it almost seems odd that there were no oil bomb train explosions in the news this past week to report on, while the only 2 oil spills that turned up in the news were of about 10 barrels that occurred on a Ute reservation in southwest Colorado in February and was only reported this week, and that of a spill of about 100 gallons from a cargo ship at Wilmington on the Delaware River...earlier, there was a derailment of 13 rail cars & spill of some oil in southern Manitoba late last week, apparently with no fire or explosion, that slipped under the news coverage of the larger derailment and explosion in northern Ontario that dominated last week's news...and there was also a derailment of 2 cars of an 86 car freight train near Beacon New York that didn't involve an oil spill...
even North Dakota, which usually has a major oil spill or two hit the wires each week, seems to have escaped the week relatively unscathed, with just two brine spills of under 500 barrels each...in the first spill, a pipeline owned by Continental Resources leaked nearly 19,000 gallons of brine after it was struck by excavating equipment about 16 miles north of Tioga, a fairly remote location in northwest N. Dakota...the brine, which is several times saltier than seawater, was said to be contained on the site and did not threaten any waterways or wildlife...the second spill occurred at the site of a wastewater injection well in Bottineau County, about six miles north of Maxbass, when a piping connection failure resulted in a spill of 11,970 gallons of saltwater, which was also contained on the site...
now, just because we didn't hear of any other spills doesn't mean there weren't any...for instance, we rarely hear of any spills in Texas, where nearly half the US wells are located, likely because it goes with the territory in a state where the industry owns the regulators and is hence protected...in Colorado, where they have strict reporting and remediation rules written into law, the Colorado Oil and Gas Conservation Commission requires a written report within 24 hours of any spill greater than 5 barrels, and of any spill off site greater than 1 barrel...hence, in their Oil and Gas spill report of March 16, they reported 8 spills that occurred in between March 4th and March 12, most of them minor, with the largest being of 18 barrels of produced oil that leaked when a valve was left open at the back of a production tank at a well outside of Greeley...with requirements for such reporting being enforced, we know that more than 700 oil and gas spills occurred in Colorado in 2014, a total we can only guess at for other states...
the major fracking-related news of the week came on Friday afternoon, when the Interior Department released new rules for fracking on Federally owned and American Indian lands....the key provision of these regulations is a requirement that frackers must now disclose the fracking chemicals used on such sites to the Bureau of Land Management through the website FracFocus within 30 days of completing their fracking operations; other rules include stricter specifications for well bores and casing, requirements to ensure that flowback, produced water, and other fluids are safely contained, and detailed record keeping and reporting requirements about each fracking operation that takes place on public lands...there are links to several news reports below on these new rules, which will cover about 100,000 oil and gas wells drilled on public lands, as reported on Friday afternoon, but i doubt that many reporters had any more time to read through the 395 page pdf from the Department of the Interior than i did...
usually the Friday announcement of a policy initiative such as this is intended to bury the news and catch the opponents offguard, but the outline for these new regulations were telegraphed well in advance, so the oil industry was ready to respond, while their puppets in congress already had their lobbyist-supplied scripts written and waiting...by Friday afternoon, the Republicans in the house were already speechifying about blocking these regulations, without being clear how, while 27 Senate Republicans already introduced a bill to overturn them...meanwhile, the Independent Petroleum Association of America (IPAA) and Western Energy Alliance were already filing a lawsuit against the Interior Department, apparently on the disclosure requirements which they maintain are trade secrets...that the oil industry was unhappy does not mean that environmentalists were pleased, however, as groups such as Greenpeace and Americans Against Fracking called the new regulations a giveaway to the oil and gas industry...
in an issue we should start paying more attention to, the push to allow for exports of US crude oil seemed to be getting more traction this past week as well...as you'll recall, the export of US crude is prohibited by the Energy Policy and Conservation Act of 1975, which was passed on the heels of the Arab oil embargo, and except for the earlier administration approval of the export of ultralight oil from US shale wells, US exports of heavier grades of crude have generally been restricted to Canada and Mexico, both of whom we import more from than we export to...so while it's been a ongoing wet dream of the oil industry to get that export ban overturned, and it hasn't been uncommon to see an industry official advocate that the ban be lifted, there were several such calls this week leading up to and in the wake of a Senate Energy and Natural Resources Committee hearing on oil exports Thursday...while most of the arguments in favor of exports have previously suggested that allowing them would add gazillions of jobs to the 198,300 who work in oil & gas extraction now, oil companies packed this hearing with experts who testified that allowing exports would reduce the prices of gasoline in the US, and those pushing a host of geopolitical factors, suggesting we could use oil exports as a weapon against Iran and Russia...
let's be clear; if there's one policy change that will bring fracking back with a vengeance, it would be to allow domestic drillers to sell their crude overseas...over the past 5 years, WTI (West Texas Intermediate), the US benchmark price for crude oil, has generally been trading for about $10 a barrel less than the price of Brent oil, the similar international oil benchmark price...if we allow exports, that price gap will close, most likely to the upside, because it's been the domestic glut of oil that has been holding US oil prices lower...so in addition to tearing up more of our countryside with the kind of industrial activities we've seen are associated with fracking, we'll be seeing even more oil and brine spills, more oil bomb trains crisscrossing the country, more injection well and fracking induced earthquakes, and higher prices for all the oil based products most of us still buy, all so that the oil companies can extract a few more bucks of profit out of each barrel...and this applies not just to the current push in Congress to allow for exports of US crude, but it also applies to the two trade agreements being negotiated in secret by the administration at the behest of 600 multinational corporations...if Obama gets trade promotion authority (TPA) from Congress, also known as "fast track", which the Republicans tend to support, these two trade deals, which would mandate oil and gas exports to Asia and Europe in the same way that NAFTA clears them for Mexico and Canada, can be passed without a public hearing or debate, on a simple majority yes or no vote of Congress...even worse, draining America first will leave us vulnerable to higher prices and the whims of international oil producers in the future, after our fracking boom runs its course; in the most recent forecast from the Energy Department, US oil production is expected to peak in 2020 and gradually decline from there...meanwhile, they also project the average price for oil to rise to $234.53 a barrel by 2040...so if we let the oil companies drain our oil basins to sell that oil at $50 to $60 a barrel now, we'll be paying them 4 to 5 times as much to import whatever oil we still need 25 years into the future...
otherwise, this week's story on oil production, inventories and rig count was pretty much the same as it's been...our oil production for the 2nd week in March averaged 9,419,000 barrels a day, up .57% from the 9,366,000 barrels per day rate of the prior week, and 14.7% than the 8,215,000 barrels per day that we produced in the 2nd week of March last year...similarly, our inventories of crude in storage reached yet another record. increasing by 9.6 million barrels from the previous week to 458.5 million barrels; that's 22% more than the 375,852 barrels of oil stored commercially in the US in the 2nd week of March a year ago...the weekly Petroleum Status Report (62 pp pdf) also showed that US crude oil imports averaged 7.5 million barrels per day last week, up by 703,000 barrels a day from our imports in the first week of March...in the four weeks ending March 13th, US crude oil imports averaged over 7.2 million barrels per day, 0.6% higher than the same 4 week period last week...so you see that despite our record production, our imports of oil are still rising to cover the contango trade...
oil field activity continued to slow, however, as the number of US rigs drilling for oil this week fell by 41 to 825, and the count of rigs drilling for natural gas fell by 15 to 242; this leaves 648 less oil rigs operating than a year ago, and 48 less gas rigs than the same week in 2014 ...the Baker Hughes weekly rig summary also showed that of the 1069 rigs operating as of March 20th, 829 were engaged in horizontal drilling, down 20 from the prior week, 148 were drilling straight down, 18 less than the prior week, and 92 were engaged in directional drilling, again a drop of 18 rigs from the week of March 13th count...and in an oddity, 11 of the 46 Gulf of Mexico platforms that were working last week and 6 of the 8 rigs drilling on inland lakes were shut down; in prior weeks, most of the closures had been land based...nonetheless, this week also saw 39 fewer land based rigs operating, with just 1030 operating as of March 20th...once again, the Permian Basin in west Texas saw the greatest decrease in activity, with 19 rigs taken out of service there; combined with losses of 8 rigs in the Eagle Ford and more elsewhere, that left Texas with 465 active rigs, 36 fewer than last week...with the Gulf shutdowns, Louisiana's rig count fell by 18 to 75; in addition, New Mexico's count dropped by 5, while North Dakota and Ohio both saw 3 rigs shut down...Ohio now has 28 rigs operating, down from 35 two weeks ago...
while the number of rigs actively drilling for oil and gas in the US fell for the 15th consecutive week, the rig count story that everyone seems to be missing is occurring north of the border...in the past two weeks, Canadian drillers have shut down 160 rigs, more than half of the 300 they had running on March 6th, leaving them with just 140 operating...moreover, 120 of the rigs idled in Canada over this period were drilling for oil, so now they only have 30 oil rigs left up, meaning that drilling for oil in Canada has just about stopped...while their gas drilling operations are also down, it's not as severe a cutback, as they shut down 15 gas rigs last week and another 25 this week, leaving them with 110 gas rigs still in use...this leaves Canada down 249 rigs from last year's 389, with oil rigs down from 210 to 30 and gas rigs down from 135 to 110...quite interestingly, that Canadian oil would shut down first was one of the first things we discovered when we compared the breakeven prices for production in various US and worldwide oil fields the weekend after the OPEC oil meeting...
