Tulsa-based Williams Cos. will ease a glut of gas in Appalachia by expanding how much fuel they can deliver to profitable markets. “The infrastructure we build is a key ingredient to bringing reliability and price stability to growing markets in the Northeast and along the Eastern seaboard,” said Ryan Savage, vice president and general manager for Williams’ northeast gathering and processing business based in Findlay. "The shale revolution has generated huge infrastructure demands as the appetite for natural gas continues to grow for home heating, electric-power generation and industry. Our job is building and operating pipelines that connect the best basins with the best markets, thus satisfying the needs of the producers and the consumers. Our focus is making these connections in a timely, safe and cost-effective manner. Our commitment to providing natural gas infrastructure remains consistent regardless of short-term fluctuations in natural gas prices. Last winter, when temperatures in New York City fell into the single digits, natural gas delivered in the city spiked to a record $123 per thousand cubic feet on the spot market. Not far away, in Pennsylvania’s Marcellus shale area, the price was about $4. This isn’t a supply problem; it’s an infrastructure problem. And that’s bad for consumers, especially during peak-demand periods in the winter. Williams is helping solve this problem with a multibillion-dollar pipeline expansion program."
Long-term solution for wastewater disposal eludes shale gas industry -- Defining wastewater disposal in the Marcellus shale fields has been a moving target. Drillers initially sent millions of gallons to public water treatment plants, until regulators said the plants were not equipped to properly clean the salt- and metal-laden water that comes from shale gas wells. The traditional method of injecting it back into deep wells is less feasible in Pennsylvania, which has few such wells, and Ohio is accepting less wastewater because of potential links between injection and earthquakes. The search for a solution has spawned an industry of companies and innovators looking for ways to treat or reuse the wastewater that environmentalists feared would foul drinking supplies. “They can barge all this water somewhere else or reuse it, which is what we're seeing now,” said Radisav Vidic, chair of the University of Pittsburgh's civil and environmental engineering program and a leading researcher on management of gas drilling waste. Recycling wastewater from hydraulic fracturing in shale gas production has become the norm in the Marcellus and Utica shale plays. About 90 percent of what comes out of wells goes into the next job, Vidic said. “What we call disposal is disposal to the generator. We find a home for it in the drilling fields,”
Pennsylvania DEP Sticks Head into Radioactive Sand And comes up glowing about fracking. A nice radioactive green. The Pennsylvania Department of Environmental Prevarication has released it’s study on radioactive matter produced by fracking. The TENORM study concluded among other things that:
- - There are potential radiological environmental impacts from fracking flowback spilled in streams at drilling sites, in landfills on roads etc. Radium should be added to the Pennsylvania spill protocol to ensure cleanups are “adequately characterized.” There are also site-specific circumstances and situations where the use of personal protective equipment by workers or other controls should be evaluated, given their potential exposure to radioactive frack wastes.
- - There are potential radiological environmental impacts that should be studied at all facilities in Pennsylvania that treat frack wastes to determine if any areas require remediation. If elevated radiological impacts are found, the development of radiological discharge limitations and spill policies should be considered.
- –Frack filter “cake” from facilities treating wastes could have a radiological environmental impact if spilled, dumped in barns, dropped on roads or buried and there is also a potential long-term disposal issue. TENORM disposal protocols should be reviewed to ensure the safety of very long-term disposal of waste containing TENORM.
- - Further study of radiological environmental impacts from the use of brine from the oil and gas industry for dust suppression, de-icing and road stabilization should be conducted.
- The mining, drilling and burning of fossil fuels produces more hazardous radioactive material than nuclear energy does.
Pennsylvania Fracking Companies Regularly Commit Serious Environmental Violations - Oil and gas companies in Pennsylvania seriously violate environmental rules and regulations, many of them more than once per day, on average. That, according to a reportpublished Tuesday by Environment America, which compiled violation data for Pennsylvania fracking companies between January 1, 2011, and August 31, 2014. It found that the top 20 most frequently-violating companies broke the rules 1.5 times per day on average. “These violations are not ‘paperwork’ violations, but lapses that pose serious risks to workers, the environment and public health,” the report’s authors write. The violations include a 4,700-gallon hydrochloric acid spill that occurred at a Chief Oil & Gas drilling site in Bradford County, PA and that ended up flowing into a nearby creek and causing a fish spill. They also included instances of companies dumping fracking waste into streams and creeks, a practice that drilling company EQT Production was cited twice for in 2012, according to the report. The report also found 243 cases of fracking operations impacting drinking water due to well problems between December 2007 and August 2014. Environment America looked at the number of citations issued to fracking companies in Pennsylvania during that time period in order to gather its data, but the organization notes that the total number of violations committed by fracking companies is probably higher than the total number of citations. Environment America says in the report that this discrepancy is in part due to “Pennsylvania’s consistent pattern of conducting fewer inspections than state rules require, and because inspectors regularly decline to issue violation notices when companies voluntarily agree to fix problems.”
Report Shows How Fracking Industry's Failure to Follow Regulations Impacts Human Health - A new report out today from Environment America Research & Policy Center shows that all types of fracking companies, from small to large, are prone to violating rules intended to protect human health and the environment. The report, Fracking Failures: Oil and Gas Industry Environmental Violations in Pennsylvania and What They Mean for the U.S., analyses Pennsylvania’s oil and gas industry over a four-year period and found that the top offenders of regulations—averaging more than one environmental violation every day—represented a wide range of companies from Fortune 500 companies like Cabot Oil, to mom-and-pop operators, to firms like Chevron. “Fracking is an inherently risky, dirty, dangerous practice, and regulations can’t change that,” . “But this report shows that a range of oil and gas companies struggle to meet even modest protections for our environment and public health.” The report tracks lapses such as allowing toxic chemicals to leach into the air and water, endangering drinking water through improper well construction and dumping industrial waste into waterways. According to Environment America, fracking operators in Pennsylvania have committed thousands of violations of oil and gas regulations since 2011 with violations that are not “paperwork” violations, but lapses that pose serious risks to workers, the environment and public health
Washington County residents speak against gas drilling - Gas well drilling companies can’t be counted on to follow the raft of ordinance changes being proposed in Peters, claim a group of Washington County residents who imparted what they said were their experiences with Marcellus Shale drilling to council Monday. “This is a cautionary tale,” said JoAnne Wagner of Mount Pleasant Township, where the first Marcellus well was drilled 10 years ago. “Drillers not only take an inch, they take a mile. They will ignore your ordinances and do what they want to do.” Ms. Wagner said drillers in her township have built facilities without seeking permits — or even making local officials aware of their plans. She did not list specifics. She said she moved from Peters to Mount Pleasant in 2004, seeking a peaceful life in a country setting. “Little did I know it would be the worst nightmare of my life,” she told council. Ms. Wagner was among more than 100 residents who turned out Monday night for a public hearing into plans by Peters to revamp its shale drilling ordinance. Originally passed in 2011, parts of the ordinance were struck down by council last year after a 2013 Supreme Court ruling changed the drilling landscape for state and local officials.Saying it wouldn’t pass legal muster, council eliminated a drilling overlay district, which would have required a minimum of 40 acres for drilling activities.
Children Given Lifelong Ban on Talking About Fracking - Two young children in Pennsylvania were banned from talking about fracking for the rest of their lives under a gag order imposed under a settlement reached by their parents with a leading oil and gas company. The sweeping gag order was imposed under a $750,000 settlement between the Hallowich family and Range Resources Corp, a leading oil and gas driller. It provoked outrage on Monday among environmental campaigners and free speech advocates. The settlement, reached in 2011 but unsealed only last week, barred the Hallowichs’ son and daughter, who were then aged 10 and seven, from ever discussing fracking or the Marcellus Shale, a leading producer in America’s shale gas boom. The Hallowich family had earlier accused oil and gas companies of destroying their 10-acre farm in Mount Pleasant, Pennsylvania and putting their children’s health in danger. Their property was adjacent to major industrial operations: four gas wells, gas compressor stations, and a waste water pond, which the Hallowich family said contaminated their water supply and caused burning eyes, sore throats and headaches. Gag orders – on adults – are typical in settlements reached between oil and gas operators and residents in the heart of shale gas boom in Pennsylvania. But the company lawyer’s insistence on extending the lifetime gag order to the Hallowichs’ children gave even the judge pause, according to the court documents. The family gag order was a condition of the settlement. The couple told the court they agreed because they wanted to move to a new home away from the gas fields, and to raise their children in a safer environment. “We need to get the children out of there for their health and safety,” the children’s mother, Stephanie Hallowich, told the court.
Gas drilling watchdog group settles suit over terror listing — A gas drilling watchdog group that was characterized in Pennsylvania security bulletins as a potential terror threat has settled its lawsuit against the state, the group’s lawyer said Thursday. The settlement terms between Pennsylvania officials and the Gas Drilling Awareness Coalition were not immediately released. The gas drilling coalition’s lawsuit said the bulletins characterized the group as a possible threat to infrastructure without evidence. A private contractor, the Institute of Terrorism Research and Response, produced the reports under a one-year, $103,000 contract. Then-Gov. Ed Rendell later apologized for the monitoring of peaceful citizens’ groups, and his homeland security director resigned. Yet the coalition’s attorney, Paul Rossi, said Thursday he has evidence that improper monitoring of citizen groups is still happening within state government. “This has to stop,” he said. “State officials ought to … understand they can’t do this, in any form whatsoever.” The security bulletins were issued several times a week and sent to hundreds of people, most of them in law enforcement and private industry. State police have said the bulletins included information taken out of context, some of the analysis was biased and their internal analysis concluded there was no threat to public safety.
Shale development slowing due to market prices - Preparing for a slump in natural gas prices, which nosedived in December, a Findlay Township-based shale development company has halted drilling new wells for five months in Butler and Armstrong counties. The company, PennEnergy Resources LLC, has braced itself for reduced profits, which it expected, and it is now waiting for prices to rise from a point that hasn’t been this low in more than two years. PennEnergy decided to halt drilling new wells around October, said Greg Muse, company president and chief operating officer. Reduced market prices mean hydraulic-fracturing companies are not fracking as many wells, water haulers have reduced runs, and lower revenues are translating to reduced payouts for leaseholders, said Matt Henderson, who recently worked for Pennsylvania State University’s Marcellus Center for Outreach and Research in State College. Henderson was helping with community education, oil and shale gas research and economic development, and he said several factors can curb those effects for leaseholders. Checks to property owners can take 60 to 90 days to be received, so the delay the drop in prices might take longer to affect them. For businesses, futures contracts can lock in prices, and companies can choke back on production so they aren’t hit as hard.
Pennsylvania’s New Governor Will Ban Fracking In State Parks And Forests -- Pennsylvania’s new Governor Tom Wolf will sign an executive order Thursday banning the practice of hydraulic fracturing, or fracking, in state parks and forests, the Associated Press reports. The order will reverse a policy implemented in 2014 by notoriously fracking-friendly former Gov. Tom Corbett, which opened up state parks and forests to the controversial well stimulation technique. Wolf — who was sworn in as governor less than two weeks ago — had promised in his campaign to reverse that decision. . According to NPR, approximately 385,400 acres of state land has already been leased to drillers, and another 290,000 acres where the state does not own the mineral rights are currently under development. The ban on fracking in state parks and forests is a huge deal for Pennsylvania, both for the pro-fracking crowd and environmentalists. Pennsylvania’s fracking boom has fueled its economy for years, but the state has also seen its fair share of environmental problems, including 243 cases of contaminated private drinking water wells across 22 counties. Because approximately two thirds of Pennsylvania’s state forests sit atop Marcellus Shale natural gas deposits, proponents saw opening up the land as an unprecedented economic opportunity, while opponents saw the potential destruction of some of the state’s most treasured natural beauty.
Wolf Gets Cake and Eats it Too - Via an executive order, Governor Tom Wolf issued an executive order #2015-03 which on first glance appears to stop all drilling on state lands and forests. To those who have broken out the champagne and are toasting the Governor’s actions you may want to put the cork back into the bottle and read the actual executive order. Executive Order 2015-03 – Leasing of State Forest and State Park Land for Oil and Gas Development There are two important items in the Executive order: The first is in the “whereas”: WHEREAS, DCNR has concluded that additional leasing of State Forest land or State Park land for oil and gas development would jeopardize DCNR’s ability to fulfill its legislative duty to conserve and maintain these public natural resources, and to sustain its FSC forest certification; Key Words: ADDITIONAL LEASING Wolf’s executive order does not apply to EXISTING DCNR leases only ADDITIONAL (i.e. future) leases. According to a DCNR powerpoint: Impacts of Leasing Additional State Forest for Natural Gas Development, approximately 700,000 acres of state forest land have been leased or severed. Severed lands are not available to leasing by DCNR, these are areas which are held by private owners who own the subsurface rights. See maps below.
Chevron Slashes 23% Of PA Workforce As US Rig Count Collapses To June 2010 Lows -- For the 8th week in a row (something that hasn't happened since June 2009), US total rig count plunged. This week's 90 rig drop to 1543 is the largest so far (with oil rigs down 94 to 1223 - lowest since Jan 2013). The total rig count is now down 20% in the last 8 weeks to the lowest since June 2010 as it tracks the 4-month lagged oil price perfectly. This is the 2nd biggest 8-week drop in 22 years. This - rather unsurprisingly - has led Chevron to decide to cut 23% of its Pennsylvania workforce "due to activity levels." Obviously for oil prices to eventutally stabilize, production will have to slow and rig counts plunge further.. and so will jobs...
The false promise of fracking and local jobs -- During the past five years, I’ve researched and written about the economic impacts of fracking and, as a long-time resident of New York, I have observed its fractious politics. What I’ve found is that most people, including politicians and people in the media, assume that fracking creates thousands of good jobs. But opening the door to fracking doesn’t lead to the across-the-board economic boon most people assume. We need to consider where oil and gas industry jobs are created and who benefits from the considerable investments that make shale development possible. A look at the job numbers gives us a much better idea of what kind of economic boost comes with fracking, how its economic benefits are distributed and why both can be easily misunderstood. Not a recession buster Pennsylvania is one of the centers of dispute over fracking job numbers. In Pennsylvania, the job numbers initially used by the media to describe the economic impact of fracking were predictions from models developed by oil and gas industry affiliates. For example, a Marcellus Shale Coalition press release in 2010 claimed: “The safe and steady development of clean-burning natural gas in Pennsylvania’s portion of the Marcellus Shale has the potential to create an additional 212,000 new jobs over the next 10 years on top of the thousands already being generated all across the Commonwealth.” These job projections spurred enthusiasm for fracking in Pennsylvania and gave many people the impression that oil and gas industry employment would lead Pennsylvania quickly out of the recession. That didn’t happen. Pennsylvania’s unemployment roughly tracked the national average throughout the state’s gas boom. While some counties benefited from the fracking build-up, which occurred during the “great recession,” the state economy didn’t perform appreciably better than the national economy.
Natural gas prices hit an all-time low -- Trailing a momentary price increase during November, natural gas has hit its lowest prices since September 2012, reflecting solid domestic production and inventory builds. According to the U.S. Energy Information Administration (EIA), “Prices remained elevated through the spring and early summer of 2014, but dropped as domestic production continued to set new records and inventory rebuilds remained strong.” This winter, the heating season started with below average temperatures in November. The national benchmark Henry Hub rose to the mid-$4/MMBtu range, which could have been due to supply concerns and the expectation of another freezing winter. The week ending on November 21, 2014, inventory levels dropped by 162 billion cubic feet (Bcf), “tying the largest weekly November withdrawal on record.” Since that week, smaller-than-average withdrawals for this winter have brought stock levels above where they were a year ago and closer to average levels from five years ago. Over recent weeks, natural gas prices have dropped to the lowest levels in over two years. Day-ahead Henry Hub prices fell to $2.97/MMBtu on December 23, 2014, which is the first time prices were below $3 in over two years. Since the end of December, spot and future prices have lingered around the $3 mark and on January 26th closed at $2.92 and $2.88. Reported by the EIA, “Preliminary data sources show increased natural gas production through early winter, with production rebounding quickly from freeze-offs in November and early January.”
Natural Gas Well Production Ranges Widely - - A single Antero Resources well in Tyler County produced 1.4 billion cubic feet of natural gas in 2013, while in Brooke County a well operated by Chesapeake Energy yielded only 111 million cubic feet. The "Timmy Minch" Chesapeake Energy well in Ohio County - from which the Wheeling Park Commission and city of Wheeling draw royalties - supplied 391 million cubic feet of gas, and it also pumped 36,099 barrels of oil in 2013, according to West Virginia Department of Environmental Protection information. Although there are now hundreds of Marcellus and Utica shale wells producing oil and natural gas throughout the Northern Panhandle, the amounts those wells yield - as well as the chemical makeup of their production - can differ significantly. "There are a lot of factors that go into it," said Tim Greene, owner of Land and Mineral Management of Appalachia and a former DEP Office of Oil and Gas inspector. "Are they producing it wide open? Is someone better at fracking than someone else? Is the geology of the shale different in certain areas?" When referring to "wide open," Greene means whether a driller is actively squeezing as much gas out of a single well as possible in as short a period of time as possible. Some companies do not do this because they want the well to produce over a longer period. Greene also said some companies may choose to shut down certain wells periodically if the selling prices for natural gas and oil drop too low for it to make economic sense. Multiple drillers are now slowing down operations amid oil priced at about $47 per barrel and natural gas at about $3 per 1,000-cubic-foot unit.
Companies bid millions to drill under state lands in W.Va. - — West Virginia officials have opened millions of dollars in bids to drill for oil and natural gas beneath state-owned lands, including waterways and a wildlife management area. In one of the biggest offers the state Department of Commerce opened Friday, Jay-Bee Production Company bid amounts ranging from $5,000 to about $16,300 to drill underneath 303 acres of Jug Wildlife Management Area in Tyler County, or about $4.5 million total. The leases for Marcellus and Utica shale mineral rights, which allow for hydraulic fracturing, commonly called fracking, are a new undertaking for the state. So far, only one lease agreement has been finalized — a $6.2 million deal letting Antero drill below 518 acres at the Conaway Run Wildlife Management Area in Tyler County, said Department of Commerce spokeswoman Chelsea Ruby.