-------------------------------------------------------------------------------------------------------------Judge shoots down Broadview Heights ban on future oil and gas wells | cleveland.com: - - Two oil and natural gas firms can drill new wells in Broadview Heights, a judge has ruled, effectively overturning the city's voter-approved ban on future wells. In a March 11 ruling,Cuyahoga County Common Pleas Judge Michael K. Astrab said that Bass Energy Co. Inc. of Fairlawn and Ohio Valley Energy of Austintown - and other oil and gas companies - can drill new wells in Broadview Heights. Bass and Ohio Valley sued Broadview Heights in July, challenging the city's Community Bill of Rights, a charter amendment that includes a ban on future oil and gas wells. Voters approved the bill of rights in November 2012. Bass and Ohio Valley, in their lawsuit, said the state of Ohio, not Broadview Heights, has sole authority to permit or deny drilling and to regulate wells. Astrab, in his nine-page ruling last week, agreed. He said state law gives the Ohio Department of Natural Resources "sole and exclusive authority'" to permit, locate, space and regulate oil and gas wells. Further, Astrab said state code prohibits local governments from exercising authority that "discriminates against, unfairly impedes or obstructs oil and gas activities and operations." In December, Mothers Against Drilling filed its own lawsuit against the state of Ohio and Gov. John Kasich in an attempt to stop drilling in Broadview Heights. That case is ongoing in county common pleas court.
OH Antis Handed Crushing Defeat in Broadview Hghts Home Rule Case - We’ve commented before on the lawless tendencies of anti-drillers, particularly in Ohio where, when they lose a court case, they declare the government is illegitimate (see OH Anti-Drillers on Rampage after Supreme Court Home Rule Decision). It hasn’t been a full month since the Ohio Supreme Court ruling and now a second, crushing defeat for anti-fossil fuelers. Last week a Cuyahoga County Common Pleas Court judge struck down the Cleveland suburb of Broadview Heights’ so-called community bill of rights that bans all, including shale drilling. Once again, as with the Supreme Court “Munroe Falls” case, we see what sore losers anti-drillers are. If a court case like Broadview Heights doesn’t go their way, they immediately start talking about anarchy–that the government has “ceased to be legitimate.” These are not only stupid people, they’re dangerous too… We now have two Ohio court cases–one from the Supreme Court, the other from a county court–that uphold Ohio law which says local municipalities’ home rule stops where the state’s interest begins when it comes to oil and gas drilling. That is, state law specifically empowers the state to control this activity–not local towns and cities. Here’s more on the Broadview Heights decision: A Cuyahoga County judge has struck down Broadview Heights’ community bill of rights that banned additional drilling. The action came from Judge Michael Astrab in what was a major victory for Ohio’s drilling industry. Astrab said the city’s community bill of rights conflicts with state law that gives the Ohio Department of Natural Resources sole authority to regulate drillers since 2004. Many had questioned whether such community bills of rights are legal in Ohio, and the Broadview Heights case is the first Ohio case to get a legal review.
Yet Another Town Botches a Frack Ban -- As you may recall, there is a right way to “ban fracking” and a wrong way. Yet another town in Ohio gets it wrong. See below. No town ban was overturned in New York and the reason why is that they did not simply single out and ban fracking (surprised ?) They defined fracking as one of many industrial uses, and prohibited all industrial activities (not just fracking) under their comprehensive land use plans and zoning ordinances. The state regulates how oil and gas wells are drilled. Local zoning laws regulate where they are drilled and where they may not be drilled. Any questions ? Who promotes the legal fiction that a municipality can simply amend their charter to say King’s X on fracking ? Some fractavist snake oil salesmen . . .– Two oil and natural gas firms can drill new wells in Broadview Heights, a judge has ruled, effectively overturning the city’s voter-approved ban on future wells. In a March 11 ruling, Cuyahoga County Common Pleas Judge Michael K. Astrab said that Bass Energy Co. Inc. of Fairlawn and Ohio Valley Energy of Austintown – and other oil and gas companies – can drill new wells in Broadview Heights. Bass and Ohio Valley sued Broadview Heights in July, challenging the city’s so called “Community Bill of Rights,” a charter amendment, not a zoning law, that includes a ban on future oil and gas wells. Voters approved the bill of rights in November 2012. Bass and Ohio Valley, in their lawsuit, said the state of Ohio, not Broadview Heights, has sole authority to permit or deny drilling and to regulate wells.
Fracking-tax ballot issue? - Columbus Dispatch -- Maybe Ohio’s Republican lawmakers and the oil-and-gas interests who command their loyalty don’t believe Gov. John Kasich when he hints at a possible statewide ballot issue to hike the state’s puny severance tax. They should, because a ballot issue is possible and would appeal to voters. Those oil-and-gas titans who call Kasich’s proposed 6.5 percent tax on oil profits too burdensome should consider how they would like a 10 percent tax or 15 percent or 20 percent, because voters likely would be more than happy to approve it. Most Ohioans — the ones who don’t receive cash donations from the oil-and-gas industry — favor raising the severance tax, levied on companies that profit by extracting irreplaceable resources. Ohio’s current tax is far lower than that of other shale-drilling states. That means Ohioans are being cheated out of reasonable compensation for the loss of those resources. Everyone welcomes the jobs and investment that can come from shale drilling, but the boom doesn’t come without problems. Roads in drilling areas take a beating and neighbors have to worry about air and water pollution from the drilling itself and from disposing of the toxic-water byproduct. Where disposal wells are drilled, experience has shown there’s even the possibility of earthquakes. Letting out-of-state companies pay a fraction of what they pay in taxes elsewhere leaves local communities with less money to manage the impact and makes it harder for the state to pay for regulation and monitoring to ensure safety. Still, lawmakers, who count drilling-industry giants among their biggest contributors, refuse to consider a reasonable increase in the tax. It’s a disservice to the people of Ohio, and taking the issue directly to the people via the ballot would be a perfect remedy.
Republicans change their minds about pushing fracking in state parks - A push to allow fracking under state parks, opposed by Gov. John Kasich, died in a legislative committee today. Republicans who control the House Energy and Natural Resources Committee changed their minds on whether include the public lands in a bill designed to speed up the permitting process for fracking. After a 15–minute private GOP caucus, the panel agreed to an amendment from Rep. Sean O’Brien, D-Warren, to take the parks out of the bill, and to forbid surface disruptions in state forests. The amended bill passed without objection and was sent to the full House. Rep. David Leland, D-Columbus, tried to remove state lands through an amendment a week ago, but his provision was tabled – usually a sure death in the legislature. The General Assembly approved fracking in Ohio’s parks in 2011, and Kasich signed the bill. Under the 2011 law, potential drillers must get permission from a newly created Oil and Gas Commission was given the responsibility of approving potential drillers after completion of environmental and geological studies, determining the potential impact on visitors, seeking public input and meeting other requirements. But Kasich had a change of heart on allowing drilling on public lands and in effect imposed a unilateral moratorium by not appointing members to the commission — meaning that nobody could get an OK to drill in parks.
No Fracking in State Parks, Ohio House Democrats and Republicans Surprisingly Agree -- In a surprising move for a polarized Ohio legislature controlled by far-right Republicans cozy with fossil fuel interests, its House Energy and Natural Resources committee voted 12-0 Tuesday to ban fracking in state parks. The full bill, which aims to speed up the drilling permitting process, was then passed unanimously on the House floor Wednesday. It now heads to the Senate. It comes following a series of maneuvers in the last several years that have left both fracking operators and anti-fracking activists unsure where they stood. Just last week, House Republicans had opposed such a ban. But when an amendment was proposed by House Democrat Sean O’Brien just before the committee convened Tuesday, it took a 15-minute recess so Republicans could confer privately. When they returned, they had agreed to support the amendment, which also protects the surface of state forests from being disrupted by fracking although it could still take place underground. “Despite its best efforts, industry was stonewalled from snorkeling through state parks,” said Trent Dougherty of the Ohio Environmental Council. “OEC testified against the bill in late February, citing, among other concerns, the bill’s overreaching impact to state protected forests and parks. Tuesday’s amendment addressed some of our major concerns. We would have desired no bill approving unitization on public lands, and on the other side, industry wanted to force ODNR to allow drilling units to include all public owned lands in the state—no questions asked. In the end, the bill was a compromise where industry can force ODNR to move at the speed of business, just not over the back of Mother Nature.”
Drilling Permit Issued For Injection Well In Troy Township - K&H Partners has been issued a state permit to drill its third injection well in Troy Twp. "The injection well permit was issued to K&H today and the Ohio Department of Natural Resources will monitor each step of the drilling and injection process," according to a statement released Wednesday by the agency. The permit was issued without holding a hearing. ODNR spokesman Eric Heis told The Messenger last month that 243 comments were received about the permit application, with only one in favor of the well. Many of the comments requested a public hearing. "No public hearing will be held, as no public comment objections were new or unaddressed in the initial permit review process," Wednesday's ODNR statement said. Roxanne Groff, a member of the Athens County Fracking Action Network, said that Rick Simmers, chief of the Division of Oil and Gas Resources Management, is required to hold a public hearing if relevant and substantive objections are raised. Groff said she believes those who objected to the application met that requirement. "ODNR has not addressed the substantive and relevant concerns raised by people here in Athens County," she said. Groff said that when she got word the permit was issued she was in the process of writing her third letter (regarding this application) to the governor's office asking him to intervene and require a public hearing. She asserted that Simmers has failed to address seismic concerns regarding the K&H application. She noted that there has been seismic activity in both Athens County and Washington County.
What would you do? - While no drilling companies have proposed drilling oil or gas wells in the city of Athens, city voters last November overwhelmingly approved a ban on oil and gas drilling, fracking and related activities within the city limits. However, since that vote, courts in Ohio, including the state Supreme Court, have ruled against local efforts to restrict or ban fracking (the intensive process used in deep-shale oil and gas wells throughout the region). In the most recent case, Cuyahoga County Common Pleas Judge Michael Astrag ruled that a community bill of rights for Broadview Heights, Ohio, conflicts with a state law that reserves oil and gas regulation to the Ohio Department of Natural Resources. The Broadview Heights law is similar to the one approved by 79 percent of Athens city voters in November. In light of the recent decisions striking down local oil-and-gas regulation, The Athens NEWS queried elected and appointed city officials last week to see how they would proceed in case an oil and gas outfit applied for a state permit to drill within the city limits. The officials also were asked about their position if a fracking waste injection well were proposed in the city. Five of seven Athens City Council members said last week that they fully expect the city of Athens to enforce its Community Bill of Rights, with its fracking ban, if the Ohio Department of Natural Resources were to approve an oil or gas drilling or injection well permit for within the city limits.
Court rulings suggest Athens fracking ban is indefensible: Athens city officials should admit that the Community Bill of Rights/fracking ban approved by city voters in November doesn't have a snowball's chance in hell of surviving a legal challenge. That being the case, they should quit pretending the amendment is defensible. A more honest and effective approach would be to help kick-start a statewide campaign to pass a state constitutional amendment that grants local communities the authority to regulate oil and gas drilling and related activities. Granted, that approach would require city officials to familiarize themselves with the clear defeats that other local oil-and-gas regulations and prohibitions have suffered in recent court cases in Ohio. Our interviews last week about this issue with elected and appointed city officials revealed a surprising lack of knowledge on the issue in general, and the recent Ohio court cases specifically. Some city officials seemed indifferent. We asked Athens officials how the city should respond if the state were to grant a permit for an oil or gas well, or for a fracking waste injection well, within the city limits. By law, the city of Athens prohibits any oil and gas drilling or related activities. Seventy-eight percent of Athenians who voted in November approved a Community Bill of Rights prohibiting drilling activities in the city limits. Since that vote, two courts – including the biggest one in Ohio, the state Supreme Court – have ruled against Ohio municipalities that had laws regulating or banning oil and gas activities. In each case, the courts cited Ohio Revised Code Chapter 1509.
Where exactly are Athens County's injection wells? (interactive map) - Athens County doesn't actually have wells specifically used for fracturing underground rock to extract oil and gas, but it is home to seven wells where fuel companies inject byproduct waste from that extraction. All seven wells are classified as class II injection wells, which house brines and wastewater, among other substances, according to a fact sheet from the Ohio Department of Natural Resources. ODNR just recently approved a permit for a 4,200-feet-deep well to operated by K&H Partners in Troy Township, near Coolville. As of last fall, there were 199 active injection wells in Ohio, a state where the byproduct fluids aren't required to be tested prior to their injection. In all of Pennsylvania there were only 10 permits for such wells, as of last fall. In 2014, well operators injected 2,757,508 barrels of brine into six of Athens County's active injection wells, according to ODNR. Click on each point on the map to find out more information about each of these wells that cause so much controversy in Southeast Ohio and throughout the United States.
Number of drilling rigs in Ohio continues to drop - The number of drilling rigs in Ohio’s Utica Shale region continues to drop. There are 27 rigs drilling in Ohio, as of March 14, the Ohio Department of Natural Resources said. That’s down from 37 rigs Feb. 28 and from 49 rigs Jan. 3, according to state records. The drop in the rig count comes as commodity prices for oil and natural gas continue to drop. Many drillers have scaled back 2015 operations in eastern Ohio and elsewhere. Ohio has 1,393 drilled Utica Shale wells, of which 828 are producing. The U.S. Energy Information Administration on Tuesday said drops in rig counts in three key oil areas foreshadow a growing drop in oil production. That analysis looked at the Eagle Ford Shale in Texas, the Bakken Shale in North Dakota and the Niobrara Shale in Colorado and neighboring states. Those three oil areas are projected to produce 24,023 fewer barrels per day in March, the federal agency said. It is the first decline since the agency published its Drilling Productivity Report in October 2013.
Despite falling prices, Ohio oil production increases -- Oil and natural-gas prices might be low, but production in Ohio’s Utica shale region next month is expected to continue rising. The forecast, issued by the Energy Information Administration, shows the Utica is one of two shale regions in which oil production is on track to grow, while the country’s other five regions are projected to have reductions or flat growth. “The biggest thing that differentiates Utica from the other regions is Utica is relatively young,” said Jozef Lieskovsky, an analyst for the energy agency. Because the region’s development is more recent, most of its existing wells are still producing at a high rate, he said. This, along with output from new wells, is enough to maintain a net increase. But this does not mean the region has been immune from the effects of low commodity prices. Production would almost certainly be growing much faster if prices were higher, Lieskovsky said. Energy companies in the Utica are projected to produce 62,000 barrels of oil per day in April, up from 59,000 in March.
Utica Shale: Weak vs. Strong is coming -- Chris Doyle, the executive vice president of operations for Chesapeake Energy Corp., believes that over the next few years it will be clear who the weak and strong are in the Utica shale. Doyle’s experience in the Utica Shale started back in 2011 while managing the Appalachian division of Anadarko Petroleum Corp. At the time, the company had acquired about 400,000 acres in the Utica Shale located in Ohio and drilled its first well. Doyle left Anadarko in mid-2013 for a similar job with Chesapeake. Doyle soon learned that the Utica wasn’t as oil rich as many had hoped, but the region’s natural gas and natural gas liquids were ample. As reported by Columbus Business First, “It’s been a bit of a roller-coaster ride for people like Doyle. The first few years of Utica exploration focused on acquiring large swaths of land using the best geological information companies had at that time. Then the relative performance of the area started to be known and the “core” of the play was defined along a corridor of southeastern Ohio around Belmont and Monroe counties.”Having been in the Utica Shale for years now, Doyle believes the time has come for companies to prove themselves after dedicating so much time and money in the region. He also feels that over the next few years there will be a divide between companies operating in the Utica and it will be clear who the weak are: This is where you will be able to separate the weak from the strong.