Drillers bid millions for oil, gas beneath West Virginia public lands | TribLIVE: — West Virginia officials have opened millions of dollars in bids to drill for oil and natural gas beneath state-owned lands, including waterways and a wildlife management area. One of the biggest offers the state Department of Commerce opened Friday would let Antero Resources Inc. drill underneath 283 acres of Jug Wildlife Management Area in Tyler County for $2.3 million, plus royalties. The leases for Marcellus and Utica shale mineral rights, which allow for hydraulic fracturing, commonly called fracking, are a new undertaking for the state. Only one lease agreement has been finalized: a $6.2 million deal letting Antero drill below 518 acres at the Conaway Run Wildlife Management Area in Tyler County, said Department of Commerce spokeswoman Chelsea Ruby. On Friday, several other bids were submitted:
- • Jay-Bee Production Co. bid amounts ranging from $5,000 to about $16,300 per acre for various tracts of the Jug wildlife land.
- • Noble Energy offered about $685,000 total to drill beneath 134 acres of Fish Creek and adjacent land in Marshall County.
- • StatOil USA Onshore Properties Inc. bid $9,000 per acre to drill under a 2-mile section of the Ohio River in Wetzel County.
Pipeline Explodes In West Virginia, Sends Fireball Shooting Hundreds Of Feet In The Air- A gas pipeline in Brooke County, West Virginia exploded into a ball of flames on Monday morning, marking the fourth major mishap at a U.S. pipeline this month. No one was hurt in the explosion, but residents told the local WTRF 7 news station that they could see a massive fireball shooting hundreds of feet into the air. An emergency dispatcher reportedly told the Pittsburgh Tribune-Review that the flames had melted the siding off one home and damaged at least one power line. The gas pipeline is owned by Houston, Texas-based The Enterprise Products, L.P., which said Monday evening that it is investigating the cause of the explosion. The West Virginia explosion is the fourth in a string of news-making pipeline incidents this month. Earlier this month, a gas pipeline in Mississippi operated by GulfSouth Pipeline exploded, rattling residents’ windows and causing a smoke plume large enough to register on National Weather Service radar screens. On Jan. 17, a pipeline owned by Bridger Pipeline LLC in Montana spilled up to 50,000 gallons of crude oil into the Yellowstone River, a spill that left thousands of Montanans without drinkable tap water. Just a few days later, on Jan. 22, it was discovered that 3 million gallons of saltwater drilling waste had spilled from a North Dakota pipeline earlier in the month. That spill was widely deemed the state’s largest contaminant release into the environment since the North Dakota oil boom began. Here’s some footage of Monday’s explosion’s resulting fire, via WTRF 7:
Boom goes the pipeline, again - On Monday morning another gas pipeline exploded, marking the fourth extreme accident involving a U.S. pipeline just this month. The gas pipeline in Brooke County, West Virginia, is owned by Enterprise Products LP. Several eye witnesses stated all they could see was a massive fireball rocketing hundreds of feet in the air. One witness told emergency dispatchers that the explosion melted siding off of one home and damaged at least one power line. Enterprise Products is conducting an investigation to find the cause of the explosion. This explosion is the fourth pipeline incident that has made headlines this month. Earlier in the month, a gas pipeline in Mississippi operated by GulfSouth Pipeline burst into flames, causing a smoke plume so large it registered on National Weather Service radar screens. On January 17th, a pipeline owned by Bridger Pipeline LLC in Montana spilled an estimated 30,000 gallons of crude oil into the Yellowstone River. The spill left thousands of people living in Montana without consumable tap water. Days later, three million gallons of saltwater drilling waste spilled from a North Dakota pipeline. The spill was deemed North Dakota’s largest pollutant release into the environment since the beginning of the oil boom. Below is footage from the pipeline explosion in Brooke County:
Science, courage behind high-volume fracking ban: According to a statistical evaluation of the peer-reviewed literature by Physicians Scientists & Engineers for Healthy Energy, there were only six peer-reviewed papers on the effects of shale gas development in 2009 — the year that high-volume fracking first became an issue for many New Yorkers. Six more studies were published in 2010. Although anecdotal and media reports of negative effects were plentiful, the science lagged, as is often the case, especially when hindered by secrecy and non-disclosure agreements accompanying the oil and gas industry. By the beginning of 2012, when the state's three outside reviewers began their analyses, there were 44 peer-reviewed papers. By the time they finished, at the start of 2013, there were just over 100, and the signs of harm were piling up. Between the start of 2013 and the end of 2014, and before the outside reviewers wrote their series of letters, however, the science on high-volume fracking came down like an avalanche: Nearly 300 more peer-reviewed papers were published for a total of about 400. What do these peer-reviewed papers show? Overwhelmingly, they revealed risks and adverse effects, giving a fuller picture of the harm and making a strong case that high-volume fracking is not safe. On its own, the science is powerful. But what's so special in New York is the well-informed citizens' movement that had its ear to the track of the science, followed the emergence of the data, and helped carry its message to political leaders. The appetite of the citizenry for scientific knowledge was voracious; they wove this science into their tens of thousands of public comments and other communications with Albany.
Pipelines Prompt Discussion Of Property Rights Law -- Meanwhile, pipeline opponents and some property rights advocates have found common ground in the campaign to repeal or modify the 2004 law. They say pipeline companies should not have access to private property until granted the certificate from FERC that greenlights pipeline construction and the use of eminent domain. The constitutionality of the 2004 law is being challenged by legal action filed in federal and state court. The litigation notes that the Virginia Constitution was amended in 2012 to strengthen the private property rights of Virginians. The amendment holds that the General Assembly “shall pass no law whereby private property, the right to which is fundamental, shall be damaged or taken except for public use.” But the amendment also describes exceptions: “A public service company, public service corporation, or railroad exercises the power of eminent domain for public use when such exercise is for the authorized provision of utility, common carrier, or railroad services.” The office of Attorney General Mark Herring filed a response this week to the federal lawsuit challenging the law. The response contends the law is not unconstitutional. Atlantic Coast Pipeline has asked state courts to support the company’s right to enter private property for surveying without an owner’s consent. A related motion states that if Atlantic Coast Pipeline “is unable to immediately enter the property … timely construction of the project will be jeopardized and the public interest in expanding natural gas transmission capabilities will be negatively affected.”
Keep toxic byproducts out of state - -- One of the most significant problems of fracking is disposal of the flowback fluids. Since millions of gallons of water mixed with chemicals are needed per well, and since a portion of this mixture is returned to the surface along with the natural gas, there is the issue of where and how to dispose of these fluids. Pennsylvania's contaminated water produced in a year exceeds the current supply of its disposal sites, which means sites outside of the state must be found. Much of Pennsylvania's contaminated water is trucked to injection wells in neighboring Ohio. However, Ohio is at capacity to handle wastewater from Pennsylvania, so disposal of toxic waste from Pennsylvania is transported via barges on the Mississippi River to sites in Gulf Coast states. Meanwhile, tailings and toxic sludge byproducts from Pennsylvania are being transported to upstate New York. The environmental group Riverkeeper, through the Freedom of Information Act, discovered that six landfills in western New York are accepting hazardous waste from Pennsylvania's fracking operations. Riverkeeper also found at least 29 municipalities in seven counties in western New York have been authorized by the state to use toxic fracking brine on local roads. The implications could be significant for these upstate municipalities, most of whom rely on tourism, wine production, and recreation. What is the logic in permitting Pennsylvania's toxic byproducts to cross the border? What safeguards are in place to ensure the health and safety of the local population and the environment?
Russkis Back Pseudo Fractavists ? - In an ill-advised attempt to stop fracking. Still groping for ways to rationalize New York’s frack ban, a right wing blog, ““The Washington Free Beacon”, which is indeed free, but not such a beacon, reports that five US environmental NGOs have received donations from a charitable foundation that may or may not have received funds, indirectly, from Russian oil companies, maybe. Or at least those are the allegations. Other than be factually incorrect on some major points, the problem with this story is that it seeks to tie the anti-fracking movement to the Kremlin, which is not how the grass roots anti-fracking movement evolved. And, more glaringly, it purports to trace the money to four US NGOs that were either pro-fracking or actively promoted “safe fracking.” Only one of the five groups supposedly funded by the Russians has been consistently anti-fracking. Two of the groups helped crater the local control initiative in Colorado last year. One of the groups has Ed Cox on its board. I kid you not. If the Russians wanted to stop fracking in the US, they backed the wrong horses. They’d be better off sending the money to me. Let’s talk Ivan. Make me a fracking offer I can’t refuse. Preferably in dollars or Swiss francs, not rubles. These conspiracy theories do not not make much economic sense. Most of the fracking done in the US has been for gas. High cost US fracked gas is not an economically viable threat to Russia or the Mideast on selling gas to Europe or China. The way competing oil exporting countries compete for market share is by doing the limbo on pricing – with the lowest cost producers keeping market share. High cost fracked shale oil cannot compete with conventional lower cost resources.
New England Growing More Dependent On Natural Gas - New England may avoid a spike in natural gas prices this winter, but the region is becoming increasingly dependent on the fuel, ensuring that price spikes in future years are not out of the question.A year ago, the polar vortex brought several bouts of low temperatures and heavy snow to the northeast, causing demand for heating and electricity to jump. Temporary shortages in natural gas flows due to pipeline constraints led spot prices to shoot up. Prices at Algonquin Citygate, a marker for the Boston area, hit an all-time high of $77.595 per million Btu (MMBtu) on January 23, 2014. Thus far, this winter has been milder, and record levels of natural gas production in 2014 have restored inventories, lowering the chance of a repeat in price spikes.And in the short-term at least, there is another reason that New England likely won’t see the dramatic price spikes this winter: more imported liquefied natural gas (LNG). LNG prices are correlated with the price of oil, so the collapse in oil prices have pushed down LNG prices as well. This has made LNG imports much more attractive for the eastern seaboard. In the first three weeks of 2015, two LNG terminals in New England along with the Cove Point terminal in Maryland have together imported more than three and a half times the volume of LNG that was imported during the same period a year ago.
Illinois misses the fracking boom because of falling oil prices - Lyle Weber paid off a sizable chunk of his son’s college loan three years ago with money he got from an oil company intending to drill on his farmland. Weber and thousands of downstate landowners are now watching as those leases begin to expire with dwindling hopes they’ll be renewed. Low oil prices have accomplished in Illinois what environmentalists couldn’t. Horizontal hydraulic fracturing, a controversial method of drilling for oil trapped in shale rock, has been halted even before it began. Officials at the state Department of Natural Resources say not a single company has applied for a fracking permit. That’s because oil prices have tanked. Oil was fetching about $100 a barrel in the U.S. when then-Gov. Pat Quinn signed a law in June 2013 to regulate fracking. By the time the permitting process was in place in November 2014, oil prices were dropping rapidly, ironically a byproduct of fracking’s success in the U.S. Today oil is selling for under $50 a barrel, half of what it was priced at when Illinois dreamed of an oil boom that would help solve its budgetary woes and bring much-needed jobs and revenues to the southern part of the state. Seth Whitehead, Illinois field director for Energy in Depth, a public relations arm of the Independent Petroleum Association of America, said Illinois would have fared better had some fracking wells been drilled. “The shale play is unproven,” Whitehead said, referring to a geological formation that contains oil or natural gas deposits. “If there were wells in production by now, we’d be in much better shape. There’s no doubt about it.” Illinois’ timing couldn’t have been worse. “They finally got the rules passed, and it was days later that the price of oil started falling,” Whitehead said.
Fracking Fraud: Bogus Production Numbers Scam Investors - According to a report from Bloomberg’s Bradley Olson, several studies have found that the results of one-day production tests on shale oil wells were not indicative of how they would perform over 12 months.Investors rely on these test results, which have little or no regulation, as an indication of future performance, and share prices have surged on these results in the past.Here’s what researchers said about them, via Olson: Some producers open flow valves full blast for the tests, an action not generally used in regular production, they said. Others install pumps to create artificial pressure, or measure just the first eight hours of flow, then multiply that by three to represent a full-day’s output. Allen Gilmer, CEO of the research firm Drillinginfo, told Olson: ” It’s hyperbole. There is no relationship between those test numbers and what can be economically delivered on a sustained basis.”A report from Drillinginfo said a better measure would be a month-long test of a well. But producers aren’t willing to wait longer than a day because they often don’t have the infrastructure to go to such lengths.These test results are used to attract the funding they need for more pipelines.For example, Olson noted, shares of Range Resources spiked after a one-day test showed that it could supply gas to 1,000 homes for a year.One Drillinginfo report said that at South Texas’ Eagle Ford shale fields, the 24-hour results did not have a statistically significant relationship to production over a full year.
House votes to speed natural gas pipelines - The House passed legislation on Wednesday to expedite the federal review process for natural gas pipeline applications. Passed 253-169, the bill would allow automatic approval of natural gas pipelines if federal agencies don't act within a certain timeframe. Under the measure, the Federal Energy Regulatory Commission (FERC) would be ordered to approve or deny a pipeline application within 12 months. Agencies responsible for issuing licenses or permits must act within 90 days after FERC issues a final environmental review, though the deadline could be extended by 30 days if the agency demonstrates it can't finish in time. But if the agency doesn't make a decision by then, a pipeline would automatically be approved.
Dominion Pipeline Opponents Rally At Capitol – Environmentalists and western Virginia property owners rallied Friday at the state Capitol in opposition to a proposed 550-mile natural gas pipeline. Richmond-based Dominion Resources is partnering with other utilities to build the $5 billion Atlantic Coast Pipeline, which would cross the Blue Ridge Mountains to deliver gas from Pennsylvania, Ohio and West Virginia. Environmentalists say the project would contribute to global warming because of the extraction method, known as hydraulic fracturing, or “fracking,” used to get the gas out of the ground. Calling climate change an “immense environmental crisis,” Kirk Bowers of the Sierra Club said the project would worsen sea-level rise and flooding in Hampton Roads. Property owners whose land would be crossed by the pipeline say the utilities are trampling on their property rights. Joanna Salidis of Nelson County, a landowner in the pipeline’s path, decried what she called Dominion’s “bullying” tactics.
Coastal Community Fights The Fracking Plan Threatening Its Sole Drinking Water Source -- Since its founding as a Native American trading village, Abita Springs has staked its reputation on its clean air and pure waters. Princess Abita of the Choctaw tribe, as the local legend goes, was wasting away in filthy New Orleans in the 1780s until she traveled north and drank from the healing spring that gave the town its name. A few hundred years later, Abita Brewery set up shop in town because of the “pristine” aquifer water it now uses in its internationally popular beers. “The safe, clean environment has always been very, very important to Abita Springs,” said the town’s mayor Greg Lemons. “The quality of life is high here.” But now, residents fear that pristine aquifer, the sole source of drinking water for miles, could be under threat of contamination as a fossil fuel company eyes the oil and gas deposits below. In December, over the objections of Mayor Lemons and many parish residents, Louisiana’s Department of Natural Resources approved a permit for the corporation Helis Oil & Gas to drill an exploratory well two and a half miles deep in the wooded wetlands just outside Abita Springs. If they find the fossil fuels they’re looking for, the company plans to extract it through the controversial process of hydraulic fracturing, known commonly as fracking.
U.S. oil well shut-ins start as crude rout batters small producers - Collapsing crude prices are confronting scores of smaller U.S. oil producers with the grim choice of either shutting older high-cost wells or burning through cash in the hope of riding out the downturn. As oil prices fell by more than half over the last six months from more than $100 per barrel, the U.S. oil industry responded by slowing its blistering growth and dialing back expansion plans. Now, with U.S. crude around $46 a barrel, operators are already closing some small old wells, known as strippers, and tens of thousands of similar wells are on the verge of losing money. A further slide could, by some estimates, idle an equivalent of up to 2 percent of U.S. supply, slowing overall output growth more than expected or even leaving it flat. Ray Lasseigne, an oilfield veteran and president of TMR Exploration Inc in Louisiana, is deciding which wells to close. TMR looks to close old wells, which produce so much saltwater that disposal costs exceed what the oil can fetch today. Other running costs include repairs and electricity to run the pump jacks, also known as nodding donkeys because they bob up and down while pulling oil out of the ground. “We’ve identified about 20 of our wells that are not economic at these prices,”
Earthquakes Rattle Texas Town: Is Fracking to Blame? - January has been a shaky month for Irving, Texas. Twelve earthquakes rattled the city during a 48-hour period at the end of the first week of the new year. “It was very scary. I was at my job on the 4th floor in a cubicle surrounded by glass,” . “One quake seemed like it lasted five minutes. No one knew what to do.”The earthquake swarm shows no sign of stopping. On Jan. 21, five more quakes struck. The quakes are relatively small, all of them registering under 4 on the Richter Scale. None has caused significant damage to property or resulted in bodily harm—but that hasn’t stopped people from worrying about their personal safety and property. A Dallas suburb, Irving sits atop the Barnett Shale, a geologic formation rich in natural gas. Seismic activity is not something the region is known for, and the fact that the earthquakes are now in the news has many fearing their home values will drop. Residents want to know what is causing the quakes, the likelihood they may increase in size and if anything can be done to stop them. A public meeting held Jan. 21 by city officials to address the earthquakes and other issues overflowed the 250-person capacity of the Irving Arts Center.“Everywhere they’re fracking they have earthquakes,” someone in the audience yelled out, according to the Dallas Morning News.
Kansas Geological Survey Suspects Quakes Caused By Oil, Gas Practices - Officials with the Kansas Geological Survey told legislators Monday they suspect recent earthquakes were caused by oil and gas production practices. Rex Buchanan, interim director of the Kansas Geological Survey, said a byproduct of the drilling process that is disposed of in wells could be increasing seismic activity in the state. “The scientific and regulatory community is focused on salt water from these disposal wells as a possible cause of the seismicity,” he said. Buchanan said his agency has discussed the increase with the U.S. Geological Survey and academics, and information points toward a correlation between the tremors and the increased use of saltwater injection from drilling. Rep. John Carmichael, a Democrat from Wichita, had asked Buchanan about a “reasonable probability” connecting quakes and the use of saltwater injection. Injection wells are used to force wastewater produced by oil and gas extraction back into the earth. Injection wells differ from hydraulic fracturing, also known as fracking, which fractures rock to extract oil and gas. “We need to differentiate between hydraulic fracturing, a well completion technique, and saltwater disposal, a production technique,” Buchanan said.
Let's Shake, Rattle And Roll With These Earthquakes | KMUW: Woo hoo! Roll over, Beethoven! Tell Tchaikovsky the news! Rock and roll is here to stay! And by “rock and roll,” I mean earthquakes. Kansas Geological Survey representatives recently testified at a legislative hearing. They said it’s not the fracking, it's the reinjecting of salty wastewater from the oil and gas drilling process into the earth. In other words, it’s not the frack, it’s the brack--brackish water injection. Hooray! Fracking’s not the problem! It’s wastewater injection, that’s all. Yes, it has to do with the increase in oil and gas drilling that fracking has brought about. That’s because more drilling means more wastewater to be injected. But, let’s not connect those dots. Let’s just think about the dotted lines on which we sign away drilling rights. And let’s not connect any dots between Kansas’ dwindling Ogallala aquifer and wastewater injection into the earth. Hey – it’s hard to draw straight lines connecting dots when the earth you’re standing on is shaking so much. Let’s just roll with it! I paid $1.69 a gallon to fill up yesterday! Sure, it took me a while to get the pump nozzle into my gas tank, the tremors shaking things like they were. But, hey! $1.69!