Utica well activity in Ohio -- The rig count in the Utica Shale has begun to drop, but some still see hope in the region, if you are strong enough of course. Chesapeake Energy Corp.’s Executive Vice President of Operations Chris Doyle believes that now is the time when people will begin to see a separation of companies, the weak and the strong. Doyle explained how it is time for companies that have put in the hours and spent the money on operations in the Utica to really prove themselves. Of course, Chesapeake Energy has always been a top company in the region, continues to remain at the top. According to Doyle, Chesapeake has zero plans to leave the Utica and plans on sticking around for decades. Chesapeake Energy Corp. is the second largest natural gas producer in the U.S. The company has an industry leading portfolio of excellent unconventional wells and focuses on discovering and developing its extensive and geographically diverse oil and natural gas resources. Chesapeake Energy produces over 700,000 barrels of oil per day, a 48 percent increase since 2010. The following information is provided by the Ohio Department of Natural Resources and is for the week ending on March 14th. DRILLED: 301 - DRILLING: 264 - PERMITTED: 462 - PRODUCING: 828 - TOTAL: 1,855
Marcellus horizontal well activity in Ohio - While Marcellus activity in Ohio remains the same, the Department of Conservation and Natural Resources (DCNR) is boosting gas drilling monitoring in Pennsylvania. Pennsylvania Governor Tom Wolf has proposed a $342 million budget for the DCNR in the fiscal year 2015-2016, an $8 million increase compared to last year. About a third of the budget would come from the Oil and Gas Fund based on payments for public land drilling. Wolf also plans to use an additional $22 million from the taxpayer-supported General Fund, which will be a change for the DCNR since it was mainly supported by the Oil and Gas Fund. The budget will be used to study the long-term impacts that oil and gas drilling operations have on air and water quality, wildlife and people who visit the forests. Cindy Dunn, secretary-designate of the Department of Conservation and Natural Resources, explained the agency has already hired botanists and biologists to study the impacts that oil and gas drilling is having on plants. The funding comes after Gov. Wolf’s executive order back in January that reinstated a moratorium on leasing new state forest or state park land for drilling. In his order, Wolf refers to the need for additional research and monitoring in order to completely understand the impacts of oil and gas drilling in state forests and parks. The following information is provided by the Ohio Department of Natural Resources and is through the week ending on March 14th. DRILLED: 15 - PERMITTED: 15 - PRODUCING: 13 - INACTIVE: 1 - TOTAL: 44
Where do Pennsylvania oil and gas drillers get their pipe? -- State Sen. Jim Brewster was angry when he heard in June that U.S. Steel was about to close a plant in McKeesport that made pipe to transport natural gas. “When I have a plant shut down with 175 to 200 jobs, I have a problem with that,” said Mr. Brewster, a Democrat who is a former mayor of McKeesport and whose late father worked at a pipe plant in the city. When he heard from U.S. Steel officials that a big part of the reason for shutting down the plant was that the oil and gas industry here was buying a lot of pipe made in other countries, he got angrier. Before that, Mr. Brewster said, “I hadn’t given much thought to where the pipe was coming from.” There is no requirement that drillers use domestic steel, but Mr. Brewster believed the industry should work to provide American jobs.Mr. Brewster wanted more detailed information about pipe in both oil and gas wells, so he asked his staff to look into where the pipe used in Pennsylvania wells was coming from. They used well record data from the state, which since October 2012 has required drillers to indicate the country of origin for every section of pipe that goes into a well. Because of errors by drillers filling out the forms, and delays by Pennsylvania Department of Environmental Protection staff in filing the forms, Mr. Brewster’s staff was able to find properly prepared records on only 709 of the 4,473 wells that were drilled between Oct. 5, 2012, and Oct. 30, 2014. About half of the 709 wells used all American-made pipe; about one-third used some combination of domestic and foreign pipe; and nearly 20 percent of the wells used just foreign pipe.
Special issue delves into the long term consequences of fracking on people, environment: Marcellus shale extraction and its potential negative effects on the environment is the subject of a recently published special issue in the Journal of Environmental Science and Health, Part A. This issue, comprised of eight different papers, delves into the long term consequences fracking has on people, animals, and the environment. Paper topics range from the positive correlation between the amount of fracking and mercury found in the surrounding wildlife, to the long term impacts of unconventional drilling on human and animal health. The research was presented at the 2013 conference Facing the Challenges: Research on Shale Gas Extraction, held at Duquesne University. "This publication presents some of the biggest topics scientists are grappling with as they study unconventional energy extraction," said Dr. John Stolz, director of Duquesne's Center for Environmental Research and Education and the conference organizer. "Given the importance of fracking and its possible impacts on health and the environment, we welcome this special issue. It provides academics, industry experts and residents with the opportunity to see a number of different aspects gathered in one volume." Some articles cover topics such as human exposure to unconventional natural gas development, well water communication in rural communities, and animal health conditions near natural gas wells.
P.A. needs a train derailment task force, according to Casey -- Pennsylvania Senator Bob Casey is pushing for a federal legislation that would put in place a task force to acknowledge the increasing number of crude oil train derailments occurring in Pennsylvania. The legislation, titled The Response Act, would develop a Federal Emergency Management Agency National Advisory Council subcommittee that would assist first responders in dealing with crude oil train derailments. According to data from Sen. Casey’s office, there has been a drastic increase in oil train derailments from 2008 to now. The committee would suggest recommendations to increase training and responses within a year. Sen. Casey commented on the increased number of derailments and the need for legislation: The increase in train derailments in Pennsylvania and throughout the nation is troubling and requires action … This legislation is a commonsense approach that could give our first responders more training and the additional resources they need.The most recent crude oil train derailment to take place in Pennsylvania was on February 12th. A Norfolk Southern train was hauling heavy Canadian crude oil when it derailed and spilled in western Pennsylvania. The train crashed into an industrial building and 19 of the 120 were carrying crude oil. Four of the cars spilled between 3,000 and 4,000 gallons of oil. No injuries were reported and the leaks were plugged. Cleanup began that day and the Federal Railroad Administration said it was dispatching an investigator to the derailment location.
Public needs answers about destination of gas in PennEast pipeline - When asked recently if the PennEast pipeline would be used for liquefied natural gas export, Tony Cox, PennEast project manager, said there is "no evidence whatsoever of that." PennEast maintains its line is designed for Pennsylvania and New Jersey. Consider these facts. First, Peter Terranova, vice president of UGI Energy Services, lead company in PennEast, gave a presentation July 21, 2014, at a Department of Energy event in Pittsburgh with this phrase in slide 9: "To SE PA, Philly, LNG Exports?" Slide 9, titled "A Direct Pipe from Supply to Market," has one arrow from Marcellus Shale joining five arrows with captions, including, "To MD, DC Markets, Mid-Atlantic Power Gen." Second, UGI's Oct. 17, 2012 "Analyst Day" presentation for investors mentions the now suspended "Commonwealth" pipeline, apparent predecessor to PennEast's proposal. Slide 102, "Pipelines: Commonwealth," notes, "The proposed route preserves the option to extend from Eagle to Cove Point, MD." Dominion Resources submitted its Federal Energy Regulatory Commission application for an LNG export facility at Cove Point, MD, on April 1, 2013, five months later. Third, on Oct. 9, 2014, in Falmouth, Maine, FERC Office of Energy Projects Director Jeff C. Wright described numerous "pre-filed," "pending," and "potential" gas transmission lines from Marcellus Shale (slides 7-9). Slides 10-12 discuss future LNG exports in terms of 4 "approved," 13 "proposed," and 13 "potential" LNG sites. Could future LNG export terminals draw from PennEast's pipeline and its interconnects? Which other markets would PennEast's pipeline supply? The public deserves answers.
PennEast Spams FERC - The PennEast Pipeline is in the pre-file stage of the Federal Energy Regulatory Commission rubber-stamping process. (Docket#15-1)Since its announcement in late 2014, the PennEast Pipeline has been met with unprecedented opposition.Townships and county governments have passed and filed resolutions against it, and opposition to the PennEast Pipeline ruled the FERC scoping hearings held earlier in 2015.Between September 2014 and now, over 1,500 comments have been submitted to FERC. The vast majority are thoughtful and original writings of residents along the pipeline route, who express, in their own words, why they oppose PennEast. It is obvious PennEast is under fire with the growing numbers of people and communities who are against this project. How does PennEast fight back? One way would be to encourage their supporters to also file comments, but that would mean supporters would have to take time, compose a comment, and then register with FERC to submit it, or pay postage to send it in via the US Post Office. Perhaps PennEast did try this, but judging from comments submitted to FERC, the supporters appear to be reluctant to make that effort. Next best thing, is to SPAM the FERC with Preprinted Postage Paid PennEast PostCards. Supporters would only need to fill in their name, address, phone number and check the one and only box available. There is a space for comments, however it has usually been left blank.