Oklahoma worries over swarm of earthquakes and connection to oil industry – The earthquakes come nearly every day now, cracking drywall, popping floor tiles and rattling kitchen cabinets. On Monday, three quakes hit this historic land-rush town in 24 hours, booming and rumbling like the end of the world. “After a while, you can’t even tell what’s a pre-shock or an after-shock. The ground just keeps moving,” said Jason Murphey, 37, a Web developer who represents Guthrie in the state legislature. “People are so frustrated and scared. They want to know the state is doing something.”What to do about the plague of earthquakes is, however, very much an open question in Oklahoma. Last year, 567 quakes of at least 3.0 magnitude rocked a swath of counties from the state capital to the Kansas line, alarming a populace long accustomed to fewer than two quakes a year. Scientists implicated the oil and gas industry — in particular, the deep wastewater disposal wells that have been linked to a dramatic increase in seismic activity across the central United States. But in a state founded on oil wealth, officials have been reluctant to crack down on an industry that accounts for a third of the economy and one in five jobs. With seismologists warning that the spreading earthquake swarms could trigger something far bigger and potentially deadly, pressure is building to follow the lead of other oil and gas-producing states and take more aggressive action. “The question is: Is it all about profits, or do the people have any rights at all?” said Robert Freeman, 69, a retired Air Force contracting officer who is trying to rally his neighbors in Guthrie to demand a moratorium on new disposal wells. “I understand the oil and gas industry is the economic lifeblood of the state. I get some of my paycheck from the oil and gas industry,” added Lisa Griggs, 56, a Guthrie environmental consultant. “But they don’t get to destroy my house.”
Court Will Decide If Fracking Companies Can Be Held Responsible For Earthquakes - Oklahoma’s highest court is about to make a decision that could really shake up the way fracking companies do business in the state. In the coming months, Oklahoma’s Supreme Court will decide whether two oil companies should be held financially responsible for injuries suffered by a woman during a 2011 earthquake thought to have been caused by drilling activity. If the woman’s lawsuit is successful, it could set a legal precedent for future earthquake claims against oil and gas companies in Oklahoma. In other words, oil and gas wells in Oklahoma would “become economic and legal-liability pariahs,” attorney Robert Gum said in comments reported by the Tulsa World. The lawsuit in question was brought by Sandra Ladra, a woman who lives in a small town called Prague. Ladra claims that on Nov. 5, 2011, she was sitting at home watching television with her family when a 5.6 magnitude intraplate earthquake struck, causing big chunks of rock to fall from her fireplace and chimney. Some of the rocks fell onto Ladra’s legs and into her lap, causing what the lawsuit describes as “significant injury.” Ladra was taken to the emergency room and treated. Then, two years later in March 2013, scientists from the University of Oklahoma, Columbia University, and the U.S. Geological Survey published a peer-reviewed study in the journal Geology, linking the 2011 earthquake to a process called wastewater injection. During that process, companies take the leftover water used to drill wells and inject it deep into the ground.
Oklahoma Court to Decide Whether Fracking Companies Are to Blame for Spate of Earthquakes -- The Oklahoma Supreme Court is set to make a decision that could, for the first time, legally acknowledge that the oil and gas industry may have something to do with the swarm of earthquakes the state has experienced in recent years, the Tulsa World reports. The case, brought by Prague, Oklahoma resident Sandra Ladra, centers around a 5.7 magnitude earthquake, the strongest ever recorded in the state, that struck the region on November 5, 2011 amid a series of similar quakes, destroying 13 homes. The quake caused pieces of rock to fall from Ladra’s fireplace and chimney onto her legs and lap. She was treated for injuries in an emergency room. Two years later, a peer-reviewed paper in the scientific journal Geology concluded that the quakes were induced by three injection wells in the vicinity, which perform a step in the fracking process—the disposal of vast volumes of salty, chemical-laced wastewater by injecting it deep into the ground.If the court sides with Ladra, the disposal wells in Oklahoma could “become economic and legal-liability pariahs,” attorney Robert Gum, who is representing one of the oil companies named as a defendant in the suit, said to a lower court in comments reported by the Tulsa World. A second oil company, Spess Oil Co., is also named as a defendant. Both have asserted that their activities did not trigger the quakes.
Fracking causing environmental concerns of seismic proportions -- Environmental activists have been dealt a pretty decent hand when it comes to betting against fracking–and as of late–that hand has . Recently, reports of fracking-related earthquakes are popping up in the news nearly as frequent as job cuts in the oil industry. States like Kansas, Oklahoma, Colorado and Ohio have all reported multiple earthquakes recently. A study released earlier this month by the Bulletin of the Seismological Society of America linked nearly 80 earthquakes in Mahoning County, Ohio in March 2014 to nearby fracking operations. Researchers said that the earthquakes were caused when companies fracked into a previously unknown fault. As recently as Monday, geologists in Kansas went to the House Energy and Environment Committee to ask for more funding to investigate an unprecedented spike in earthquakes in the state. Take a look at the map below. The dots on the map show reported earthquakes within the past month. As you can see, most earthquakes are occurring in northern Oklahoma and southern Kansas, 215—according to the USGS—to be exact. While that may seem like a ton of earthquakes to occur in one month, only one-third of them registered a magnitude of 3.0 or higher. Now take a look at this map below. The red lines represent fault lines throughout the United States. As you can see, red is raiding the western-half of the country, but nearly none appears in the Midwest or east coast. A lot of people believe that for a fracking-related earthquake to occur, the given area must be near a fault line. Well, as you can see from this map, that is clearly not the case.
Colorado lawmakers gear up for battle over fracking - — Colorado Republicans are proposing to compensate mineral owners when a local government bans or restricts fracking. The GOP’s approach has bothered Democrats who argue lawmakers should wait for recommendations from a task force studying how to resolve land-use disputes among homeowners, local governments, and energy companies. Regulations over fracking, or hydraulic fracturing, are expected to be one of the most divisive issues state lawmakers take up this year. Recommendations from the task force are due in late February. But Republicans already have two pending proposals to counter any fracking restrictions. A bill in the House would require local governments that ban fracking to compensate mineral owners. A bill in the Senate would also compensate mineral owners if fracking restrictions are imposed.
Energy Transfer Partners to bail out sister company with new deal - - Dallas-based Energy Transfer Partners announced Monday that it would buy its sister company Regency Energy Partners for $11.2 billion, including nearly $6.8 billion in debt, according to FuelFix. The purchase will make Energy Transfer Partners the second largest master limited partnership (MLP), the company said. CEO of Regency Mike Bradley said in a statement: “In light of the current volatility in commodity prices and the changes in the capital markets, it became apparent over the last several months that Regency needed more scale and diversification, along with an investment grade balance sheet, to continue its growth.” The potential deal would be a cash-and-stock deal, with both companies being controlled by parent company Energy Transfer Equity, L.P. Unitholders of Regency will receive 0.4066 Energy Transfer Partners common units and a cash payment of $.032 for a total price of $26.89 per unit, based on Energy Transfer Partners’ closing price on January 23. The price is a 15 percent premium to the average price of Regency’s common units for the past three trading days ending January 23, the company said. The deal will also restructure the amount of cash Energy Transfer partners is required to pass along to its parent company, Energy Transfer equity, by a total of $320 million over a five-year period. Energy Transfer owns and operates approximately 71,000 miles of pipelines, which is combined across several companies.
Fracking paused on gas wells in Western Colorado - The largest natural gas developer in Colorado has instituted a fracking freeze in the Piceance Basin of Western Colorado in response to dropping prices for natural gas and oil. WPX Energy announced in a blog postthis week that it will "pause" the completion process for about 20 wells that have been drilled in the Piceance Basin. That means the wells will sit idle for the time being and won't undergo the hydraulic fracturing needed to release gas from underground formations."We are looking at ways to save on costs," said WPX spokesman Jeff Kirtland. WPX employs 380 people in Colorado; the company hasn't announced any layoffs at this time. The stop to fracking is expected to have more of an employment effect on contractors and service companies that are involved in that portion of the well development process. Halliburton and other large oilfield service providers, Schlumberger NV and Baker Hughes, provide those fracking-related services. Those companies announced this week that they are laying off thousands of workers, but the companies have not specified where those layoffs will take place.
Oil and gas spill report for Jan. 19 - The following spills were reported to the Colorado Oil and Gas Conservation Commission in the past two weeks. Noble Energy Inc, reported on Jan. 14 that during a pressure test on a flow line outside of Kersey, it was determined that there was a loss of pressure and a leak. It is approximated that less than five barrels of condensate and less than five barrels of produced water spilled. The impacted area was uncovered, and soil that exceeded compliance with COGCC standards was found. Bonanza Creek Energy Operating Company LLC, reported on Jan. 13 that a Bonanza Creek contractor struck a well head, resulting in a leak from the wellhead piping that spilled approximately 10 barrels of oil and six barrels of water outside of Kersey. An emergency response crew arrived to stop the leak. A clean up of the soil and snow was initiated by a clean up crew. Carrizo Niobrara LLC, reported on Jan. 9 that at about 8 p.m. Jan. 8 a partially cracked valve on a gas buster released an estimated amount of five barrels of E&P waste spill outside of Grover. The spill was released within containment. Cleanup efforts ensued. Bill Barrett Corp., reported on Jan. 8 that crew from Eastern Colorado Well Service Co. cracked a pipe nipple on a well head in the process of removing a base beam outside of Gill. The beam struck the nipple creating a crack that released approximately three barrels of oil, which sprayed onto the location in a mist. It is estimated that the oil mist covered an area of 300 feet long by 100 feet wide. The heaviest mist was approximated to be within a 150-foot area from the wellhead. . The well was depressured and the broken nipple was replaced. Noble Energy Inc., reported on Jan. 3 that a load line for a water tank froze and split outside of Briggsdale. The line released approximately 19 barrels of produced water spill inside of containment.
Wyoming to Strengthen Fracking Chemical Disclosure in Response to Citizen Pressure: Under a settlement agreement approved late Friday, the Wyoming Oil & Gas Conservation Commission must adopt more rigorous policies for scrutinizing industry requests to keep the identities of fracking chemicals secret. The Oil & Gas Commission must require substantially greater factual support for oil and gas industry claims that the identities of fracking chemicals used in Wyoming qualify as trade secrets or confidential commercial information and are therefore exempt from state public disclosure requirements. The settlement is the result of a public-interest lawsuit challenging state regulators’ decisions to withhold the identities of dozens of fracking chemicals from the public, despite evidence that many fracking chemicals cause serious health conditions and have the potential to contaminate soil and drinking water. Earthjustice represented the Powder River Basin Resource Council, Wyoming Outdoor Council, Earthworks, and the Center for Effective Government in bringing the lawsuit and negotiating the settlement with the Oil & Gas Commission and Halliburton Energy Services, Inc., which intervened in the case to represent industry interests. “The family that looks out their kitchen window and sees a drilling rig shouldn’t be left in the dark about what chemicals are being pumped into the ground under their home,” said Katherine O’Brien, Earthjustice attorney. “The reforms required by today’s settlement will ensure that oil and gas companies don’t get a free pass from public disclosure laws in Wyoming.”
Wyoming, Halliburton agree to greater fracking disclosure: A settlement reached by environmental groups, Wyoming regulators and the oil services giant Halliburton means it will be harder for companies to withhold information from the public about the chemicals used in fracking. The deal, announced Monday, represented a win for environmental groups, who have for years sought greater transparency surrounding the use of chemicals used to break open oil and gas bearing rock. They hailed the agreement as a "groundbreaking reform," saying it will provide more information to the public about potentially harmful chemicals being used on frack jobs near homes, schools and businesses. But they said more work remains and the focus will now be on the state to implement the terms of the deal. Under the agreement, the Wyoming Oil and Gas Conservation Commission will be required to implement a review process that effectively makes it more difficult for a company to claim fracking chemicals are exempt from public information requests. The burden of proof will be on firms to show a chemical qualifies as a trade secret, a legal designation afforded to companies in order to protect valuable technology from competitors. And it requires firms resubmit applications for 128 chemicals, which had previously been granted trade secret status by the state and challenged in court by environmentalists. Halliburton, which intervened in the case on Wyoming's behalf and helped negotiate the settlement, will resubmit applications covering 24 chemicals. Now it is up to the Oil and Gas Conservation Commission to effectively implement the agreement.
Deal requires Wyoming fracking trade-secret justification - — A legal settlement will require petroleum companies to provide justification when they ask Wyoming regulators to withhold from the public details about the chemical products they pump underground.Last year, the Wyoming Supreme Court sided with a landowners group and against Wyoming regulators in a lawsuit that sought public disclosure of the ingredients in those products.A state district court judge approved a settlement Friday that requires companies to provide detailed justification when they claim the ingredients are trade secrets.At issue are chemicals used in hydraulic fracturing, the process of pumping water mixed with sand and chemical products into wells to crack open oil and gas deposits.Tom Kropatsch with the Wyoming Oil and Gas Conservation Commission says the settlement will allow the agency to process backlogged trade-secret requests.
Massive oil drilling project in Carson is dropped - — A California firm has dropped plans to launch a massive oil drilling project in the Los Angeles County city of Carson. California Resources Corp. said in a statement Monday that the proposed project “is no longer practical in the current commodity price environment.” Oil prices have plunged in recent months. The decision was hailed by environmental activists and residents who had fought the project for years. City Attorney Sunny Soltani tells the Los Angeles Times that Carson staff will immediately stop work on the project’s application and pending environmental review. The firm, which was spun off from Occidental Petroleum last month, had planned to bore more than 200 wells to extract more oil from the Dominguez Oil Field. The field has produced more than 270 million barrels of oil since its discovery in 1923.
Layoffs in the Bakken and a shifting economy -- As the oil price slump persists consumers are reaping the benefits of lower fuel costs. Towns like Williston, however, with economies structured around the oil and gas industry, are beginning to see the effects of the nation-wide drilling slowdown. A recent report from CNN Money examines how the slowdown is beginning to affect workers in the Bakken oil formation of Montana and North Dakota. Across the nation, oil and gas companies have been announcing layoffs. Schlumberger, the world’s largest oilfield services company, reported that it would cut 9,000 jobs companywide. Earlier this week, Baker Hughes announced the layoffs of about 7,000 employees by the end of March. The rig count in North Dakota has dropped significantly within the past month and has reached the lowest level in five years. As of today, the rig count is 157 compared to 189 the same time last year. CNN reports that CEO of MBI Energy Services Jim Arthaud said, “My prediction is we’re down to 50 rigs by June.” Though, he didn’t express much concern about the effects it would have on his company. The firm repairs area oil field equipment, works to increase well flow and transports oil from the fields to adjacent rail hubs. Arthaud, who grew up in North Dakota, plans to use the layoffs from other companies as an opportunity to hire additional employees. The Belfield-based company currently employs roughly 2,000 people. The effects of the drilling slowdown will likely have a large impact on the region if low oil prices persist, however. Arthaud commented, “I’d say we’ll lose 20,000 jobs by June.” Despite the current slowdown, other residents don’t seem as concerned. While the drilling slowdown may lead to layoffs in the oil and gas sector, the region continues to sustain its population and retains the need for infrastructure related to the industry.
North Dakota oil rigs drop points to U.S. output decline after May: Kemp – The decline in oil drilling that has occurred so far across the United States is probably enough to ensure U.S. production peaks by April or May, though that might not be evident until June or July given delays in publishing production records. In North Dakota, the number of rigs drilling for oil has fallen by almost a quarter in less than four months, according to oil field services company Baker Hughes. Baker Hughes puts the number of active drilling rigs in the state at just 147 last week, down from 189 at the beginning of October, and the lowest number since December 2010. Baker Hughes counts rigs as active only when they are actually drilling – from the time the rig breaks ground and the well is spudded to the time the rig reaches target depth. The company excludes rigs in transit, moving in and rigging up, or engaged in non-drilling activities such as production testing. North Dakota’s Department of Mineral Resources (DMR), which uses a slightly broader definition, puts the count higher at 157 but shows a similar decline over the last three months. Moreover, of the 157 rigs included in the department’s active list, 27 are recorded working on projects that began in 2014; it remains unclear whether they will be deployed on new wells.Many rigs are being stacked. DMR records shows at least four of the 157 active rigs are due to be stacked once their current well is completed rather move to another job. Rigs are said to be “cold stacked” when they are released from contract or stopped and the crew is normally laid off. Warm stacking refers to taking a rig off the market temporarily, in the hope of obtaining a better rate in future, and basic operations and staffing are normally maintained
North Dakota: oil producers aim to cut radioactive waste bills -- North Dakota’s oil industry is pushing to change the state’s radioactive waste disposal laws as part of a broad effort to conserve cash as oil prices tumble. The waste, which becomes slightly radioactive as part of the hydraulic fracturing process that churns up isotopes locked underground, must be trucked out of state. That’s because rules prohibit North Dakota landfills from accepting anything but miniscule amounts of radiation. The most common form of radioactive waste is a filter sock, a mesh tube resembling a sandbag through which fracking water is pumped before it’s injected back into the earth. Tank and pipeline sludge are also radioactive. It’s not clear how much of this waste is generated, as North Dakota officials only began requiring tracking last year; final 2014 reports aren’t due until next month. Some put the number at 70 tons per day; others say 27 tons. Given that, estimates on potential savings aren’t precise. But the oil industry says allowing North Dakota‘s landfills to accept more radioactive material could save at least $10,000 in transportation costs per truckload. There are 11,942 active wells in the state, so assuming each well generates at least one 15-cubic yard Dumpster’s worth of radioactive waste each year – a conservative estimate, state officials say – that translates to an annual savings of about $120 million statewide.
OSHA investigating Bakken oil patch death - The North Dakota oil patch has lost another oil and gas worker, according to The Bismarck Tribune.An employee for C&D Oilfield Services who has not been identified was found dead on January 15 on the catwalk of an oil well tank battery, says Occupational Safety and Health Administration (OSHA) Area Director Eric Brooks. OSHA is currently investigating the incident.The Tribune reports that the worker was gauging the tank setup at a well site operated by Denbury Resources, located between Dickinson and Manning, North Dakota. The cause of death is being investigated by the State Medical Examiner’s office. According to Brooks, incidents like these are generally thought to be caused by exposure to lethal amounts of volatile organic compounds that emanate from the stored oil. Toxic organic compounds such as hydrogen sulfur gas are usually to blame, but it doesn’t appear to the cause of death in this event. Also under continued investigation by Brooks and fellow staff members is the January 14 death of the owner of Watford City-based Legendary Field Services, Wes Herrman. He died as a result of burn injuries sustained after a fire erupted on a heating and treatment unit at a QEP Resources well site located outside Mandaree.
Bakken: 2015 is off to a deadly start - The Occupational Safety and Health Administration (OSHA) is reporting that North Dakota has seen as many oil and gas related deaths this year as the entirety of last year. The figures for 2015 date back to October 1. KX News reports that OSHA tracks the data from October 1 of one year to September 30 of the next. The last few weeks have been especially dangerous according to OSHA Area Director Eric Brooks. Four of the five fatal accidents reported for 2015 have occurred during the first few weeks of January. The deaths are currently being investigated. This is of great concern, he says, because of a possible link between the shifting economy and the safety of work places, according to KX News. “I’m starting to get a little concerned. The drop in oil prices, are they causing companies to maybe try to protect their probability by hiring a contractor that’s not as experienced in this particular industry? Some of the things we’ve seen in the last couple of weeks are things we hadn’t seen in about three years,” Brooks said. According to Brooks, fatalities in the oil and gas industry are generally caused by flammable vapors, being struck by equipment, falls and electrical accidents. Since October 1, OSHA has reported eight work related deaths, five of which were related to oil and gas development. For the 2014 period, OSHA reported 18 work related deaths, five of which were related to oil and gas.
Barriers set up, water being testing at North Dakota site of 3 million-gallon saltwater spill - — Earthen barriers have been set up across a creek and water was being tested Thursday around the site of a nearly 3 million-gallon leak of saltwater generated by oil drilling, the largest spill of its kind during North Dakota's current oil rush. The berms were built at Blacktail Creek to prevent potentially contaminated water from flowing out of the creek and into a bigger body of water that eventually leads into the Missouri River. "So when the ice starts to melt if there's any oil or contaminated water, they can contain it and pump that out before it goes downstream," said Dave Glatt, chief of the North Dakota Department of Health's environmental health section. Pipeline operator Summit Midstream Partners LLC and state inspectors will keep testing the soil and water at the Blacktail Creek and larger Little Muddy Creek until after the ice melts this spring, Glatt said. Saltwater, known as brine, is an unwanted byproduct of oil and natural gas production that is much saltier than sea water and may also contain petroleum and residue from hydraulic fracturing operations. Some previous saltwater spills have taken years to clean up. The spill was detected Jan. 6 during a periodic inspection by the company, which said Thursday the cause of the rupture in the pipeline and when exactly it happened is still unknown. The portion of the pipeline that ruptured has been sent to a laboratory to be analyzed, and Summit Midstream said crews are probing the soils and water close to the rupture to determine the ultimate cause and extent.
EPA: 4M gallons pumped from North Dakota saltwater spill - More than 4 million gallons of a mixture of fresh water, brine and oil have been pumped from the area affected by the largest saltwater spill of North Dakota’s current energy boom, according to a report issued Monday by the Environmental Protection Agency. The report provides an overall assessment on the nearly 3 million-gallon spill of saltwater generated by oil drilling that leaked from a ruptured pipeline that operator Summit Midstream Partners LLC detected on Jan. 6. It remains unclear exactly when the spill occurred and what caused it.The spill happened in Marmon, about 15 miles north of Williston, and primarily contaminated the Blacktail Creek. Saltwater also reached the bigger Little Muddy River and the Missouri River. Saltwater, known as brine, is an unwanted byproduct of oil and natural gas production that is much saltier than sea water and may also contain petroleum and residue from hydraulic fracturing operations. Some previous saltwater spills have taken years to clean up.The EPA’s report also states that underflow dams — which allow clean water to flow freely underneath and can contain materials that float on the water’s surface — are being built in case water levels rise. The mixture of fresh water, brine and oil that has been pumped from several locations along Blacktail Creek is being transported to a well site to be injected underground. Saltwater is usually pumped underground for permanent storage from a network of pipelines that extends to hundreds of disposal wells in the western part of the state.
Pipeline not state-inspected before 3M-gallon saltwater leak - A pipeline that ruptured recently in North Dakota and spilled nearly 3 million gallons of saltwater produced during oil drilling wasn't inspected by the state before being installed, according to state regulators. Alison Ritter, a spokeswoman for the North Dakota Industrial Commission, which oversees the state's oil and gas industry, said Wednesday that it's common for officials not to inspect such small gathering pipelines before they become operational.North Dakota has struggled to find qualified installation inspectors because candidates are often drawn to lucrative jobs in the oil industry, Ritter said. Instead, the state has to rely on the word of companies, which are required to file an affidavit stating that they've followed state-mandated procedures when implementing the smaller pipelines, which typically run from one well pad to another. "We wanted these positions filled a long time ago," Ritter said. "Could they have prevented something like this? I don't know, because hindsight's 20-20 and we still don't know the cause. But does it help to have the people in that position? Absolutely." Nearly 3 million gallons of saltwater, an unwanted byproduct of oil and natural gas production, was unleashed during the spill, the largest of North Dakota's current energy boom. Saltwater, known as brine, is much saltier than sea water and may also contain petroleum and residue from hydraulic fracturing operations. Some previous saltwater spills have taken years to clean up.
Questions and answers about oil and gas wastewater spills - Nearly 3 million gallons of briny water generated by crude oil production has leaked from a North Dakota pipeline and reached two creeks, making it the biggest spill of this type of wastewater since the state’s Bakken formation oil boom began in 2006. Here are some questions and answers about oil and gas saltwater spills:
- Q: What does this liquid consist of, and where does it come from?
- A: Trapped within underground rock is naturally occurring water that can be more than 10 times saltier than the oceans, depending on the location. It accumulates in porous formations that also contain oil and gas deposits, so it rises to the earth’s surface when those hydrocarbons are pumped out. The industry and regulators refer to the wastewater by different terms, including “produced water,” ”saltwater,” ”brine” and “formation water.”
Breached pipeline that spilled oil lies exposed on riverbed — Sonar indicates part of an underground pipeline that spilled almost 40,000 gallons of oil into Montana’s Yellowstone River and fouled a local water supply is exposed on the riverbed. The pipeline is exposed for about 50 feet near where the breach occurred Jan. 17, according to a news release from public agencies involved with the response. The pipeline had been buried at least 8 feet under the riverbed, and the depth was last confirmed in September 2011. The cause of the spill remains under investigation. It prompted a five-day shutdown of drinking water services for 6,000 people in the city of Glendive after oil got into a treatment plant. Prior accidents, including a 2011 Exxon Mobil pipeline spill on the Yellowstone near Billings, have demonstrated that pipelines beneath bodies of water can quickly become exposed by floodwaters or other natural forces. Bridger Pipeline Co., which is based in Casper, Wyoming, says its pipeline will remain shut down from Glendive to near the Canada border until the river section is replaced. The company says the pipeline will be buried deeper beneath the river. Federal rules require lines to be buried at least 4 feet beneath riverbeds. The 193-mile Poplar Pipeline delivers crude from the Bakken oil patch of North Dakota and Montana to a terminal in Baker, Montana, about 55 miles south of Glendive. It was built in the 1950s and has a capacity of 42,000 barrels of oil a day.
Pipeline Break in Montana: The Yellowstone River Is Something We'll Probably Miss: Why do pipelines break? Because they're pipelines, that's why. The Pipeline Hazardous Materials Safety Administration confirmed the location of the break, but couldn't say whether the 12-inch diameter Bridger pipeline, which began releasing oil into the river Saturday, lay bare on the river bottom. Not only that, but this is the second crack that oil has had at fouling this particular river. In 2011, when an exposed oil pipeline ruptured at the bottom of the Yellowstone River near Laurel, the pipe was assumed to be buried well under the riverbed. It was later determined that an unusually high river flow had scoured several feet of rock cover leaving the pipeline vulnerable. Pipelines are state of the art technology, unless they're required to operate in cold weather and amid unexpected phenomona like ice in Montana in January. "There's a limited amount of places where the cleanup can be done: Open water, or thick ice, and there's a lot of places in between," said Tom Livers, state Department of Environmental Quality deputy director. "They can't plug the leak, because there is no way to get at it" under the ice. There is oil sheen on the water as far downstream as Sidney. However, that community relies on well water and hasn't had the contamination problems that Glendive has. The Glendive water supply contains the cancer-causing agent benzene, an oil ingredient. Workers are flushing the Glendive drinking-water system, Livers said. The goal is to have all of the volatile organic compounds out of the system by Thursday.
Williston water is supposedly safe to drink - Despite finding trace amounts of hydrocarbons in Williston’s drinking water, officials are reporting that it is still safe to drink. According to a report from The Williston Herald, Public Works Director David Tuan said, “During this period there are trace amounts of hydrocarbons in the water that are producing an odor. It is still small enough that it is safe to consume. People may not want to consume it, which is understandable because it tastes bad and smells bad, but it is safe to consume.” City officials are currently unsure if the increased levels of hydrocarbons in the water supply are from the recent oil spill in Glendive, Montana, or if they water has been tainted from a different source. Last week, a pipeline owned by Bridger Pipeline LLC ruptured and released an estimated 40,000 gallons of oil into the Yellowstone River. The spill occurred about 50 river miles away from North Dakota where the Yellowstone and Missouri rivers meet. After the spill, Glendive officials shut down the water treatment plant and measured hydrocarbon contents at levels of 15 parts per billion (ppb). In Williston, the highest readings reached 3.39 ppb and have been dropping since the measurement was taken. The state cut off level for hydrocarbon content in water is five ppb. Tuan said, “Water quality has nothing to do with the smell, color and odor … Your water could be yellow, blue or smelly and still be safe. In the spring, water can have a musty smell during the runoff period,” reports The Herald. It takes about two days for water to travel from the water treatment plant to the tap. The odor, coming days after the spill in Glendive, could be the culprit. Tuan said, “It could be a lag effect to get through the system.” However, officials are still uncertain if the spill in Glendive is the cause. The EPA is reporting that no oil has come into North Dakota so officials are unable to assume the spill is to blame.
Oil and brine spill reported in Williams County - The North Dakota Department of Health has announced another oil and brine spill, the third such incident to happen this month. According to a report from United Press International (UPI), the Health Department received notice from Oasis Petroleum that 490 barrels of oil and 455 barrels of brine were released due to storage tank overflow. The health department reports that nearly all of the spilled material has been recovered. Personnel from the Health Department and the North Dakota Oil and Gas Division responded to the scene located in western Williams County. Brine water, also referred to as saltwater, is a byproduct of the oil and gas drilling process. The Environmental Protection Agency states that this water is usually extremely toxic to the environment and contains radioactive material and heavy metals. The water is many times saltier than sea water and the toxic substances can be extremely damaging to the environment and public health if released onto the surface. The company gave no statement regarding the overflow, and the Health Department has given no indication of the incident being a threat to public health. This most recent incident occurred in the same region as the brine spill that happened earlier this month when a Summit Midstream owned salt water pipeline released roughly 70,000 barrels of the byproduct. In other news, last week the Department of Health was notified of a source water spill in Williams County nine miles southwest of Tioga. Hess Bakken Investments reported that 2,500 barrels of source water used for enhanced oil recovery was released from a pipeline. The source water, which is higher in dissolved minerals and solids than fresh water, impacted a local stock damn. The company initiated cleanup and the Department of Health is assisting with remediation planning.
Montana oil spill adds to fears about proposed pipeline - A pipeline oil spill in Montana that contaminated a river and a city’s drinking water supply is adding to fears about a proposed pipeline to carry oil from western North Dakota to a terminal in Illinois for distribution to refineries in eastern states. Many people who commented Thursday at a public hearing in Sioux Falls, South Dakota, on the proposed $3.8 billion Dakota Access Pipeline referenced the Yellowstone River spill that contaminated drinking water in Glendive, Montana, this week. Some residents fear a similar incident could occur with the Dakota Access Pipeline. “If the pipeline fails — and there are plenty of examples of these types of pipelines failing — and cleanup costs exceed what Dakota Access can pay, who is going to end up paying?” Aaron Johnson asked members of South Dakota’s Public Utilities Commission, which must approve a construction permit. Some at the hearing voiced support for the project, citing a promised economic boost and the value of pipelines in pushing the country toward independence from foreign oil. “This crude is being consumed by millions of people across the United States,” said Joe Chastain, who represents union workers in South Dakota. The proposed 1,134-mile Dakota Access Pipeline would stretch from the Bakken oil formation in North Dakota to Patoka, Illinois. North Dakota’s Pipeline Authority has said it would be the largest-capacity pipeline for the state’s crude to date.
Montana's Bakken boom might have gone bust -The Bakken oil boom in Montana has gone bust, or at least that’s the belief held by Terry Johnson, director of energy research at the University of Montana’s Bureau of Business and Economic Research. Montana Public Radio reports that Johnson said, “I would argue that the Bakken boom in Montana actually occurred back in 2005 and 2006. That the boom is really no longer that present in Montana at this point in time.” Last Friday, Johnson gave a presentation in Missoula and said it appears that Montana’s oil wells in the Bakken formation have reached maturity and yielding less with each passing year. Now that the price of oil has declined over half within the past year, there’s not much motivation for companies to drill new wells. According to MPR, Johnson said, “Continental Resources, the largest oil producer in Montana, is projected to cut their spending by 40 percent, and they also are projecting that they will reduce the number of drilling rigs by about a third, or 33 percent.” Oil production in the state has already declined compared to last year, and when combined with the decreased price of oil, the total value of the resource being extracted will be substantially less than the previous year. He predicts the overall value of oil produced in the state will drop by half with the coming year. Natural gas production isn’t looking up either. Johnson said, “I’m not seeing any positive signs there because of our maturing wells, reduced investments, so I’m seeing probably about a 10 percent decline in natural gas.” Coal production, however, is expected to hold steady throughout the year, despite the shrinking of domestic demand as many coal-fired plants are decommissioned or converted to use natural gas.
Washington State Officials Kept in the Dark About Oil Spill for Over a Month: State and federal officials are investigating an oil spill from a railroad tank car at Washington state’s largest refinery last November, but key agencies were kept in the dark about it for at least a month. The delayed notification of the spill highlights gaps in communication and enforcement as more crude oil shipments travel by rail. According to reports reviewed by McClatchy, when the tank car arrived on Nov. 5 at the BP Cherry Point refinery, Federal Railroad Administration inspectors discovered oil stains on its sides and wheels. A closer inspection revealed an open valve and a missing plug. The car was also 1,611 gallons short, enough to fill the gas tanks of 100 Subaru Foresters . Neither the railroad, nor the third-party company that unloaded the oil at the terminal, however, could determine where the missing oil had spilled, making it likely that it had leaked somewhere along the train’s 1,200-mile path between the loading terminal in Dore, N.D., and the refinery, near Ferndale, Wash. The oil train route to Northwest refineries passes through national parks, along rivers and through the region’s population centers. An oil release of that size from a marine tanker, a refinery or a storage facility would automatically trigger a well-establish set of notification requirements that would result in the information about the incident flowing promptly to local, state and federal agencies.
Five Years after Enbridge Oil Spill, Landowners Await Spring Landscaping of Repaired Line - The giant trenching tractors, bulldozers and trucks that once shook his house with the intensity of a small earthquake have disappeared and oil now pulses through the pipeline that runs 14 feet from his house near Ceresco, Mich. The shaking stopped months ago, but Gallagher remains perhaps even more shaken by the emotional aftershocks of the experience. Gallagher, a 45-year-old custom cabinet maker and interior contractor, said memories of living in the house will be spoiled by damage done to the land. His wife's parents built the house in 1973, five years after the original Line 6B had been buried under open farmland. Now that the machines are gone, Enbridge has vowed to heal the landscape this spring with grass, trees and other native plants destroyed by the years of construction all along the course of the new 285-mile pipeline that stretches from Griffith, Ind. across southern Michigan to Sarnia, Ontario, Canada. Enbridge is deactivating the old Line 6B since the new 285-mile pipeline and infrastructure went fully operational late last year.
Enbridge defends northern route for pipeline - Pipeline operator Enbridge Energy on Tuesday defended its proposal to build a northern Minnesota crude oil pipeline in the face of persistent suggestions by state agencies that another route, farther south, might be better. Company executives testified during the first day of a trial-like evidentiary hearing before a regulatory judge in St. Paul. Critics of the $2.6 billion project have questioned whether the line needs to be built Up North, an idea that Paul Eberth, Enbridge’s project director, disputed on the witness stand. He said the project, known as Sandpiper, would allow shippers to carry North Dakota crude oil to a terminal in Clearbrook, Minn., and then on to Enbridge’s storage terminal and other pipelines in Superior, Wis. Rerouting the pipeline without reaching those destinations wouldn’t serve shippers’ needs, he said. “I am not sure the project would proceed,” Eberth said when asked if Enbridge would consider alternate routes proposed by environmental groups and a state agency. State officials have raised concerns about the risk of a major oil spill like the 2010 rupture of an older Enbridge pipeline in Marshall, Mich. It sent crude oil into the Kalamazoo River and has cost more than $1 billion to clean up. Enbridge has since replaced that line with new pipe. “If we have incidents like that I don’t know that we could continue to stay in business,” Eberth said under questioning. “It is hugely important for Enbridge to prevent those kind of incidents.”