Segmentation – A Pipeline Loophole -- In 2014 the Delaware Riverkeeper Network (DRN) successfully won a lawsuit against the Federal Energy Regulatory Commission (FERC). The lawsuit involved the Tennessee Gas Pipeline Company’s (TGP) Northeast Upgrade Project (NEUP). The NEUP project involved the interdependence of its 300 Line upgrade project components. TGP tried to hide this interdependence to avoid critical environmental regulation and oversight. Avoiding interdependence and thus finding a loophole by segmenting projects eliminates the need to look at cumulative impacts of the project will have. Segmenting projects eliminates the need to take existing pipelines and known future projects. It puts the specific pipeline in a vacuum. In a decision issued June 6, 2014, the United States Court of Appeals for the District of Columbia, ruled that the Delaware Riverkeeper Network, the NJ Sierra Club and New Jersey Highlands Coalition were correct in their legal challenge to the Tennessee Gas Pipeline Company’s Northeast Upgrade Project and ordered additional analysis and review. The Court stated: “On the record before us, we hold that in conducting its environmental review of the Northeast Project without considering the other connected, closely related, and interdependent projects on the Eastern Leg, FERC impermissibly segmented the environmental review in violation of NEPA. We also find that FERC’s EA is deficient in its failure to include any meaningful analysis of the cumulative impacts of the upgrade projects. We therefore grant the petition for review and remand the case to the Commission for further consideration of segmentation and cumulative impacts.” “On the record before us, we find that FERC acted arbitrarily in deciding to evaluate the environment effects of the Northeast Project independent of the other connected action on the Eastern Leg.” Logic would dictate if one pipeline has an impact that the impact would increase with the addition of more pipelines. In other words there would be a cumulative impact.
Constitution Pipeline can access properties, judge orders - Constitution Pipeline Co. can access properties in Susquehanna County the company seeks to condemn to build its new natural gas pipeline to New York, a federal judge ordered Tuesday. Constitution argued it needs to access seven properties in New Milford, Jackson, Oakland and Harmony townships that it has not been able to obtain through negotiation. A joint partnership among midstream company Williams, Cabot Oil & Gas Corp., Piedmont Natural Gas and WGL Holdings, Constitution is ready to begin work on its 124-mile line from Brooklyn Twp. to Schoharie County, New York. The 30-inch thick line is designed to carry 650 million cubic feet of gas per day. The company is in a hurry to gain necessary permits, complete surveys and start work as soon as possible to comply with time-sensitive conditions imposed by the Federal Energy Regulatory Commission, which approved the project in December. It must complete the project by Dec. 2, 2016.
Judge rules shale gas pipeline can cross holdout properties — The companies backing a 124-mile pipeline designed to ferry cheap Marcellus Shale natural gas to New York and New England can build across seven northeastern Pennsylvania properties whose owners had not agreed to it, a judge ruled. U.S. District Judge Malachy Mannion ruled that the Constitution Pipeline has the necessary permits from the Federal Energy Regulatory Commission and that it serves the public interest by providing additional natural gas pipeline capacity. Mannion also wrote in the Tuesday ruling that the Susquehanna County landowners stand to gain adequate compensation from the pipeline’s owners. Some of the defendants did not respond to the lawsuits seeking access to their land. The lead partners in the Constitution Pipeline are Tulsa, Oklahoma-based Williams Partners LP and Houston-based Cabot Oil & Gas Corp. Construction on the seven properties can begin after the partner companies posts a $1.6 million bond to ensure there is money to pay the landowners once a judge approves the final compensation. A Williams spokesman, Chris Stockton, said Thursday the group hopes to begin construction June 1 and still needs permits from the U.S. Army Corps of Engineers and New York’s Department of Environmental Conservation.
Oil Rot Spreads as Loan Default Claim Puts Connacher on Brink --- A New York lawsuit is threatening to make Connacher Oil and Gas Ltd. a casualty of crude’s collapse in Canada’s oil sands as creditors squeeze small producers in one of the priciest places to extract the fuel. As oil prices resumed their slide to a new six-year low this week, creditors filed suit on Monday demanding Connacher immediately repay a $128.4 million loan. If successful, the suit would make it difficult for the company to stay in business unless it finds some other source of capital, according to Moody’s Investors Service Inc. Connacher is among smaller oil-sands companies that drew interest from debt investors willing to finance upstart developments when U.S. crude prices averaged more than $90 a barrel. With prices now about half that, those so-called junior developers are fighting to stay afloat. “In this new pricing environment, my view is it’s going to be a struggle for junior oil-sands players to continue to grow or even survive,” said Jeff Lyons, a national oil and gas leader in Calgary at Deloitte LLP, an audit, tax, consulting and financial advisory firm. “This latest downturn signals to me the end of unprofitable oil growth in Canada.” Chris Bloomer, Connacher’s chief executive officer, didn’t return phone messages and e-mails requesting comment on the lawsuit by lenders. Connacher hasn’t yet responded in court to the allegations.
When the Roots Aren’t Made of Grass, the Solutions Save the System, and the Only Thing Hotter than the Planet is the Bacon -- About two thirds of the way into Josh Fox’ Solutions Grassroots Tour performance at Lycoming College, Pennsylvania, I got up and walked out. I wasn’t noisy–but I was definitive. I could say that Fox’ gig just wasn’t very well put together (it wasn’t), or that it seemed pretty cheesy on the side of a pitch for his new installment in the Gasland documentary series (it was). I could say that the “theater” promised in the trailer was wholly MIA, and that it wasn’t much of a concert–but the surprise musical guests were really really great. Nope, I got up and walked out because the Progressive Democrat brand of politics being sold to an audience mostly made up of all the usual anti-fracking movement suspects–and no one really new–is a recipe for reinforcing the very system of commodification and exchange that generates endemic social and economic injustice and–through both willful blindness and the demand that the solutions be easy–contributes to climate change.I walked out because it’s just not true that we Westerners can keep consuming practically everything at the massive level we do, and that–just by the easy-peasy switch from centralized fossil fuel production to centralized solar and wind–we’re actually making a substantial difference.
Wolf Richter: Investors Crushed as US Natural Gas Drillers Blow Up - The Fed speaks, the dollar crashes. West Texas Intermediate had been experiencing its biggest weekly plunge since January, trading at just above $42 a barrel, a new low in the current oil bust. When the Fed released its magic words, WTI soared to $45.34 a barrel before re-sagging some. Even natural gas rose 1.8%. Energy related bonds had been drowning in red ink; they too rose when oil roared higher. It was one heck of a party. But it was too late for some players mired in the oil and gas bust where the series of Chapter 11 bankruptcy filings continues. Next in line was Quicksilver Resources. It had focused on producing natural gas. Natural gas was where the fracking boom got started. Fracking has a special characteristic. After a well is fracked, it produces a terrific surge of hydrocarbons during first few months, and particularly on the first day. Many drillers used the first-day production numbers, which some of them enhanced in various ways, in their investor materials. Investors drooled and threw more money at these companies that then drilled this money into the ground. But the impressive initial production soon declines sharply. Two years later, only a fraction is coming out of the ground. So these companies had to drill more just to cover up the decline rates, and in order to drill more, they needed to borrow more money, and it triggered a junk-rated energy boom on Wall Street. At the time, the price of natural gas was soaring. It hit $13 per million Btu at the Henry Hub in June 2008. About 1,600 rigs were drilling for gas. It was the game in town. Throughout, gas drillers had to go back to Wall Street to borrow more money to feed the fracking orgy. They were cash-flow negative. They lost money on wells that produced mostly dry gas. Yet they kept up the charade. They aced investor presentations with fancy charts. They raved about new technologies that were performing miracles and bringing down costs. The theme was that they would make their investors rich at these gas prices. Quicksilver’s bankruptcy is a consequence of this fracking environment. It listed $2.35 billion in debts. That’s what is left from its borrowing binge that covered its negative cash flows. It listed only $1.21 billion in assets. The rest has gone up in smoke. Its shares are worthless. Stockholders got wiped out. Creditors get to fight over the scraps.
After Frack “Ban” New York Awash in Frack Filth : Imported fresh daily from Fracksylvania. Where they appear to have an infinite supply of the stuff. other ways that hydrofracking puts New York’s water resources at risk. Steve Penningroth, director of the Community Science Institute recently spoke about how shale gas waste disposal and infrastructure development threaten the state’s water resources despite the federal Clean Water Act and the state-wide frack ban. State regulations that address wastewater treatment plants, factories, landfills, and even concentrated animal feeding operations (CAFOs) allow a certain amount of pollution. That’s because the SPDES permits (State Pollution Discharge Elimination System) specify the source and quantities of pollutants that operations can “legally discharge” into streams, rivers, and lakes. But some chemicals, such as endocrine disruptors and pharmaceuticals, are allowed to enter the public waste streams unregulated. And even though some wastes may be hazardous, the Clean Water Act exempts them – including radioactive drill cuttings from fracked gas wells.It’s not just landfills that have to deal with radioactive waste in drill cuttings from Pennsylvania and other states, says Penningroth. Wastewater treatment plants that take landfill leachate have to deal with whatever pollutants end up in the water percolating through the landfills. Add to that the risks associated with train and truck transport of oil and liquefied petroleum gas (LPG) for spills, fires, and explosions and the potential for storage fields – including salt caverns – to leak or explode.