Enbridge Gets Another Federal Tar Sands Crude Pipeline Permit As Senate Debates Keystone XL --On January 16, the U.S. Army Corps of Engineers gave Enbridge a controversial Nationwide Permit 12 green-light for its proposed Line 78 pipeline, set to bring heavy tar sands diluted bitumen (“dilbit”) from Pontiac, Illinois to its Griffith, Indiana holding terminal. The permit for the pipeline with the capacity to carry 800,000 barrels-per-day of tar sands dilbit came ten days after the introduction of S.1 — the Keystone XL Pipeline Act — currently up for debate on the U.S. Senate floor, which calls for the permitting of the northern leg of TransCanada's Keystone XL. Griffith is located just south of Whiting, Indiana, home of a massive refinery owned by BP. In November 2013, BP opened its Whiting Modernization Project, which retooled to refine up to 85-percent of its capacity as heavy dilbit from the tar sands, up from its initial 20-percent capacity. In July 2014, environmental groups including the Sierra Club, National Wildlife Federation, Center for Biological Diversity and Environmental Law and Policy Center submitted a letter to the Army Corps, requesting a full National Environmental Policy Act (NEPA) review for Enbridge's proposal. As with TransCanada's Keystone XL southern leg, Enbridge's Flanagan South andEnbridge's Alberta Clipper expansion, Enbridge dodged a more democratic and transparent NEPA review from the U.S. Environmental Protection Agency and other executive agencies. Just as DeSmogBlog has called Enbridge's north-to-south dilbit pipeline network a “Keystone XL Clone,” Enbridge has quietly proposed and is currently permitting into existence a clone of TransCanada's controversial Energy East dilbit pipeline. According to the map of Line 78 on Enbridge's website, the pipeline will connect with Line 6B in Griffith. Line 6B is infamous for the biggest dilbit pipeline spill in U.S. historyin Kalamazoo, Michigan. Line 6B will then connect with Enbridge's proposed Line 9 Reversal project (also known as the Eastern Canadian Refinery Access Initiative), which will bring tar sands dilbit to Canada's east coast — like Energy East — for potential export.
Senate Passes Bill To Approve Construction Of Keystone XL Pipeline -- The Senate wrapped up nearly a month of debate on the Keystone XL pipeline on Thursday, voting 62-36 to approve construction of the controversial project. The bill will now make its way to the House, which has already approved its own separate version of the bill but is said to be taking up the Senate’s version with its amendments next week. When it’s approved in the House, the bill will go to President Obama’s desk. President Obama has pledged to veto the bill. At the moment, neither the House nor Senate has enough votes to override a veto.Aside from providing authorization for the construction of Keystone XL — the proposed 1,700-mile pipeline which would transport up to 830,000 barrels of tar sands oil per day from Canada down to the Gulf Coast — the Senate bill also includes five extra provisions that came from approved amendments. Over the last few weeks, the Senate voted on more than 40 amendments to the Keystone bill, ranging from whether climate change exists to whether the EPA should have armed enforcement officers. The amendments approved include a “sense of the Senate” amendment that states “climate change is real and not a hoax;” a symbolic, but ultimately useless gesture for property rights; and two bipartisan boosts for energy efficiency. More about the passed amendments can be found here.
Kinder Morgan says Freedom Pipeline project is gaining refiner interest - Kinder Morgan Inc’s proposed Freedom Pipeline, which would move West Texas crude oil to Southern California, is “getting more interest” from U.S. West Coast refiners, the head of the company’s natural gas pipeline unit told analysts on Wednesday. Unit President Tom Martin said the company “may have a shot” at moving ahead with converting a natural gas pipeline to move crude and condensate to California “if we can get the refiners on board.” The pipeline and logistics company first proposed the $2 billion project in 2012 but shelved it in May 2013 for lack of shipper interest. Martin said on Wednesday that the revamped proposal included adding a facility at the front end in Texas to provide crude blends that better match the Alaska North Slope (ANS) crude that California refineries typically process. The new proposal also involves shipping ultra-light crude, known as condensate, that could be exported from California, he said during the company’s annual analyst meeting.
America’s fracking ‘boom’ is having its worst months ever - They threw a fracking party in Illinois, and hardly anyone showed up. More precisely, two months after the state completed a long regulatory process and opened the door to hydraulic fracturing, only one company applied. The state hired 36 employees and five lawyers to handle the expected rush of applicants, reported the Chicago Tribune, “for work that doesn’t exist.” This after a land rush by energy companies in Southern Illinois that saw them buy tens of thousands of acres anticipating a North Dakota-style energy boom that would create 10,000 jobs. The disinterest is attributed to the sharp decline in oil and gas prices globally, which makes fracking unprofitable — at best a break-even proposition, at worst a big money-loser.“Smart people don’t invest in things that break-even,” said energy expert Arthur Berman in Oilprice.com. “I mean, why should I take a risk to make no money on an energy company when I can invest in a variable annuity or a REIT that has almost no risk that will pay me a reasonable margin? Oil prices need to be around $90 to attract investment capital. So, are companies OK at current oil prices? Hell no! They are dying at these prices. Oil prices these days are in the $49 range for Brent crude, the global benchmark, and $47 a barrel for West Texas intermediate crude, the U.S. benchmark — 30 percent and 40 precent lower, respectively, than the prices two months ago, according to Reuters.
California county declares fiscal emergency due to oil price plunge - (Reuters) - Plunging oil prices led California's Kern County to declare a fiscal emergency on Tuesday, a move that allows officials to tap into a reserve fund as tax revenue faces a big decline due to the lower oil prices. A roughly 50 percent drop in crude prices since the summer is hitting budgets in U.S. oil regions. Kern County, in central California, is at the heart of the state's oil production. Officials in Kern County, with a population of about 900,000, say the plunge in oil prices has cut projected property tax revenue for the 2015/16 fiscal year budget by $61 million. Oil companies account for about 30 percent of the county's property tax revenues, said Lee Smith, an assistant county assessor. Roughly two-thirds of the county's revenue is gleaned from property tax. Overall, the projected drop in property tax revenues, combined with rising pension costs, will cause a $44 million hit to the county's general fund in 2015/15, said Nancy Lawson, the county budget director. The general fund is currently $781 million and in surplus. But by 2015/16, officials predict a $27 million general fund deficit, Lawson said.
Louisiana budget hole widens even further: -- The Louisiana Legislature is going to have to dig deep to plug holes in the state's budget this year and next. That was the opinion of the Louisiana Revenue Forecasting Committee, which met Monday afternoon at the state capitol. The mid-year cuts for the fiscal year ending in June are now in the range of about $104 million. The Jindal administration had already cut the current budget by about $180 million. The gap for fiscal year 2016 has widened to more than $1.5 billion. The price of oil is mostly to blame. Lawmakers pegged this year's budget at $100 per barrel oil. It's now about half that. For every dollar the price of oil drops, Louisiana loses about $11 million in state revenue. "The news is bad, " said the state's chief economist Greg Albrecht. "Those are substantial downgrades to oil prices in the current fiscal year, and in future years it lowers the general fund baseline."
Initial Jobless Claims Collapse To 15 Year Lows But Shale States Job Losses Explode - After 4 weeks missing expectations (and 3 above the crucial 300k mark), initial jobless claims totally and iutterly collapsed last week. Printing 265k (beating the 300k expectation by the most in years), the 13.9% drop WoW was the biggest since September 2005!!! This is the lowest initial claims data since the financial crisis and in fact the lowest since April 2000. But it is the story from the Shale states that is most troubling as initial claims through the 2nd week of January (data is lagged by state) show a massive surge in initial claims as unambiguously good news is very much not for many thousands across these regions.
Price Collapse Hits Scavengers Who Scrape the Bottom of Big Oil's Barrel - In the $1.6 trillion-a-year oil business, there are global titans like Exxon Mobil Corp. (XOM) that wield more economic might than most of the nations on Earth, and scores of wildcatters scouring land and sea for the next treasure troves of crude. Then there are the strippers. For these canaries in the proverbial coal mine, the journey keeps going deeper and darker. Strippers are scavengers who make a living by resuscitating once-prolific oil fields to coax as little as a bathtub full of crude a day from each well. Collectively, the strippers operate almost half-a-million oil wells that produced more than 730,000 barrels a day in 2012, the most recent year for which figures were available. That’s one of every 10 barrels produced in the U.S. -- equivalent to the entire output of Qatar, or half the crude Royal Dutch Shell Plc (RDSA), Europe’s largest energy company, pumps worldwide every day. With oil prices down 58 percent since June, these smallest of producers will be the first to succumb to the Great Oil Bust of 2015. Stripper wells -- an inglorious moniker for 2-inch-wide holes that produce trickles of crude with the aid of iconic pumping machines known as nodding donkeys -- were a vital contributor to U.S. oil production long before the shale revolution. Though a far cry from the booming shale gushers that have pushed American crude production to the highest in a generation, stripper wells are a defining image of the oil business, scattered throughout rural backwaters abandoned by the world’s oil titans decades ago. With the price of crude dipping so low, there’s no way Shulman will be able to drill a new well that regulators have already permitted. Nor is he even going to turn on a well finished last month that’s ready to start production.
Why Fracking & Tar Sands are Doomed: Low-Cost Oil and Pollution - Oil comes in at least these categories:
- · Conventional oil: vertically drilled wells on land or shallow continental shelf. Conventional oil, worldwide, is past its peak of production (it peaked in 2005-8 per the International Energy Agency), and oil production is declining at an average rate of 5.8% per year
- · Unconventional oil comes from oil-laden shale, requiring vertical and horizontal drilling, and also requiring hydraulic fracturing, or “fracking”. It is more expensive to produce than conventional oil....However, the price of all oil has been dramatically declining (today it is about $45/barrel) – more than a 55% decline – and, in most cases, the price is insufficient to cover shale oil production costs plus profit.
- · Tar sands are a mixture of sand and bitumen. Heat is used to separate the bitumen from the sand, and the bitumen is then cut with lighter hydrocarbons and refined to be similar to crude oil. It is generally more expensive than shale oil to produce, but much of the cost is related to building the initial plant.
- · Ultra-deep oceanic wells are expensive and high risk. For example, the Macondo well in the Gulf of Mexico, which blew out, was a major ecological/financial disaster for BP. However, some deep drilling is continuing. Arctic drilling has not been successful and instead has caused huge losses for Shell.
The extent of fracking is declining for economic reasons. However, the decline is a good thing for other reasons. Fracking is a legal technique only because Richard Cheney, VP under President George W. Bush, pushed through laws in 2005 which exempted oil and gas production from these existing laws: The Clean Air Act, Clean Water Act, Safe Drinking Water Act, National Environmental Policy Act, Resource Conservation and Recovery Act, Emergency Planning and Community Right-to-Know Act, the Superfund act, and from various toxic reporting requirements.
BP shedding jobs in Houston - Petro Global News reports that support staff at BP’s Houston office will be seeing a round of layoffs, though the company did not disclose how many will be without jobs. However, the move was to be expected after the oil giant announced yesterday that it will be selling part of its stake in joint projects with Chevron in the Gulf. Houston is the hub of operations for BP’s Gulf of Mexico projects. As of June 2014, the company employed 7,200 people in the city. According to the Economic Impact Report BP released earlier this year, the company has four production platforms and 10 operating rigs throughout the Gulf. The southern states and the Gulf are BP’s strongest areas of operation in the United States. With a daunting $13.7 billion in possible fines under the Clean Water Act, BP is making an effort to slim down and improve efficiency on a global scale. A freeze on base pay was initiated this week for 2015 to help the company minimize costs during the oil price slump. BP also laid off 300 employees in the North Sea and cut 255 jobs in Azerbaijan already this year. Worse yet, BP expects to announce more layoffs throughout the first quarter.
Big Oil’ Cuts $20 Billion in Five Hours to Preserve Dividends -- Royal Dutch Shell Plc will cut $15 billion of investment over the next three years as the crash in oil prices saw fourth-quarter profit miss forecasts. Shell, the first of the world’s largest oil companies to report earnings following the slump in crude to a five-year low, will defer or cancel about 40 projects worldwide, Chief Executive Officer Ben van Beurden said today. Exploration will also be curtailed. “We see pressure on our investment program,” van Beurden said on Bloomberg TV. “It’s a game of being prudent but at the same time not overreacting.” Profit excluding one-time items and inventory changes was $3.3 billion in the quarter, up from $2.9 billion a year earlier, Shell said today. That missed the $4.1 billion average of 13 analyst estimates compiled by Bloomberg. The global industry is scurrying to respond as oil below $50 a barrel guts cash flows. Occidental Petroleum Corp. and ConocoPhilips also announced lower spending today. BP Plc has frozen wages and Chevron Corp. delayed its 2015 drilling budget. By cutting investment, companies aim to protect returns to investors. ConocoPhillips, the third-largest U.S. energy producer, reported its first quarterly loss since 2008 and has announced spending cuts. More than 30,000 dismissals have been announced across the oil industry as companies shrink budgets, according to a tally by Bloomberg News. Exploration and production spending will fall by more than $116 billion, or 17 percent, on weaker oil revenues, according to an estimate from Cowen & Co.
Trio of oil companies announce $20 billion in spending cuts: The year’s first wave of major oil company financial reports sent more dark clouds over the oil patch Thursday, with news of $20 billion in combined spending cuts, profit losses and a growing pricing standoff between oil producers and the companies that drill and service their wells. Lower drilling budgets announced by Royal Dutch Shell, ConocoPhillips and Occidental Petroleum Corp. will have a hand in putting the oil services industry – a major employer in Houston – on a path for sinking profits this year, analysts say, as well as widespread layoffs and, if oil stays below $50 a barrel for long, even deeper cuts. “What we’re seeing thus far is a textbook implosion,” said Bill Herbert, an analyst with Simmons & Company International. Houston-based oil field services giants Schlumberger, Baker Hughes and Halliburton already have announced 17,000 job cuts combined.
Goodrich Petroleum cuts oil drilling in La. and Miss. - — Low oil prices mean the driller that has been the most bullish on an oil region that straddles the Louisiana-Mississippi line is cutting back. Goodrich Petroleum Corp., based in Houston, said Friday that it will spend $80 million to $100 million on exploration and drilling this week, down from $150 million to $200 million it had previously projected. The company had projected that it would drill 16 to 21 wells in the Tuscaloosa Marine Shale region in southwest Mississippi and Louisiana’s Florida Parishes. A spokesman didn’t immediately respond to a request for comment, but the new budget will mean fewer wells drilled. A number of other companies that had been drilling in the region have cut back or pulled out, in part because of high drilling costs per well.
"Oil Drillers Are Going To Die" In Q2, Conway Mackenzie Warns "Expect Outright Liquidations" -- "The second quarter is going to be devastating for the service companies," warns Conway Mackenzie - the largest U.S. restructuring firm - adding that, despite slashing thousands of jobs, delaying (or scrapping) billions in capex amid the prolonged rout in oil prices, "there are certainly companies that are going to die." As Bloomberg reports, oil drillers will begin collapsing under the weight of lower crude prices during the second quarter and energy explorers who employ them will shortly follow with oilfield-service providers are facing a "double-whammy." As we noted here, there are more than a few candidates for this 'death' list as it appears increasingly clear that what was considered an "unambiguously good" narrative for the nation is anything but...
U.S. Shale Boom May Come To Abrupt End -- U.S tight oil production from shale plays will fall more quickly than most assume. Why? High decline rates from shale reservoirs is given. The more interesting reasons are the compounding effects of pad drilling on rig count and poorer average well performance with time. Rig productivity has increased but average well productivity has decreased. Every rig used in pad drilling has approximately three times the impact on the daily production rate as a rig did before pad drilling. At the same time, average well productivity has decreased by about one-third. This means that production rates will fall at a much higher rate today than during previous periods of falling rig counts. Most shale wells today are drilled from pads. One rig drills many wells from the same surface location, as shown in the diagram below: A few charts from the Eagle Ford play will demonstrate why I believe that the shale boom will fall sooner and more sharply than many analysts predict. The first chart shows that the number of active drilling rigs (left-hand scale) in the Eagle Ford Shale play stabilized at approximately 200 rigs as pad drilling became common. The number of producing wells (lower scale), however, has continued to increase. This is because a single rig can drill many wells without taking the time to demobilize and remobilize. In other words, drilling has become more efficient as less time is needed to drill a greater number of wells. The next chart below shows Eagle Ford oil production, the number of producing wells and the number of active drilling rigs versus time. This chart shows that production growth has not kept pace with the rate of increase in new producing wells since mid-2012. That is because the performance of newer wells is not as good as earlier wells. The final chart shows that the rate of daily production is now more dependent on the number of drilling rigs than on the number of producing wells. Rig productivity–the barrels per day per rig–has increased but average well productivity–the barrels per day per well–has decreased. In other words, production can only be maintained by drilling an ever-increasing number of wells.
Oil and the dollar will complicate the U.S. revival - At the start of 2015, two familiar features dominate the global economic outlook: continuing turbulence in financial markets and the relative strength of the US recovery. One aspect of America's superior performance, though, has received surprisingly little attention, and that's the marked decline in the country's external deficit. The shrinking of the current-account deficit -- from its peak of almost 6 percent of US gross domestic product in 2006 to 2.3 percent in 2013 -- ought to be a big story. Bear in mind, it happened even though the US has enjoyed stronger growth in domestic demand than either Europe or Japan, and despite the recent strength of the dollar. That took some doing.One crucial variable is the price of oil. The US is a net oil importer, so the collapse in crude-oil prices has squeezed the current-account deficit. In the short term, it will continue to do so; in the longer term, however, other forces will come into play. Cheap oil will boost the real incomes of U.S. consumers, allowing them to spend more on imports. In addition, if the price of oil stays down, the recent surge of investment in the domestic production of shale oil and gas may stall or even go into reverse. The technological opportunity afforded by fracking -- and the prospect of a permanent improvement in the U.S. balance of trade in oil -- could be undone. Another big factor is the aforementioned strength of the dollar. Over the past year, the dollar has appreciated against almost all the main currencies. Even if the connection isn't apparent yet, a stronger dollar will slow the decline of the US deficit.
Crude Oil Price Depression Increasingly Impacts Energy Development Negativity -- A somber note regarding the increasingly negative results emanating from the ongoing oil price crash has sounded depressing tones of cutbacks by the U.S. energy industry's backup manufacturing. U.S. Steel, a major producer of oil field tubular and supplemental products critical to crude oil and natural gas excavation and drilling, has announced a major cutback of such products, including the idling of plants in Ohio and Texas, which will lay off almost 800 workers. A spreading growth in layoffs by technical service providers such as Schlumberger and Baker-Hughes may just be the beginning of major industry layoffs. The subsequent production weakness of hydraulic fracturing (fracking) couldn't come at a worse time for U.S. Steel, which had been expecting a 2015 comeback year, encouraged by a resurgent American auto industry, along with the booming oil and gas sector. The shortfall of "fracking" expansion anticipated in the months to come are also concerning other U.S.-based steelmakers such as Nucor, Steel Dynamics, ArcelorMittal, and AK Steel Holding Corp. Oversupply in oilfield tubular, especially, has been exacerbated by an overage of steel imports, which were up 35%, to 38 million tons during the first 10 months of 2014. Current layoffs contemplated are sure to expand later this spring, barring an unexpected solid upward price reversal during the first quarter 2015. What has gotten lost in the obvious consumer price benefits "at the pump," in addition to the significant reduction of air transport jet fuel, etc., is the scope of reduction in growth by an economic sector that had become the driving force of America's manufacturing comeback.
Most U.S. Businesses Will See a Boost From Cheap Oil, Economists Say - Most U.S. businesses will benefit from lower oil prices this year, but the cheaper energy bill also threatens to derail a recent driver of economic growth, according to a new survey of business economists. Three-fourths of economists said their business or industry will feel the effects of the price drop, with 57% expecting a positive impact, and 18% anticipating a negative impact, according to a survey from the National Association for Business Economics released Monday. “By a three-to-one ratio, it’s positive,” said James Diffley, a senior director at IHS Economics and the survey’s chairman. “The 18% though represent those industries that benefit directly from oil and gas. So, yeah, there’s a negative, but we think the positive outweighs the negative.” Cheap fuel is expected to give the economy a boost this year as consumers turn around and spend what they’re saving at the pump. Gas prices have fallen to close to $2 a gallon, and are poised to fall below that, one of the swiftest declines on record. That led the International Monetary Fund to revise up its projection for U.S. growth this year. But it’s important to keep in mind that some of that extra stimulus could be taken away, Mr. Diffley said, as oil and gas firms scale back investment and development. That affects other jobs in the supply chain for tool makers and pipe fitters, for example.
Scrapped: Oil Prices Shelve an $11 Billion Gulf Coast Project - WSJ: South African energy giant Sasol Ltd. said Wednesday it was shelving an $11 billion project on Louisiana’s Gulf Coast, imperiling one of the largest foreign investments on U.S. soil because of the plunge in oil prices. Sasol has spent years planning to expand its chemical factory outside Lake Charles, La., into a sprawling facility to turn natural gas into industrial compounds and diesel fuel. In October, the company committed $8 billion for equipment that produces ethylene, which is used to make plastics and other products. That plant is still going forward, but Sasol said on Wednesday that a bigger project, to use natural gas rather than crude to make diesel, is on hold. Plummeting oil prices have forced it to push back its own 2016 deadline for deciding whether to build the unusual and expensive plant now that oil prices have fallen from over $100 a barrel to under $50. “This will allow us to evaluate the possibility of phasing in the project in the most pragmatic and effective manner,” Sasol Chief Executive David Constable said in a statement.
Obama to propose protecting U.S. Arctic wildlife refuge from drilling (Reuters) - President Barack Obama will call on Congress to expand protection of Alaska's Arctic refuge where oil and gas drilling is prohibited to 12 million acres (5 million hectares), an area that includes 1.4 million oil-rich acres along the coast. The proposal, unveiled by the Interior Department on Sunday, ran into instant criticism from Republicans and will likely face an uphill battle in Congress, where Republicans now control both chambers. The wilderness designation, the highest level of federal protection under which oil and gas drilling is banned, would be extended to a total of 19.8 million acres (8 million hectares) under the proposal, the Interior Department said. true The move was the latest salvo in the energy wars between Obama, a Democrat, and Republican lawmakers. Republicans kicked off the new Congress earlier this month with a bill to approve the Keystone XL pipeline to help move Canadian tar sands oil to refineries on the U.S. Gulf Coast. Obama immediately said he would veto the measure. U.S. Senator Lisa Murkowski of Alaska, Republican chair of the Senate Energy and Natural Resources Committee, called the Obama administration's proposal a politically motivated attack on Alaska. On Friday, she had introduced a bill that would have permitted oil production in the Arctic National Wildlife Refuge. "It's clear this administration does not care about us, and sees us as nothing but a territory. The promises made to us at statehood, and since then, mean absolutely nothing to them. I cannot understand why this administration is willing to negotiate with Iran, but not Alaska," Murkowski said in a statement on Sunday.
White House Proposes Protecting More Than 12 Million Acres Of Alaska’s Arctic Refuge -- President Obama is proposing to protect more than 12 million acres in Alaska’s Arctic National Wildlife Refuge (ANWR), protection that would prohibit oil and gas drilling, the White House announced Sunday. In plans unveiled by the Interior Department, the Obama administration is recommending that 12.28 million acres of ANWR be designated as “wilderness,” the highest level of protection that the government can award to a wild place. That area includes ANWR’s Coastal Plain, which according to the Energy Information Administration likely houses 5.7 billion barrels of technically recoverable oil. The U.S. Fish and Wildlife Service is also recommending that four rivers within ANWR’s boundaries — the Atigun, Kongakut, Marsh Fork Canning, and Hulahula Rivers — be included in the National Wild and Scenic Rivers System, a designation held by just 1/4 of 1 percent of the U.S.’s rivers. Obama said in the video that he’s “calling on Congress to make sure that they take it one step further, designating [ANWR] as a wilderness, so that we can make sure that this amazing wonder is preserved for future generations.” The Washington Post reports that once the federal government recommends that a place be designated a wilderness area, that place is given the highest level of protection until Congress or a future administration says otherwise. So though this announcement does grant ANWR some protection, only Congress has the ability to create a permanent wilderness area. And already, some members of Congress are lambasting the proposal.
Obama Blocks Oil and Natural Gas Drilling in Alaska’s Bristol Bay - WSJ: —President Barack Obama announced Tuesday he is indefinitely blocking oil and natural gas drilling in Alaska’s Bristol Bay, a move that drew cheers from wildlife groups and muted reaction from oil and gas proponents. In a video message posted online, Mr. Obama cited the environmental and economic benefits of Bristol Bay’s natural habitat, including how it provides 40% of the nation’s wild-caught seafood, as reasons why drilling shouldn’t be allowed. “It’s something that’s too precious for us just to be putting out to the highest bidder,” Mr. Obama said. The announcement comes just weeks before the administration intends to release its draft plan for what federal waters it proposes to open up to energy development. Tuesday’s announcement is relatively noncontroversial. There is no oil and gas drilling in the region, which spans about 32.5 million acres of federal waters in Southwestern Alaska. A portion of the region was leased in the mid-1980s. It was never developed due to litigation, according to the Obama administration, and because of souring public sentiment following the 1989 Exxon Valdez oil spill that occurred in a separate region of Alaska. Today, few if any companies have expressed interest in developing Bristol Bay.
This Federal Government Land Grab Would Permanently Lock Up Millions of Alaska Acres With Energy Potential --The Obama administration is calling on Congress to designate more than 12 million acres in Alaska as wilderness, including the coastal plain, barring economic activity and energy development. If Congress chose to act, it would be the largest wilderness designation since President Lyndon Johnson signed the Wilderness Act into law more than a half century ago. ANWR boasts massive energy potential. According to the U.S. Geologic Survey, an estimated 15-42 billion barrels of oil lie in ANWR’s 1002 Area, the Coastal Plain. The entire 1002 area represents 1.5 million acres out of more than 19.6 million. The Survey produced these estimations in 1998, where they said producers could extract 10.4 billion barrels–using 1990s drilling technologies–that lie beneath a few thousand acres with minimal environmental impact.Seventeen years later, the technologies have vastly improved. By opening ANWR we could truly find out Alaska’s energy potential. Importantly, the U.S. Geologic Survey also notes that “nearly 80 percent of the oil is thought to occur in the western part of the ANWR 1002 area, which is closest to existing infrastructure.” Oil produced in ANWR could relieve potential technological challenges Trans Alaska Pipeline System faces if the supply becomes too low.
Obama’s Trans-Alaska Oil Assault - WSJ: Washington’s energy debate has been focused on President Obama ’s endless opposition to the Keystone XL pipeline, but maybe that was only a warm-up. His new fossil fuel shutdown target is Alaska. President Obama announced Sunday that he’ll use his executive authority to designate 12 million acres in Alaska’s Arctic National Wildlife Refuge (ANWR) as wilderness, walling it off from resource development. This abrogates a 1980 deal in which Congress specifically set aside some of this acreage for future oil and gas exploration. It’s also a slap at the new Republican Congress, where Alaska Sen. Lisa Murkowski has been corralling bipartisan support for more Arctic drilling. The ANWR blockade also seems to be part of a larger strategy to starve the existing Trans-Alaska pipeline, the 800-mile system that carries oil south from state lands in Prudhoe Bay. ANWR occupies the land east of that pipeline. The Interior Department this week will release a five-year offshore drilling plan that puts vast parts of the Chukchi and Beaufort Seas—the area to the north of the pipeline—out of bounds for drilling. This follows an Administration move in 2010 to close down nearly half of the 23.5 million acre National Petroleum Reserve-Alaska (NPRA)—the area west of the pipeline. Federal agencies have also been playing rope-a-dope with companies attempting to drill on the few lands that are still available. ConocoPhillips has been waiting years for permits to access a lease it purchased in NPRA—and the Administration is this week expected to make that process even harder. Shell has spent $6 billion on plans to drill in the Chukchi and Beaufort, only to be stymied by regulators.
Obama to Propose Opening More Areas to Drilling - Obama administration is planning to propose opening up new areas of the nation's federally owned waters to oil and natural gas drilling, including areas along the Atlantic Coast, according to people familiar with the plan. The Interior Department is set to propose as soon as Tuesday its plan that will outline what leases the federal government will offer from 2017 to 2022, a step the government is required by law to take every five years. The plan is expected to come under increased scrutiny as low oil prices are testing the profit margins of energy companies and President Barack Obama is pursuing an aggressive climate-change agenda. Jessica Kershaw, an Interior Department spokeswoman, declined to comment Monday evening on the proposal. The plan is expected to include leases off states in the mid- and south-Atlantic coasts, including Virginia and both South and North Carolina, whose governors support offshore drilling. It isn't expected to include offshore Florida, whose policy makers have generally opposed such a move. The plan is also expected to block parts of the Beaufort and Chukchi seas off the coast of Alaska for future oil and gas development, according to Robert Dillon, a spokesman for Sen Lisa Murkowski (R., Alaska).
Obama Proposes Oil And Gas Drilling Along East Coast - On Tuesday, the Obama administration released a proposal to sell offshore oil and gas leases in new areas of federally owned waters, including regions along the Atlantic Coast from Virginia to Georgia. The announcement is part of the Department of Interior’s latest five-year plan, which includes federal leases from 2017 to 2022. Congressional bans on offshore drilling in the Atlantic ended in 2008 and Obama first pushed for Atlantic Coast leasing in 2010. Several weeks after announcing lease plans for south and mid-Atlantic drilling the Deepwater Horizon drilling rig blew up in the Gulf of Mexico, and also blew up these plans. Environmental groups see this revisiting of the plans as a case of “oil spill amnesia.” They argue that the technology or regulations have not advanced significantly in the five years since the Deepwater Horizon Spill, the fallout from which continues in economic recovery and prolonged legal battles over fines and compensation.. “When exploratory drilling was proposed off of North Carolina in the 1980s, the Exxon Valdez oil spill occurred and plans were shelved because we didn’t want that risk here. In 2010 after the BP Deepwater Horizon disaster in the Gulf, the Obama administration cancelled a lease sale off of Virginia because it was also too risky. That risk hasn’t changed.”
Don’t kid yourself, Obama very well might not allow any Atlantic Coast drilling - Right after the Obama administration announced a plan to block drilling in Alaska’s arctic wildlife refuge, it then rolled out a plan to open up parts of the southern Atlantic coast for oil and gas exploration. So a trade-off. What the White House took with one hand, it gave with the other. And what it gave seems pretty significant, opening up a new coastal region to drilling. But as Amy Harder of the Wall Street Journal explained on PBS last night, the swap may not be all it seems to be: Secretary Sally Jewell of the Interior Department stressed that this is the broadest plan that they’re going to consider. When it goes final in the next couple of years, they may whittle it down to something smaller than what they proposed today. … Even if there was drilling off the Atlantic Coast, executives say that wouldn’t happen until 2030. So I think the plan can only get narrower and given the president’s commitment to climate change, I wouldn’t be surprised if they ultimately took it out of the final plan, though at this point it’s far to early to say. Another reminder that Team Obama, while a huge beneficiary of America’s oil and gas boom, ultimately views that gift of American innovation as an unwelcome one.
Federal Coal Program Costing Taxpayers And States More Than $1 Billion Per Year In Lost Royalties - When it comes to paying for publicly-owned coal, the industry is getting a great deal. The American taxpayer, on the other hand, is being shorted not just by coal companies but by loopholes and generous subsidies on the part of the federal government, according to a new study released Wednesday. The report examines the federal coal leasing program managed by the Interior Department’s Bureau of Land Management (BLM), and the royalties collected by the agency. The analysis by Headwaters Economics, an independent research group based in Bozeman, Montana, found that the coal industry is paying an effective royalty rate of just 4.9 percent on the value of coal mined from public lands, most of it from Wyoming and Montana. That is well below the 12.5 percent royalty rate companies are supposed to pay under federal law for surface mined coal and the 8 percent royalty rate for underground coal. Lax regulation and loopholes in the program’s administration have cost the Treasury about $775 million between 2008 and 2012, according to the study. The analysis, “An Assessment of U.S. Federal Coal Royalties,” is the latest in a growing list of highly critical reports on the federal coal program by government watchdog agencies and private sector entities. It covers some of the same ground as a recent Center for American Progress report on measures that should be taken to close loopholes and reduce subsidies lavished on the coal industry by the Department of Interior. The CAP report detailed how two arms of the Interior Department, the BLM and the Office of Natural Resources Revenue (ONRR) “use their royalty-collection authority to subsidize coal production on federal lands” and how “coal companies, in turn, have learned to maximize these subsidies by shielding themselves from royalty payments through increasingly complex financial and legal mechanisms.”
Did Obama Forget the BP Oil Spill? - -- After a brief flurry of positive news for environmentalists out of the Obama White House—from a deal with China on reducing greenhouse-gas emissions to a plan to restrict oil drilling in the Alaska wilderness—a news report this week felt like something of a slap in the face: The administration plans to allow offshore oil and gas drilling in the Atlantic Ocean from Virginia to Georgia, beginning two years from now. The move satisfies a long-held desire by many GOP members of Congress, who’d been pushing hard for this big expansion as President Obama’s Interior Department works on a five-year offshore drilling permitting plan that will run from 2017 through 2022. And there had been warning signs that the president would give them what they sought; in July, the administration signed off on oil companies using 250-decibel seismic guns to map the Continental Shelf from Delaware to Florida—despite warnings that the blasts will deafen and even kill marine mammals, interfering with their communications and breeding. As a native son of Louisiana, I’m deeply troubled by Obama’s move. I’ve been an environmental lawyer along the Gulf Coast for a quarter-century. For the last four years, most of my work has been representing fishing boat captains or small business owners whose lives have been turned upside down by the worst offshore drilling disaster in U.S. history: the 5 million barrels of oil that spewed forth from BP’s Deepwater Horizon blowout. I’ve listened to the clean-up workers coping with headaches, nausea, and other ailments from breathing in crude oil or the toxic dispersant used to make the oil “disappear” from the surface of the Gulf. I honestly don’t think America can handle another drilling disaster of the BP magnitude. So how can we move forward on Atlantic drilling when the government has not followed through on its promises to learn from the mistakes that caused the Gulf oil disaster?
Frackdown: Government concedes to national park fracking ban — RT UK: In a victory for the Labour Party and other opponents of fracking, the Conservative-led coalition has announced that fracking will be banned in all national parks. Further restrictive measures were also placed upon shale gas companies. The announcement of new regulations comes as a cross-party group of MPs called for fracking to be banned completely on Monday. Their Commons report was accompanied by an anti-fracking demonstration outside Westminster Palace, attended by Green Party MP Caroline Lucas and campaigner Bianca Jagger. The regulations present a significant U-turn on previous government policy, which Prime Minister David Cameron claimed was going “all out for shale.” Vast areas of national parkland and areas of outstanding natural beauty (AONB) near to groundwater sources will now have a total ban on fracking. The suggestions from the Environmental Audit Committee to ban all future fracking were not passed, but the new measures are expected to halt the development of the UK’s shale gas industry. Prior to the announcement on Monday evening, the regulations stated that fracking was permissible in national parks and AONB under “exceptional circumstances,” but this has now been changed to an “outright ban.”
Tories forced into U-turn on fast-track fracking after accepting Labour plans -- The government made a major U-turn on plans to fast-track UK fracking on Monday after accepting Labour proposals to tighten environmental regulations. David Cameron had previously said the government was “going all out” for shale gas development, but widespread public concern and a looming defeat by worried Tory and Liberal Democrat backbenchers forced ministers to back down. The Guardian revealed on Monday that George Osborne, the chancellor, was demanding “rapid progress” from cabinet ministers, including delivering the “asks” of fracking company Cuadrilla. But the changes accepted by ministers would ban fracking in national parks, areas of outstanding natural beauty and in areas where drinking water is collected, ruling out significant regions of the UK’s shale gas deposits. The new regulations will slow down exploration by, for example, requiring a year of background monitoring before drilling can begin. However, an attempt to impose a moratorium on shale gas exploration, as recommended by a report from MPs, including former Conservative environment secretary Caroline Spelman, was defeated after Labour abstained. The infrastructure bill, which contains the new rules for fracking, now goes to the House of Lords, where further changes could be made.
Petrobras may book $20 billion asset write-down - – Brazilian state-controlled oil company Petróleo Brasileiro SA could take a charge of about 52 billion reais ($20 billion) in its delayed third-quarter results to reduce the value of some assets, a Veja magazine blog said on Monday. The impairment equals 42 percent of the market value of Petrobras , as the company is known, Veja’s Mercados blog said, citing sources close to the company. A Petrobras spokeswoman declined to comment on the report but reiterated the company’s plan to release third-quarter results on Tuesday. On Friday, O Globo newspaper reported that a 10 billion real write-off and a 30 percent cut in capital spending this year were under consideration to help Petrobras preserve cash amid the impact of a contract-fixing, bribery and political kickback scandal. Petrobras faces limited access to financial markets as a result of the scandal and falling oil prices. Petrobras pledged to invest about $44 billion a year under a five-year, $221 billion investment plan announced last year, but it warned in December that it would cut spending.