Compulsory Integration Shot Down in W. Virginia - Tea Party Republicans in W. Va. prove they are not stooges to the oil and gas lobby and deny frackers privatized eminent domain, aka compulsory integration or pooling. Somewhere Barry Goldwater is smiling. In a 49-49 tie vote, Democrats and tea party Republicans helped kill a forced pooling bill that drew outcry about infringement of people’s property rights. It would have allowed horizontal drilling from missing or unwilling mineral rights owners when 80 percent of the surrounding mineral owners had drilling agreements.
Pollution mandate changes for NC fracking nears final OK -(AP) - The General Assembly is one vote away from finalizing a bill giving a state panel more leeway directing how air pollution from future fracking operations in North Carolina is restricted. The Senate gave tentative approval Thursday to a House bill that in part would no longer require the Environmental Management Commission to create air-toxic rules for the natural gas drilling if it determines federal or state regulations are adequate. Regulators still would have authority to create more severe restrictions. Environmentalists worry the change will ultimately result in weaker standards. The bill is moving quickly because other drilling rules will take effect next Tuesday. A final Senate vote is expected early next week after Thursday's 37-11 tentative approval. Gov. Pat McCrory would be asked to sign the bill into law.
Revealed: Fracking Used to Inject Nuclear Waste Underground for Decades -- Recently unearthed articles from the 1960s detail how nuclear waste was buried beneath the Earth’s surface by Halliburton & Co. for decades, as a means of disposing the by-products of post-World War II atomic energy production. Fracking is already a controversial practice on its face, so allowing industries to inject slurries of toxic, potentially carcinogenic compounds deep beneath the planet’s surface — as a means of “see no evil” waste disposal — already sounds ridiculous and dangerous without even going into further detail. Alleged links between fracking and the contamination of the public water supply and critical aquifers, as well as ties to earthquake upticks near drilling locations that are otherwise not prone to seismic activity, have created uproar in the years since the “Cheney loophole” was implemented in 2005, which allowed the industry to circumvent the Safe Drinking Water Act by exempting fracking fluids, thus fast tracking shale fracking as a source of cheap natural gas.Now, it is apparent that the fracking industry is also privy to many secrets of the nuclear energy industry, and specifically, where its dangerous nuclear waste is buried — waste that atomic researchers have otherwise found so difficult to eliminate. Truthstream Media recently uncovered several published newspaper accounts from the Spring of 1964 concerning a then-newly disclosed plan to dump nuclear waste produced by the U.S. atomic energy industry into hydraulic fracturing (fracking) wells using a cement slurry technique developed by Halliburton & Co. The top two fracking companies in the nation at the time were Halliburton and Dowell, a subsidiary of Dow Chemical.
Utility doesn't have to tell customers about untreated natural gas - Atmos Energy will not be required to tell rural customers if untreated natural gas is being pumped into their homes despite evidence that it may damage appliances, shut down service and possibly release elevated levels of carbon monoxide in their homes, state hearing examiners ruled. Texas Railroad Commission examiners Cecile Hanna and Rose Ruiz, granting a request by Atmos to abandon the service to a small neighborhood near Lake Palo Pinto, did not impose tougher notification standards even when the company is selling what has been described as a “raw gas cocktail.” “The examiners find those requests for relief to be outside the scope of this proceeding and not required by applicable statutes and rules,” Hanna and Ruiz wrote in their March 6 ruling. The Texas Railroad Commission may consider their recommendation to allow Atmos to stop providing service to nine customers in April. Atmos said the use of what is known as “wet gas” made the project not economically viable.
Fracking Induces Earthquake Surge in Formerly Stable Regions: Ancient fault lines stretching across areas once considered geologically stable have been roused by the forces of industry and are now triggering chains of earthquakes in states where structures are not built to withstand the shaking of an earthquake. "There is now a substantial level of seismic hazard in areas where there used to be almost none," U.S. Geological Survey Geophysicist Art McGarr said. "These areas now have to deal with it, and there are costs in dealing with seismic hazard." This exponential increase in earthquakes, primarily in the Central U.S., is not a natural occurrence but is directly related to fluid-injection activities associated with the energy industry's modern methods of natural gas or oil production. These industrial methods result in large amounts of wastewater, which is disposed of by injecting the fluid down wells. The wastewater flows into deep aquifers chosen for their ability to accept large volumes of water. In this Nov. 6, 2011, file photo, Chad Devereaux examines bricks that fell from three sides of his in-laws' home in Sparks, Okla., following two earthquakes that hit the area in less than 24 hours. (AP Photo/Sue Ogrocki, File)"Very few of these [wastewater wells] cause earthquakes, but the ones that do can cause a real problem," McGarr said. "Occasionally, however, the increase in pore pressure caused by fluid injection makes its way from the target aquifer into a nearby fault zone that is nearly at the point of earthquake rupture."
Fracking: is a Rule 23 earthquake about to happen? - Lexology -- Class action claims stemming from underground fracking may be poised to explode on a nationwide basis as lower federal courts continue to ignore and erode the Supreme Court’s holding in Comcastand “no injury” and single issue class actions continue to be sanctioned. Of late, there have been growing claims that fracking may cause minor and perhaps major earthquakes capable of damaging homes and businesses. The frequency of earthquakes in areas where there is significant fracking activity is striking. Last year, for example, there were some 567 quakes of at least 3.0 magnitude in Oklahoma, a state that is a hotbed of fracking. In fact, since 2009, over 3600 earthquakes have struck Oklahoma, some 300 times that of previous decades. The same is true in other states. And recently, more and more scientists have come to believe that the deep water wastewater disposal injection used in fracking can be linked to the frequency of these earthquakes. Both U.S. Geological Survey (USGS) and Oklahoma Geological Survey have recently confirmed that they believe that there is just such a link between oil and gas fracking and the uptick in seismic activity in Texas, Colorado, Arkansas and Ohio as well as numerous other states. Thus far, only a smattering of class action lawsuits have been filed related to these earthquakes and many of these have been dismissed or settled. (The dismissal of one such claim is on appeal to the Oklahoma Supreme Court). These cases have generally included claims for property damage, diminution in property value and even personal injury.
Fracking will ruin sacred, preserved sites in the ‘American cradle of civilization’ - lawsuit — video - A Navajo advocacy group has asked a federal judge to halt hydraulic fracking permits in the San Juan Basin of New Mexico, claiming that drilling threatens a historic UNESCO heritage site considered sacred by Navajo, Hopi and Pueblo peoples. Diné Citizens Against Ruining Our Environment and three other groups have sued the US Bureau of Land Management (BLM) and US Department of Interior, calling on a federal judge to vacate the 130 fracking permits issued by the BLM and enjoin fracking activity in the Mancos Shale of the San Juan Basin until the BLM adheres to the National Environmental Policy Act and the National Historic Preservation Act, according to Courthouse News. The 4,600-square-mile San Juan Basin of New Mexico's Four Corners region is home to Chaco Culture National Historical Park, which includes the Anasazi ruins and other archeological remains of structures that were among North America's largest around 1,000 years ago. Chaco and the surrounding areas, known as the “American cradle of civilization,” are considered a UNESCO World Heritage site. The United Nations Educational, Scientific and Cultural Organization calls the area “remarkable for its monumental public and ceremonial buildings and its distinctive architecture – it has an ancient urban ceremonial centre that is unlike anything constructed before or since.”
California senators focus on oil industry, drinking water: (AP) — Lax oversight by the state has allowed the oil and gas industry to contaminate protected water aquifers and endanger the public, California regulators acknowledged Tuesday while pledging to intensify supervision. When it comes to a balance between supporting the oil and gas industry in California — the country’s No. 3 oil-producing state — and protecting public resources and public safety, “I would suggest that ... there has not been the proper balance between these two mandates” for state oil and gas regulators, John Laird, the state secretary of natural resources, told state senators in a scathing senate hearing. “And this is our chance to get it right.” The U.S. Environmental Protection Agency, meanwhile, set strict new deadlines for California to start dealing with more than 2,000 oil-and-gas industry injection wells that state regulators had allowed to inject into underground water reserves that are federally protected as current or potential sources of water for drinking and irrigation. In an EPA letter made public Tuesday, federal regulators also joined some state lawmakers in challenging state plans to continue issuing new permits for oilfield injection in certain protected water aquifers. Members of state Senate committees on environmental quality and natural resources convened after critical state and federal reviews, and after news reports by The Associated Press and others, addressing what state records show as decades of loose enforcement and record-keeping gaffes that allowed some oilfield operations to threaten underground drinking-water reserves. An Associated Press review of state records found more than one-third of the state permits granted in apparent violation of the U.S. Safe Drinking Water Act were awarded since 2011.
Oil, gas spill report for March 16 - The following spills were reported to the Colorado Oil and Gas Conservation Commission in the past two weeks.Noble Energy Inc., reported on March 12 that a leak in a flowline was discovered during maintenance activities outside of LaSalle. Impacted soil was discovered to be above COGCC standards. It is approximated that less than five barrels of condensate and less than five barrels of produced water were spilled. All production equipment was shut in and an excavation will be scheduled. Noble Energy Inc., reported on March 12 that a hole developed in a flow line outside of LaSalle. It is approximated that less than five barrels of condensate and less than five barrels of produced water spilled. An excavation has been scheduled and production equipment was shut in. Noble Energy Inc., reported on March 11 that during plugging and abandonment procedures outside of Eaton, soil impacts were noted. It The production equipment has been removed an excavation of impacted soil has been scheduled.Noble Energy Inc., reported on March 11 that a hole developed in a flowline outside of LaSalle, releasing crude oil and produced water. . All production equipment was shut in. An excavation has been scheduled. DCP Midstream LP, reported on March 11 that soil staining was noticed outside of Keenesburg. An excavation of the contaminated area was conducted to find the suspected leaking pressure line. Extraction Oil & Gas LLC, reported on March 9 that a valve was left open at the back of a production tank releasing approximately 18 barrels of produced oil outside of Greeley. The spill remained within containment. Noble Energy Inc., reported on March 6 that during water vault removal activities impacted soil was discovered outside of Greeley. It is approximated that less than five barrels of produced water spilled. All production equipment was shut in. DCP Midstream LP, reported on March 5 that a third party environmental consultant collected soil samples of an area that was suspected to be impacted by a gas leak, outside of LaSalle. Lab analysis indicated that the soil had been impacted. Remediation activities have been scheduled.
Fracking Next to a Cemetery? 10 Unlikely Sites Targeted for Drilling: Last November, when 6,700 acres of public land in Colorado were auctioned for oil and gas drilling, one lot came with an unusual caveat: It held an active graveyard. Kanza Cemetery sits on a 320-acre expanse east of Colorado Springs offered by the U.S. Bureau of Land Management. The rural graveyard, where more than a hundred people are buried, has been there for at least a century. Its land was leased for $26 an acre. The cemetery is one of several eyebrow-raising sites caught up in the U.S. rush to drill for oil and gas. Companies eager to capitalize on the boom have nominated tracts beneath or adjacent to farms, historic sites, art installations, and even whole towns. A report released today by the Western Values Project, a conservation group, offers a rundown of questionable nominations. Most prospects on the list ultimately got nixed, WVP says, largely because of reforms the BLM finalized in 2010. The federal process, however, remains inefficient and puts sensitive areas at risk, according to the group. "In the eyes of certain companies, almost no place should be off-limits to development," says the report. The oil and gas industry nominated more than 12 million acres of public land for leasing in 2013,, more than twice as much as the year before. The BLM weeds out illegal or unfeasible plots, then conducts an environmental assessment on the remainder, allowing public comment during the process. A 30-day protest period precedes the sale of any lease. No one filed a protest of the lease for Kanza, which sits a few miles outside Rush, a town of about 600 people marked by a cafe and post office.
Oil spill reported on Ute land: An oil spill from a ruptured pipeline was discovered on the Ute Mountain Ute reservation this month. According to the National Response Center, a leaking oil pipeline was reported on March 9. The Center is a division of the U.S. Coast Guard that tracks oil and chemical spills nationwide. The break reportedly occurred about Feb. 20, and spilled 10 barrels of oil onto the ground before being shut down. One barrel equals 42 gallons. According to the report, “The caller stated due to corrosion, crude oil released from a well head on a gathering line to a tank battery.” Biya Operators were listed as the responsible company. The spill occurred north of Waterflow in an active oil field on a portion of the Ute Mountain reservation that dips into New Mexico. The EPA and the BLM responded to the incident along with Ute Mountain environmental officials. Bryant Smalley, the EPA on-scene coordinator, told the Cortez Journal in an email that the duration and amount of the spill is still under investigation. “Initial estimates were that 10 barrels were discharged,” he stated. “Further investigation indicates it may be a larger amount.”
Interior Secretary Says Climate Change Must Factor Into Decisions To Drill On Public Lands - Secretary Sally Jewell yesterday called for reform to the way that the Department of the Interior manages America’s energy resources in order to address the causes of climate change. In a bold speech at the Center for Strategic and International Studies, Secretary Jewell outlined the Department of the Interior’s energy priorities and laid out three goals of “safe and responsible energy development, good government, and encouraging innovation” in the final two years of the Obama Administration. Jewell said that Interior needs to do more to cut carbon pollution, which “should inform our decisions about where we develop, how we develop, and what we develop.” The Department of the Interior manages the nation’s energy resources, including the coal, oil and gas, located on more than 500 million acres of public land across the country, and more than 1.7 billion acres offshore. Jewell emphasized the need for balance in the management of the nation’s resources as a key part of the Department’s role in addressing the causes of climate change. “My responsibility to my grandchildren’s generation is at the top of my mind with every decision we make,” she said, stressing that any new energy development on public lands should be also matched with new protections for lands and waters. “[T]hat is why we must — we must — do more to cut greenhouse gas pollution that is warming our planet.”
New Federal Rules Are Set for Fracking - — The Obama administration on Friday unveiled the nation’s first major federal regulations on hydraulic fracturing, a technique for oil and gas drilling that has led to a significant increase in American energy production but has also raised concerns about health and safety risks.The Interior Department began drafting the rules, focused on drilling safety, in Mr. Obama’s first term after breakthroughs in the technology, also known as fracking, led to a surge in the production of oil and gas.The fracking boom has put the United States on track to soon become the world’s largest oil and gas producer. But environmentalists fear that the technique, which involves injecting a cocktail of chemicals deep underground to break up the rocks around oil and gas deposits, could contaminate surrounding water supplies and wildlife. The states have jurisdiction over drilling on private and state-owned land, where the vast majority of fracking is done in the United States. The new federal rules, by contrast, will cover about 100,000 oil and gas wells drilled on public lands, according to the Interior Department.Obama administration officials hope that the federal rules will serve as a de facto standard for state legislatures grappling with their own regulations. “Current federal well-drilling regulations are more than 30 years old, and they simply have not kept pace with the technical complexities of today’s hydraulic fracturing operations,” said the interior secretary, Sally Jewell.Ms. Jewell, who oversaw the creation of the rules, noted that while they would create standards only for wells drilled on public lands, “there are a number of states where these may be the only regulations they have.”
The Obama administration will require energy companies to disclose fracking chemicals used on public lands (AP) — The Obama administration is requiring companies that drill for oil and natural gas on federal lands to disclose chemicals used in hydraulic fracturing operations. A final rule released Friday also updates requirements for well construction and disposal of water and other fluids used in fracking, a drilling method that has prompted an ongoing boom in natural gas production. The rule has been under consideration for more than three years, drawing criticism from the oil and gas industry and environmental groups. The industry fears the regulation could hinder the drilling boom. The groups worry that it will allow unsafe drilling techniques to pollute groundwater. The rule relies on an online database used by at least 16 states to track the chemicals used in fracking operations. The rule takes effect in June.
Obama administration tightens federal rules on oil and gas fracking - The Obama administration imposed tougher restrictions Friday on oil and gas “fracking” operations on public lands, seeking to lower the risk of water contamination from a controversial practice that is chiefly behind the recent boom in U.S. energy production. The regulations represent the administration’s most significant effort to tighten standards for hydraulic fracturing, a technique that helped make the United States the world’s No. 1 producer of natural gas while igniting a fierce debate over environmental consequences. The Interior Department rules apply only to oil and gas drilling on federal lands, or about a quarter of the country’s current fossil-fuel output. But the prospect of new regulations has drawn sharp opposition from industry groups who say the new requirements will drive up production costs everywhere.The rules announced on Friday are intended chiefly to minimize the threat of water contamination from fracking. Companies that drill on public lands would be subject to stricter design standards for wells and also for holding tanks and ponds where liquid wastes are stored. Interior officials also introduced new transparency measures that require firms to publicly disclose the types of the chemical additives they use. The liquid injected into fracking wells consists mainly of water and sand, with small amounts of other substances that can range from coffee grinds to acids and salts.