BHI: Texas anchors 90-unit plunge in US rig count - The US drilling rig count plunged 90 units—a majority of which were in Texas—to settle at 1,543 rigs working during the week ended Jan. 30, Baker Hughes Inc. reported. That total is the lowest since June 18, 2010, and 242 units fewer compared with this week a year ago. The count has now fallen in 9 consecutive weeks, losing 377 units during that time. During the week, 86 of the rigs lost were land-based, which now totals 1,482. Offshore rigs dropped 5 units to 49. Rigs drilling in inland water edged up a unit to 12. Oil rigs plummeted 94 units to 1,223. Gas rigs, meanwhile, continued their upward shift, gaining 3 units to 319. Rigs considered unclassified edged up a unit, representing the only active rig. Horizontal drilling rigs plunged 61 units to 1,168. Directional rigs fell 6 units to 140. Canada’s rig count fell 38 units to a total of 394, 242 fewer than this time a year ago. Oil rigs lost 23 units to 200 and gas rigs fell 15 units to 194. Texas plunged 58 units to 695, the state’s lowest total since Aug. 6, 2010. It now has 147 fewer units compared with this time last year. The dramatic decline reflects a 27-unit drop in the Permian—leading the major US basins—to 454. Also, notably, the Barnett fell 6 units to 19. Oklahoma declined 10 units to 183. The Mississippian fell 9 units to 54. North Dakota and Wyoming each fell 4 units to 143 and 42, respectively. Ohio dropped 3 units to 41. Louisiana, New Mexico, West Virginia each lost 2 units to 108, 87, and 23, respectively. Edging down a unit each, Colorado now has 63, Kansas 22, Utah 14, and Alaska 10. Arkansas is unchanged from a week ago at 12. Pennsylvania and California each edged up a unit to 54 and 16, respectively.
Oil rig count falls by 94 in biggest drop since 1987: Petroleum producers took 94 oil-drilling rigs off the market in the United States this week as sub-$50 oil continued to wreak havoc on the oil industry, Baker Hughes reported Friday. It was the biggest one-week decline for oil rigs since 1987, the earliest year of Baker Hughes data available. That year, the oil industry had faced another oil bust that left hundreds of rigs idle or repossessed by banks, which sold them for scrap. This week’s drop left 1,223 oil units up, the lowest number in three years. In Texas, 58 rigs were taken off the market, cutting the state’s count to 695 rigs. That’s down from 840 at the beginning of this month. All told, the number of oil and gas rigs active in the United States fell by 90 to 1,543, as gas rigs increased by three and one other, so-called miscellaneous rig was propped up. The U.S. offshore rig count declined by 5 rigs, down to 49 units. The decline came a day after the CEO of Helmerich & Payne CEO John Lindsay told investors the Oklahoma-based drilling contractor may have to cut 2,000 jobs in light of the falling rig count.
US Drilling Rig Count at Lowest Point in More Than 5 Years - In the week ended January 30, the total number of rigs drilling for oil in the United States came in at 1,223, compared with 1,317 in the prior week and 1,422 a year ago. Including 320 other rigs mostly drilling for natural gas, there are a total of 1,543 working rigs in the United States, down 90 week-over-week, and down 242 year-over-year. The data come from the latest Baker Hughes Inc. (NYSE: BHI) North American Rotary Rig Count. The number of rigs drilling for oil fell by 199 year-over-year and by 94 week-over-week. The natural gas rig count declined by three to 319 week-over-week and by 39 year-over-year. The two states losing the most rigs were Texas (down 58) and Oklahoma (down 10). North Dakota and Wyoming each lost four and Ohio lost three. California and Pennsylvania were the only states to add to rig counts during the week, and each added just one. In the Permian Basin of west Texas, the rig count dropped 27 to bring the total down to 454; the Eagle Ford Basin in south Texas lost three rigs and now has 178 working; and the Williston Basin (Bakken) has 148 working rigs, down five from the prior week. As of Wednesday, the posted price for Williston Basin sweet crude was just $28.19 a barrel and Williston sour was all the way down to $19.08 a barrel. Eagle Ford Light crude sold for $41 a barrel, the same as West Texas Intermediate (WTI). The difference reflects transportation costs (as well as an adjustment for specific gravity and sulfur content) of around $13 a barrel to get Bakken sweet crude to the U.S. Gulf Coast.
Oil Price Soars, Rig Count Plunges Worst Ever, But Bloodletting Just Beginning - The oil industry is dead-serious when it talks about slashing operating costs and capital expenditures. It has to. Preserving cash is suddenly a priority, after years when money was growing on trees. In the US, the cost cutting has reached frenetic levels. One place where it shows up on a weekly basis is the number of rigs actively drilling for oil. And that rig count dropped by 94 to 1,223 in the latest week, as Baker Hughes reported today. A phenomenal plunge, by far the worst ever. In January, the rig count crashed by 276, the most ever for a calendar month. That’s 18.4%! the rig count is now down 386 from its peak on October 10, by nearly a quarter! And yet, it’s still just the beginning. The chart shows the breathless fracking-for-oil boom that started after the financial crisis. Not included are the rigs drilling for natural gas. That fracking boom had started years earlier and ended in a glut and total price destruction that continues to this day (chart). Note the two-month cliff-dive, the worst ever. During the financial crisis, the oil rig count fell 60% from peak to trough. If this oil bust plays out the same way, the rig count would drop to 642! The bloodletting in the industry would be enormous.
The most important thing to understand about the coming oil production cutbacks -- What the current oil price slump means for world oil supply is starting to emerge. "Layoffs," "cutbacks," "delays," and "cancellations" are words one sees in headlines concerning the oil industry every day. That can only mean one thing in the long run: less supply later on than would otherwise have been the case. But perhaps the most important thing you need to understand about the coming oil production cutbacks is where they are going to come from, namely Canada and the United States. Why is this important? For one very simple reason. Without growth in production from these two countries, world oil production (crude oil plus lease condensate which is the definition of oil) from the first quarter of 2005 through the third quarter of 2014 would have declined 513,000 barrels per day. That's right, declined. Including Canada and the United States, oil production rose just under 4 million barrels per day. That means substantial cutbacks in the development of new oil production in Canada and the United States could lead to flat or falling worldwide oil production. But, why will any oil production cutbacks come primarily from Canada and the United States? For another very simple reason. Post-2005 oil production growth in these countries came from high-cost deposits in Canada's tar sands and in America's tight oil plays. New production from these high-cost resources simply isn't profitable to develop in most locations at current prices.
What’s driving the price of oil down? -- In December I provided some simple calculations of the extent to which a slowdown in the growth of global oil demand may have contributed to the spectacular drop in oil prices since last summer, and I updated those estimatestwo weeks ago. Some of you have suggested that as conditions keep changing, perhaps I should update those calculations every week. Thanks to the always-helpful Ironman at Political Calculations, I can now go that a step better, and provide eager Econbrowser readers a quick tool they can use to update these calculations on their own on a daily basis, if your heart so desires. The basic idea behind my calculations is the observation that at the same time that oil price has been declining, we’ve also observed big drops in the price of other commodities like copper, the yield on 10-year U.S. Treasuries, and the value of other currencies relative to the dollar. I used a regression estimated using weekly data from April 2007 to June 2014 to summarize the historical correlation between changes in the price of oil and changes in the other three factors. I used the coefficients from that regression to calculate how much of the change in the price of oil in each week since July could have been predicted statistically on the basis solely of changes in copper prices, bond yields, and the value of the dollar, Ironman has put together a little tool you can use to calculate how much of the change in the price of oil between any two dates would be attributed to demand factors with this method. Just input the four prices at your chosen starting date and ending date and press calculate. . If you try it you’ll see the answer is that oil prices would have been expected to fall to $75 a barrel based on changes in demand factors alone since last summer, accounting for a little more than half of the observed decline in the price of oil.
Hedge Funds Bet Oil Will Fall Further - Hedge funds boosted bearish wagers on oil to a four-year high as U.S. supplies grew the most since 2001.Money managers increased short positions in West Texas Intermediate crude to the highest level since September 2010 in the week ended Jan. 20, U.S. Commodity Futures Trading Commission data show. Net-long positions slipped for the first time in three weeks. U.S. crude supplies rose by 10.1 million barrels to 397.9 million in the week ended Jan. 16 and the country will pump the most oil since 1972 this year, the Energy Information Administration says. Saudi Arabia’s King Salman, the new ruler of the world’s biggest oil exporter, said he will maintain the production policy of his predecessor despite a 58 percent drop in prices since June. “There’s been a rush to call a bottom,” “The fundamentals are still stacked against a rebound.”
Oil Slides to Near 6-Year Low; Saudi Arabia Holds Firm Despite Supply Glut - Oil fell from the lowest closing price in almost six years amid signs that Saudi Arabia’s new king will maintain its production policy, bolstering speculation that a global glut will persist. Futures dropped as much as 2.7 percent in New York, extending last week’s 6.4 percent slide. King Salman, who took the Saudi throne on Jan. 23, pledged to maintain the policies of his predecessor. U.S. inventories climbed to the highest level for December since 1930, the American Petroleum Institute reported. Greek voters handed election victory to Syriza, a party that’s pledged to end austerity and renegotiate an international bailout. Oil slumped almost 60 percent since June as the Organization of Petroleum Exporting Countries resisted calls to cut output and the U.S. pumped at the fastest pace in more than three decades. Saudi Arabia, the world’s biggest exporter, has chosen not to reduce supply and counts instead on lower prices to stimulate demand, according to Mohammad Al Sabban, an adviser to the kingdom’s petroleum minister from 1988 to 2013. “All the indications from the Saudis point to no major policy changes,” . “The market’s focus remains on supply that isn’t being met by demand.”
Increasing Demand For Refined Products Will Increase Oil Prices -- In last week’s article I posted a chart from the International Energy Agency’s recent Oil Market Report that shows global demand for refined products catching up to supply by the 3rd quarter of this year. My opinion is that all of the analysts who are now blaming the sharp drop in oil prices on a “glut” of supply could change their tune quickly as consumers adjust to lower fuel costs. Just as higher costs reduce demand for any commodity, lower costs will increase demand. This is especially true for a commodity that has a direct impact on standard of living, like oil does. When the price of gasoline plunged below $1.00/gallon in 1986, demand for motor fuels and other refined products increased by almost 5% within twelve months. Today, world demand for hydrocarbon based liquid fuels (including biofuels) is over 92.5 million barrels per day. You can go to the IEA website and see for yourself that normal seasonal demand is expected to push demand over 94.0 million barrels per day within six months. I think both the IEA and our own Energy Information Administration (EIA) are grossly underestimating the price related demand increase that is already starting to show up in the data. Last week’s EIA report confirms that demand is already surging in the United States. Granted, part of the year-over-year increase in gasoline consumption may be a result of the harsh winter weather we had last year, but I think this story is going to play out. If gasoline prices remain low until this summer, we should see a sharp increase in the number of Americans that decide to take long driving vacations this year. We do love our SUVs.
Why $50 Oil Won’t Last: In the past few weeks I have received numerous questions about the role of a “drop in demand” in the oil price decline. These questions are driven by many stories in the media that have referenced a drop in demand. There are two primary reasons given for this so-called demand drop. One is that years of high oil prices have resulted in reductions in consumption through conservation and improvements in vehicle fleet efficiency. The second reason is due to the strengthening dollar, oil has become more expensive for many countries since oil is generally traded in dollars. There are elements of truth behind both reasons. There has indeed been reduced oil consumption in recent years in most developed regions of the world. It is also true that the dollar has strengthened against many currencies. But despite the rationale that explains this drop in oil consumption, ultimately the data must support the narrative. We have to keep in mind that the developed regions of the world aren’t the entire world. Despite this oft-repeated mantra about falling oil demand, there is no evidence that this is actually true. Last October, the International Energy Agency (IEA) reduced its forecast for 2014 global oil demand growth by 200,000 barrels per day (bpd). Their revised forecast was that global oil demand would only increase by 700,000 bpd from 2013. What has happened is that these reductions in the forecast for oil demand growth or economic growth get mistranslated into forecasts of declining demand. I think we can all agree that if I gained 5 pounds a year each year for the past 5 years, but this year I only project that I will gain 3 pounds — I did not lose weight. I will be 3 pounds heavier than I was instead of 5 pounds heavier.
Plunging Oil Prices Both Underpin and Threaten U.S. Policy Objectives - WSJ: Plunging global oil prices are both underpinning and threatening the foreign policy objectives of the Obama administration and its allies, who face what leaders assembled here described as a dangerous convergence of international crises. Fueling the uncertainty, said U.S., Arab and European officials meeting at the annual World Economic Forum, was the death Thursday of Saudi Arabia’s monarch, King Abdullah —a central player in global energy policy and the fight against international terrorism. Mr. Kerry rallied the world’s business and political elite in Davos to marshal their resources to fight Islamic State and other terrorist organizations that he said posed the greatest collective threat to international order since World War II. “We have to get serious about investing in the things that really make a difference,” Mr. Kerry said, also mentioning the political crisis in Yemen, home to a dangerous al Qaeda affiliate. “And make no mistake: If we don’t make those investments today, we will pay far more for it down the road.”The plunge in oil prices is imperiling the ability of some of Washington’s Arab allies to fight Islamic State, even while the drop also undercuts the terrorist organization’s revenues, according to U.S. and Arab officials. Energy powers Saudi Arabia, the United Arab Emirates and Qatar are part of the five-nation Arab coalition that has joined in U.S. airstrikes against Islamic State in Iraq and Syria. But all three governments have said in recent weeks that their budgets will be constrained with oil prices down to nearly $45 a barrel from over $100 last summer.
Even with low prices, US oil industry pushing for exports - Never mind dropping oil prices. U.S. producers are pushing harder than ever for the right to sell U.S. crude oil overseas. It might seem counterintuitive: Oil prices are as low as they have been at any point since 2009 and the height of the Great Recession, and some say they could drop even further. But oil producers are playing a longer game, betting that long-term demand will be strong and new markets offer lucrative rewards for U.S. producers. Supporters see possible inroads in a Congress controlled by Republicans who generally are considered more receptive to oil exports, as well as some signs that the Obama administration may at least be open to consider changes to longstanding policy, which bans the export of raw crude. The ban was put in place in the 1970s after the OPEC oil embargo led to fuel rationing, high prices and iconic images of long lines of cars waiting to fuel up. The American Petroleum Institute, the oil industry’s top lobbying arm, is running TV ads highlighting the growth of the U.S. shale oil industry as evidence that the there’s enough oil for both domestic and overseas markets. The organization lists overturning the ban as its top priority for 2015. Jack Gerard, the organization’s president, said the policy is the result of “a politically motivated disconnect between today’s much-changed energy landscape and the political orthodoxy of some who continue to push for arbitrary and unfair limits or an outright ban.”
EIA: Record Oil Inventories, Imports at 7.4 million barrels per day - Every week the EIA releases a petroleum status report. I wanted to post an excerpt this week for two reasons: 1) Oil inventories are at a record level for this time of year (see blue line on graph), and 2) the US is a very large oil importer at 7.4 million barrels per day (contrary to some myths). From the EIA: Weekly Petroleum Status Report U.S. crude oil refinery inputs averaged about 15.3 million barrels per day during the week ending January 23, 2015, 347,000 barrels per day more than the previous week’s average. Refineries operated at 88.0% of their operable capacity last week. ... U.S. crude oil imports averaged over 7.4 million barrels per day last week, up by 204,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.2 million barrels per day, 4.8% below the same four-week period last year. ...U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 8.9 million barrels from the previous week. At 406.7 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years.
Goldman Sachs’s Cohn Says Oil Prices May Hit $30 in Extended Slump - Oil prices will probably continue to decline and could reach as low as $30 a barrel, according to Gary Cohn, president of Goldman Sachs Group Inc. “We’re probably in the lower, longer view,” Cohn, a former oil trader, said Monday in an interview with CNBC. West Texas Intermediate for March delivery fell 44 cents to close at $45.15 a barrel on the New York Mercantile Exchange, the lowest settlement since March 11, 2009. Crude oil has slumped almost 60 percent since June as the Organization of Petroleum Exporting Countries resisted calls to cut output and the U.S. pumped at the fastest pace in more than three decades. Drillers in the U.S. have begun to idle rigs as falling prices make wells aiming to tap shale reserves unprofitable. Cohn, 54, said the commodity business is “very, very strong” because consumers and oil-producing nations are in different positions than they have been in the past few years. “If you’re a consumer today and you can lock in these prices, you’re a lot more aggressive in the markets in hedging than you ever have been,” Cohn said. “The flip side is if you’re an oil-exporting country today and you’re looking at these oil prices and you see a fairly steep forward curve and you see 10 or 15 dollars of price higher a year forward then you do in the spot market, you have to consider trying to lock into that forward price.”
Crude Supplies Surge To Highest Since At Least 1982 -- Remember how exuberant yesterday's small gains in Crude Oil were perceived to be? Yeah - that's all over, with WTI back near a $44 handle - following a large 12.7 million barrel inventory build according to API (EIA reports the 'main event' at 1030ET today - which Saxo Bank warns "a bigger-than-expected build would likely push the mkt over the cliff edge.") Additional weakness overnight is also likely due to Goldman's shift to a 'sell' for the next 3 months. But, as Bloomberg reports, the market is “waiting on the main event of the day, which is the EIA inventory data,” says Saxo Bank head of commodity strategy Ole Hansen. “A bigger-than-expected build would likely push the mkt over the cliff edge, while a not so strong build could be the ammunition the bulls need to trigger some sort of recovery” “The mkt is stuck in a tight range, looking for a breakout, but it is unclear in which direction that breakout will be,” says Hansen. “The mkt is torn between general belief you don’t want to miss the opportunity to buy, while at the same time the fundamentals don’t support the recovery”
Oil dips despite OPEC talk - Oil prices have wavered between gains and losses as traders weighed potentially bullish comments from the Organization of the Petroleum Exporting Countries against ongoing concerns that the market is oversupplied. Oil prices have plunged more than 55 per cent since mid-June on concerns about ample supplies and tepid demand. OPEC decided in November not to lower its output quota, sending prices tumbling lower on the expectation that without intervention from OPEC, it could take months or years for the global glut of oil to shrink. OPEC Secretary-General Abdalla Salem el-Badri said in an interview with Reuters that with prices between $US45 and $US55 a barrel, "I think maybe they reached the bottom and will see some rebound very soon." Prices, which had been trading in the red, turned positive on the news, but then moved lower once again in late trade. US oil for March delivery rose as high as $US46.11 a barrel, up from $US45 a barrel earlier in the day, on the New York Mercantile Exchange. However, prices ended down US44c, or 1 per cent, at $US45.15 a barrel. Brent, the global benchmark, rose from $US48 a barrel to $US49.29 a barrel after the interview was released. Traders again turned bearish in late trade, however, with prices ending down US63c, or 1.3 per cent, at $US48.16 a barrel on ICE Futures Europe.
Bearishness Continues Among Oil Industry Experts: The business world is full of sometimes conflicting theories about what caused the plunge in oil prices during the past seven months, and how low that price will go. But Goldman Sachs seems to have come up with a unified theory. It began late in the afternoon of Jan. 26 when Gary Cohn, the president of Goldman Sachs Group Inc., told the CNBC television program “Closing Bell” that he expected the average price of oil, now around the $45 range per barrel, to fall further, perhaps as low as $30 per barrel. “My view is we’re probably in the lower, longer view,” said Cohn, a former oil trader. “We could definitely get down to $30.” On the same day, Jeff Currie, Goldman’s chief commodity analyst, issued a research paper saying the demand for oil is slowing down in emerging economies, including China, meaning that the price of crude will stay low for a long time, and may never return to the prices they fetched 10 years ago. Related In fact it was Currie who predicted that the price of oil would exceed $100 as it did a decade ago. Now, though, he points to a more recent element in the equation: the surge in shale oil production by the United States.
OilPrice Intelligence Report: Did Saudi Arabia Just Flinch? --As has become the norm, oil markets reacted suddenly to comments by OPEC’s secretary general regarding the possibility of oil reaching $200 a barrel should investment die off due to the current price decline. However, any resurgence (crude futures erased their losses in New York for a time yesterday) was short-lived as news from elsewhere in the space regarding U.S. crude oil reserves and production numbers from around the world, returned market sentiment to normal. At present, the oversupply in the market is estimated at approximately 1.5 million barrels per day. Figures released by the American Petroleum Institute on Jan. 23 showed U.S. inventories reaching their highest December levels since 1930 of 383.5 million barrels. In addition, U.S. production increased by 16 percent to 9.12 million barrels a day, the highest level in a single month since February 1986. A report by the EIA expected on Jan. 28 is expected to show a third consecutive week of growth in U.S. crude inventories. The EIA is predicting consumption by the 34 members of the OECD to drop to 45.6 million barrels a day in 2015. Figures like these, in combination with comments from key oil ministers within OPEC, do little to restore confidence in the markets. Short WTI positions increased by 6,262 contracts to 94,203, net-long positions fell by 3.3 percent to 216,704 with producers increasing their net-short positions by 7,623 to 132,143 contracts. Elsewhere in the markets, bullish bets on gasoline increased by 5.8 percent to 39,418 contracts with futures increasing by 3.5 percent to $1.3128 a gallon. In combination with the spate of recent cuts to capex and employment by many oil majors, with BP opting for a pay freeze in 2015, it is unsurprising that market sentiment is so weary. However, to claim that oil could reach $200 due to a lack of investment is incredibly far-fetched as, even if shale operations continue to be pared back in the U.S., with Canadian tar sands following suit, any oil price rebound to even $100 a barrel would once again make these projects profitable, with supply and demand equilibrium returning quickly given the agility of so many of the major oil companies operating in the U.S,
Oil set for record bear run as OPEC output grows - Oil fell below $49 a barrel on Friday and was on course for its seventh straight month of declines, the longest such bear run on record as a supply glut showed no signs of easing with OPEC increasing production in January. Benchmark Brent crude prices have kept within a band of $45-$50 a barrel since hitting a six-year low on Jan. 13, but analysts have not ruled out further declines as global inventories continue to rise. Supplies from the Organization of the Petroleum Exporting Countries (OPEC) rose in January to 30.37 million barrels per day (bpd), a Reuters survey showed, a sign key members are standing firm in refusing to prop up prices by cutting output. Data this week also showed U.S. crude oil inventories had reached their highest levels since the 1930s. Brent oil futures were down 20 cents at $48.93 per barrel at 1412 GMT (9:12 a.m. ET), while benchmark U.S. WTI futures were down 10 cents at $44.43 a barrel. Brent is on track to post a 14 percent fall for January, marking a seventh month of decline since reaching a peak of around $115 in late June and the longest-running monthly drop since Reuters records started in 1988.
Oil soars on signs US oil companies curtail production - — The price of oil is up 7 percent on indications that production in the U.S. has slowed following the big drop in prices since last June. U.S. oil surged $3.18 to $47.71 a barrel. Baker Hughes reported that the number of rigs drilling for oil in the U.S fell by 94 in the past week to 1,223. That’s down 199 from this time last year. The price of oil plummeted about 60 percent since June as global supplies grew faster than demand. OPEC has declined to cut back on its production, putting pressure on U.S. companies to curtail drilling as oil prices fall to a level that makes some production unprofitable. Futures prices for wholesale gasoline and heating oil also rose sharply, up more than 5 percent.
Former Saudi oil boss says it can cope with low price: Saudi Arabia can cope with low oil prices for "at least eight years", Saudi Arabia's minister of petroleum's former senior adviser has told the BBC. Mohammed al-Sabban said the country's policy was to defend its current market share by enduring low prices. "You need to allow prices to go as low as possible in order to see those marginal producers move out of the market," he said. Mr al-Sabban advised the ministry for 27 years, leaving last year. Saudi Arabia, the largest producer within the Opec oil producers' cartel, has repeatedly said that it will not cut output to try to boost the oil price. Mr al-Sabban said Saudi Arabia's "huge financial reserves" would enable it to cope with the low oil price. The country is now in the process of cutting government spending. Without these cuts, Mr al-Sabban said, Saudi Arabia could not cope with low oil prices for more than four years.
Why Obama and the Saudis Like Low Gas Prices » AEI: Have you heard about the secret conspiracy between the Saudis and the White House? I haven’t either, probably because there isn’t one. But events are playing out exactly as one would expect if such a conspiracy existed. With no help from Barack Obama, the U.S. has launched an energy revolution, becoming the world’s leading oil and natural-gas producer. This has dismayed environmentalists and donors in and out of the Obama administration. After all, Obama bet big — really big — on green energy. The oil and gas boom is not the energy revolution Obama was looking for. Saudi Arabia and other petro-monarchies aren’t happy about it either (which is one reason the United Arab Emirates and other OPEC states bankroll anti-fracking propaganda in the West). Until recently, Saudi Arabia was the world’s biggest oil producer, and it is still arguably the most important one in global markets because its oil is so easy to get out of the ground. The cheaper it is to extract, the easier it is to maintain profits when prices go down. That means the Saudis have an outsized ability to affect the global price of oil. And that’s exactly what they’re doing. “Saudi Arabia,” writes Nathan Vardi of Forbes, “is making a massive $750 billion bet in 2015 that the oil kingdom can endure lower oil prices longer than other major oil producing countries both within and outside OPEC, even including American shale.”
For Saudis, Falling Demand for Oil Is the Biggest Concern - As the world’s oil producers wring their hands over a global glut that’s pushing down prices, evidence is mounting that Saudi Arabia is more concerned about shrinking demand. The world’s largest exporter has chosen not to cut production, counting instead on lower prices to stimulate consumption, said Mohammad Al Sabban, an adviser to Saudi Arabia’s petroleum minister from 1988 to 2013. The Saudis are keeping an eye on investments in fuel efficiency and renewable energy, according to Francisco Blanch, Bank of America Corp.’s head of global commodity research. “Nobody should imagine the world will continue to demand oil as long as you have it in your fields,” Al Sabban said in an interview. “We need to prepare ourselves for that stage.” The U.S. shale revolution showed that forecasts of dwindling world oil supply were premature. It also gave credence to the old adage, attributed to a Saudi oil minister more than 30 years ago, that the Stone Age didn’t end because of the lack of stone. With costs falling for clean energy and international attention focused on slowing climate change, the Saudis are more worried that the world is inching closer to peak demand. Among industrialized countries, that peak was reached 10 years ago, according to the Paris-based International Energy Agency, and fast-developing countries such as India and China won’t become as carbon-intensive, Al Sabban said.
Decapitation Marks the Beginning of Saudi King Salman Reign -- The beheading of a Saudi teacher charged with child sexual abuse has become the first decapitation since the new monarch King Salman bin Abdul Aziz al-Saud took the throne. The online news agency emphasizes that al-Zahrani pleaded not guilty and insisted he was convicted in a "sham trial." His relatives appealed to then King Abdullah, asking him to drop death penalty against Mousa bin Saeed Ali al-Zahrani. In response to their plea, Saudi authorities promised to re-investigate the case carefully. However, on January 23, when the king died, the family of al-Zahrani was notified that in accordance with the new order the teacher would be beheaded on Monday, January 26.
A Saudi Palace Coup - King Abdullah's writ lasted all of 12 hours. Within that period the Sudairis, a rich and politically powerful clan within the House of Saud, which had been weakened by the late king, burst back into prominence. They produced a palace coup in all but name. Salman moved swiftly to undo the work of his half-brother. He decided not to change his crown prince Megren, who was picked by King Abdullah for him, but he may choose to deal with him later. However, he swiftly appointed another leading figure from the Sudairi clan. Mohammed Bin Nayef, the interior minister is to be his deputy crown prince. It is no secret that Abdullah wanted his son Meteb for that position, but now he is out. More significantly, Salman, himself a Sudairi, attempted to secure the second generation by giving his 35- year old son Mohammed the powerful fiefdom of the defense ministry. The second post Mohammed got was arguably more important. He is now general secretary of the Royal Court. All these changes were announced before Abdullah was even buried. The general secretaryship was the position held by the Cardinal Richelieu of Abdullah's royal court, Khalid al-Tuwaijri. It was a lucrative business handed down from father to son and started by Abdul Aziz al Tuwaijri. The Tuwaijris became the king's gatekeepers and no royal audience could be held without their permission, involvement, or knowledge. Tuwaijri was the key player in foreign intrigues -- to subvert the Egyptian revolution, to send in the troops to crush the uprising in Bahrain, to finance ISIL in Syria in the early stages of the civil war along his previous ally Prince Bandar bin Sultan.
Rachel Bronson on King Abdullah’s Death and Its Consequences in Saudi Arabia - Council on Foreign Relations: Abdullah’s greatest contribution to his government, and what will be the most heralded part of his legacy, is the naming of Mohammed bin Nayef as deputy crown prince. This is unprecedented. The passing of power from King Abdullah to King Salman marks the transition to the seventh Saudi king. This is remarkable for any newly formed country—Saudi Arabia was established in 1932—let alone a Middle Eastern nation in the midst of today’s turbulent times. Not only has power yet again transferred peacefully, but the next in line [following King Salman], Prince Muqrin, has already been named. The last six kings have been sons of the first one, King Abdul Aziz, and the biggest challenge was expected to come after Muqrin passed from the scene—when there would be no direct descendants left. Abdullah has avoided that problem with the designation of bin Nayef as deputy crown prince. He is the son of the late Prince Nayef, a son of the founding king. He has been named deputy crown prince and will be the first grandson of the king to rule. This is King Abdullah’s most important act of his tenure.
OilPrice Intelligence Report: New Saudi King Can’t Save Oil Prices -- In recent months, the rhetoric from Saudi Arabia’s oil minister Ali Al-Naimi has been that the Kingdom, home to more than a fifth of the world’s crude oil, would not intervene and instead allow the markets to decide the price of oil. However, traditionally, incoming kings have opted to appoint new ministers to key ministries such as oil and finance. While Al-Naimi has expressed his desire to retire soon, this is not expected until sometime after the June meeting of OPEC, a key catalyst for oil price recovery in 2015. At present, the Saudi budget, which depends on petroleum exports for 85 percent of its annual revenues, balances at around $63 a barrel. This may partly explain Saudi Armaco’s latest decision to diversify its operations by, “investing big in gas,” at a field near Jordan according to its Chief Executive Officer Khalid Al-Falih. With prices hovering around $46 this morning and many predicting a prolonged period of depressed prices, Saudi Arabia will be forced to dip into to its $800 billion dollar cash reserves to handle the largest deficit in its history of $38.6 billion. Meanwhile, two fellow OPEC members are facing their own unique set of challenges. Firstly, Iraq has reportedly lost approximately 50 percent of its revenues from oil exports and has consequently had to boost output to record levels just to stay afloat, according to Bloomberg. Secondly, amid allegations of illegally falsifying Iranian exports as Iraqi by switching ship cargoes off the coast of the United Arab Emirates, Iran is also facing further pressure on its exports from one key trading partner: India. Ahead of President Obama’s visit to India on January 25th, India’s government has asked refiners to cut import numbers from Iran for the next two months in order to maintain year-on-year levels in adherence to the sanctions imposed against Iran.
Can Saudi Arabia Diversify Away From Oil? -- Just off the coast of the Red Sea, about 60 miles north of Jeddah, a massive construction project diverts the eye from an otherwise barren Saudi Arabian landscape. Shiny, modern towers glimmer under the Gulf sun, casting a brief shadow over the empty shipping port and arched gates that boast large billboards of King Abdullah. The project, known as King Abdullah Economic City (KAEC), named after the late king, is one of five planned special economic zones that Saudi Arabia hopes will bring diversity to the Kingdom’s industrial landscape. Scattered along the Red Sea and throughout the Saudi Arabian heartland, each economic city will focus investment in a different industry intended to wean the country off its most precious resource: oil. With oil prices plummeting amid Saudi Arabia’s battle for market share, new industries and economic offerings will help to define the country’s global relevance in the coming decades. Diversity will also provide jobs and opportunities for the 13 million Saudis – about half the population – that are under 25 years old. Attracting global businesses to young cities in the Gulf, however, will require strategic investments and reforms that liberalize the Saudi Arabian operating landscape. The Saudi government envisions the cities, KAEC in particular, as islands of relative liberalism. New economic guidelines would allow for foreign ownership of private companies, accompanied by a streamlined bureaucracy that will reduce turnaround on simple transactions, like visas and customs documents. Relaxed social rules will enhance women’s rights in the cities, cultivating an ambiguous mix of Western and Saudi styles.
Oil Prices Changing The Face Of Global Geopolitics: In a documentary that aired recently on the Canadian Broadcasting Corporation’s popular The Fifth Estate program, an allegory of Vladimir Putin was presented. The wily Russian president was described growing up in a shabby St. Petersburg apartment, where he would often corner rats. Now, punished by low oil prices and Western sanctions against Russian incursions in Ukraine/ Crimea, Putin is himself the cornered rat. Many wonder, and fear, what he will do if conditions in Russia become increasingly desperate. In the last six months oil prices have plunged over 50 percent and the Russian economy is hurting. The country now faces slowing economic growth, a depressed ruble, and runaway inflation estimated to be up to 150 percent on basic foodstuffs. The Kremlin is counting on austerity cuts to help balance its budget, which has revenues coming in at $45 billion lower than earlier projections. The exception, significantly, is defense. With the military exempted from the austerity plan, it begs the question of whether Putin will “play the nationalist card,” such as he did in Crimea, in an effort to strengthen greater Russia during a period of economic weakness.We are already seeing this to be the case. As Oilprice.com reported on Tuesday, Putin is set to absorb South Ossetia – Georgia’s breakaway republic that declared itself independent in 1990. Under an agreement “intended to legalize South Ossetia’s integration with Russia,” Russia would invest 2.8 million rubles (US$50 million) to “fund the socio-economic development of South Ossetia,” according to Agenda.GE, a Tbilisi-based news site.
Oil prices and Nigeria: The north-south divide | The Economist --LOW OIL prices are not good for the Nigerian economy. In its latest forecasts, the IMF's predictions for the Nigerian economy in 2015 have been cut—from over 7% growth to about 5%. The naira, Nigeria's currency, is doing badly. But what are the effects of lower oil in different parts of the country? If new research from two Oxford economists is anything to go by, people in the largely Christian south of the country will do worse than those in the largely Muslim north. The paper looks at the human impacts of oil-price changes. It uses data on 34,000 women between the ages of 15 and 49 taken from the 2008 Nigerian “Demographic and Health Survey” (DHS). Nigeria started producing oil in 1957; the DHS has data on those born from 1958 onwards. The authors compare various measures of well-being to the price of oil in the year that a given person was born. The authors find that in some respects southern ethnic groups benefit most from higher oil prices. Compared to those in the north, dearer oil is linked with an increased likelihood of southern women having a skilled occupation and being in work. Indeed the authors find that economic activity does differentially increase in the south in years of higher oil prices. Why does the south benefit more than the north? It may be because the government, flush with oil rents, increased demand for service-sector industries in the south. But that story seems unlikely: after all, for long periods of the time under investigation the north was politically dominant. The explanation could instead be to do with how northern elites used oil revenue.
Story of the wandering Kurdish tanker finally reaches a conclusion - The oil tanker filled with 1 million barrels of Kurdish crude is finally leaving the coast of Texas and is heading back across the Atlantic with all its cargo still aboard. A report from Bloomberg states that The United Kalavryta is heading to Gibraltar, the British territory on the southern tip of Spain. The ships operator, Kyriakos Maragoudakis, reiterated by email Tuesday that the tanker did not unload any product during its time on the coastal shores of the United States.The tanker found itself in a diplomatic bind lasting six months. In July, the ship turned up on radars close to a Galveston, Texas, port. The potential sale of the Kurdish petroleum left Iraqi officials disgruntled, labeling the cargo “stolen property” and claiming any help to unload the oil would be “in wrongful possession of our client’s crude oil.” In December, Iraq and the Kurds agreed to start selling crude oil cooperatively. At the World Economic Forum in Davos, Switzerland, Iraqi Deputy Prime Minister Rowsch Nuri Shaways claimed the new agreement would allow the two bodies to produce about 550,000 barrels a day more in northern Iraq.
Russia And China’s Growing Energy Relationship -- Russia’s economic freefall and isolation from the West has made it increasingly eager to build its relationship with China, even at the cost of lost leverage with Beijing. But new economic data from China shows that Russia has succeeded in capturing a larger share of the massive – and growing – Chinese oil import market. China’s imports of Russian oil skyrocketed by 36 percent in 2014. The rapid rise in Russian oil exports to China is displacing other sources, such as Saudi Arabia and other OPEC members. The Wall Street Journal reports that China’s oil imports from Saudi Arabia fell 8 percent in 2014, and imports from Venezuela fell 11 percent. The data suggests that Russia and China are finally forging closer trade ties based on energy. They share a massive border, but have been unable to capitalize on what has long appeared to be a well-matched economic opportunity – Russia is a huge energy producer and China is the world’s largest importer of petroleum products. Historic animosity and mutual suspicion had long left a major deal off the table. The sticking point had been price. Years of negotiations over major natural gas trade stalled as each side held out for more favorable terms. However, the conflict in Ukraine and the near-severing of relations between Russia and Europe led to a breakthrough in the Sino-Russian energy relationship – in Beijing’s favor. They agreed to a major natural gas deal in May 2014 that could see Russia export 38 billion cubic meters per year to China beginning in 2018, with the option of ramping those figures up to 60 bcm per year at a later point. Crucially, the two sides appeared to agree on a price in the range of $9-$10 per million Btu (MMBtu), much closer to China’s preferred price point. The exact terms were not disclosed, but China may have even secured a lower price than Europe pays for Russian gas.