Fracking: US Tightens Rules for Chemical Disclosure - The Obama administration said Friday it is requiring companies that drill for oil and natural gas on federal lands to disclose chemicals used in hydraulic fracturing, the first major federal regulation of the controversial drilling technique that has sparked an ongoing boom in natural gas production but raised widespread concerns about possible groundwater contamination. A rule to take effect in June also updates requirements for well construction and disposal of water and other fluids used in fracking, as the drilling method is more commonly known. The rule has been under consideration for more than three years, drawing criticism from the oil and gas industry and environmental groups alike. The industry fears federal regulation could duplicate efforts by states and hinder the drilling boom, while some environmental groups worry that lenient rules could allow unsafe drilling techniques to pollute groundwater. Reaction to the rule was immediate. An industry group announced it was filing a lawsuit to block the regulaion and the Republican chairman of the Senate Environment and Public Works Committee announced legislation to keep fracking regulations under state management. The final rule hews closely to a draft that has lingered since the Obama administration proposed it in May 2013. The rule relies on an online database used by at least 16 states to track the chemicals used in fracking operations. The website, FracFocus.org, was formed by industry and intergovernmental groups in 2011 and allows users to gather well-specific data on tens of thousands of drilling sites across the country. Companies will have to disclose the chemicals they use within 30 days of the fracking operation.
GOP moves to block Obama’s fracking regs | TheHill: Republicans on Friday roundly rejected the Obama administration’s rules for hydraulic fracturing on federal land and pledged to fight them. The GOP warned that the regulations will hamper the nation’s economic recovery that has been bolstered by the boom in natural gas and oil production, much of which depends on fracking. “America’s energy boom is one of the best things going for our economy, and keeping it going should be one of the federal government’s top priorities,” Speaker John Boehner (R-Ohio) said in a statement. “Instead, the Obama administration is so eager to appease radical environmentalists that it is regulating a process that is already properly regulated.” Boehner promised to “do all we can” to stop attempts to impede the energy boom, including the fracking rules.
The U.S. Just Got New Environmental Rules For Fracking, And Republicans Are Freaking Out - On Friday afternoon, the U.S. Bureau of Land Management (BLM) released its final version of rules governing the controversial practice of hydraulic fracturing, or fracking, on America’s public lands. Under the rules, companies that want to frack on lands like national parks and forests would have to comply with stronger standards to protect the environment.Republicans and the oil industry are not happy about this. So unhappy, in fact, they’ve already taken up drastic measures to stop the rule. According to Politico, 27 Senate Republicans have introduced a bill to block them, and two oil industry groups have filed a lawsuit to nullify them. Filed by oil industry groups Independent Petroleum Association for America and the Western Energy Alliance, the lawsuit claims BLM lacks the authority to issue stricter regulations on fracking. “The rulemaking has been procedurally deficient and the final rule as issued is contrary to law,” it reads, adding that “[T]he court should find the rule invalid.”The bill, which includes a co-sponsorship from Senate Majority Leader Mitch McConnell (R-KY), was reportedly filed before the rule was announced.Under the final rules, oil and gas companies will be required to disclose all the chemicals used while fracking on protected lands. In addition, companies will be prohibited from storing fracking wastewater in open pits on national public lands, and will be required to periodically test the integrity of every well to help prevent pollution.
New Fracking Rules on Public Lands 'A Giveaway to Oil and Gas Industry,' Advocates Say » Earlier this week, Secretary of the Interior Sally Jewell said that the new regulations for fracking on federal lands from the Department of the Interior’s Bureau of Land Management (BLM) would be released “within the next few days,” following a four-year process that included receiving more than 1.5 million public comments. Today she unveiled those new rules, which take effect in 90 days. The BLM claimed they would “support safe and responsible hydraulic fracturing on public and American Indian lands.” Drilling has been occurring on federal lands for years with more than 100,000 wells in existence. However, following the fracking boom of the last two decades, more than 90 percent of new drilling operations involve that process, evading the regulations of 30 years ago. Rather than the ban on new drilling that many environmental and citizen groups sought, the rules focus on safety issues like well construction, and chemical management and disclosure. Specifically, they include:
• Ensuring the protection of groundwater supplies by requiring a validation of well integrity and strong cement barriers between the wellbore and water zones through which the wellbore passes;
• Requiring companies to publicly disclose chemicals used in fracking to the Bureau of Land Management through the website FracFocus within 30 days of completing operations;
• Higher standards for interim storage of recovered waste fluids from fracking to mitigate risks to air, water and wildlife; and
• Measures to lower the risk of cross-well contamination with chemicals and fluids used in the fracturing operation, by requiring companies to submit more detailed information on the geology, depth and location of preexisting wells to give the BLM the chance to better evaluate and manage site characteristics.
Oil and gas industry groups sue over U.S. fracking rules (Reuters) - The oil and gas industry moved quickly on Friday to challenge new U.S. regulations for hydraulic fracturing on public lands, minutes after the Obama administration issued the rules. In what could be the start of a broad industry assault on the rules, the Independent Petroleum Association of America (IPAA) and Western Energy Alliance sued the U.S. Interior Department. Other industry groups and companies are expected to follow suit. The new regulations would require companies to provide data on the chemicals used in hydraulic fracturing, or fracking, and to take steps to prevent leakage from oil and gas wells on federally owned land. They do not cover wells on private land. Fracking, involves injection of large amounts of water, sand and chemicals underground at high pressure to extract fuel. The groups described the rules, under development for nearly four years, as "arbitrary and unnecessary burdens" for industry and asked the U.S. District Court for the District of Wyoming to throw out the rules. Courts typically give the government great deference when it comes to determining the need for regulations of this nature, setting a high bar for the groups involved in this case to overcome, said Thomas Lorenzen, of law firm Dorsey and Whitney. "Industry really has to establish ... that there was no reasonable basis for the government to conclude that there is a threat here unaddressed by state regulations,"
Obama’s New Fracking Rules Won't Apply to Majority of U.S. Operations - The Obama administration on Friday unveiled new hydraulic fracturing regulations three years in the making. The rules apply to so-called fracking only on federal and tribal lands, leaving in place a patchwork of state regulations that apply to the vast majority of fracking operations that take place on private and state lands. The rules will cover about 100,000 wells, said the Interior Department. As of last year, there were approximately 1.1 million active oil and gas wells in the U.S., according to data compiled by the research group FracTracker. While it is difficult to know how many of those are fracking wells, due to a mixed bag of state reporting requirements, a 2013 report on hydraulic fracturing regulation compiled by the Congressional Research Service estimated 1 million wells have had hydraulic fraturing applied to them nationwide and 90 percent of new oil and gas wells use the process. Oil and gas producers, meanwhile, filed suit against the the federal government directly following the announcement of the rules. The Independent Petroleum Association of America (IPAA) and the Western Energy Alliance sued the interior secretary, Sally Jewell, and the Bureau of Land Management (BLM), alleging that the rules are an unnecessary overreach. “States have been successfully regulating fracking for decades, including on federal lands, with no incident that necessitates redundant federal regulation,” Tim Wigley, president of the Western Energy Alliance, said in a statement. “This is a classic case of federal overreach, with the government taking on even more control that will stifle economic growth and job creation while limiting the return to American taxpayers on the energy they all own.”
More bids sought for plugging Wyoming coal-bed methane wells - (AP) - The Wyoming Oil and Gas Conservation Commission is about to solicit another round of bids to plug and clean up abandoned coal-bed methane wells. Gas developers have abandoned thousands of wells amid a bust in northeast Wyoming's coal-bed methane industry. Most companies have taken responsibility for plugging their wells while others have walked away without doing anything. Wyoming Oil and Gas Supervisor Mark Watson says the commission since last year has overseen plugging and cleanup of 381 wells at a cost of $1.7 million. Another 3,508 wells still must be addressed. Watson says the commission will seek bids for the next round of work in the days ahead. Crews plugged 14 wells in January and 25 in February. Watson says the pace will quicken with the arrival of warmer weather.
Dayton proposes spending $330 million to upgrade rail safety -- Gov. Mark Dayton, joined by officials from cities across the state, proposed Friday a $330 million 10-year spending plan to make railroads and grade crossings safer from passing oil trains. The proposal, which includes $33 million in new annual assessments on major railroads in Minnesota, is a response to more rail shipments, especially of crude oil from North Dakota. Up to 60 oil trains, often with 100 or more tank cars, roll though the state weekly. “Our local communities have a much lower margin of error now because it takes just one 30,000-gallon oil tanker to derail and explode and you have a catastrophe,” said Rep. Paul Marquart, DFL-Dilworth, one of more than a dozen officials to appear with Dayton at a St. Paul news conference. The governor proposed major projects to separate trains from roadways with bridges or underpasses in Coon Rapids, Moorhead, Willmar and Prairie Island. Those projects, Dayton said, will be included in an upcoming bonding bill, and do not rely on the proposed new assessment on railroads. The railroad assessments would pay for upgrading 71 other rail crossings, better emergency preparation, the state’s first hazmat training facility at Camp Ripley near Little Falls, Minn., and a new rail office director position to oversee freight rail issues.
MnDOT: 326K live within oil train evacuation zones - Some 326,170 Minnesotans, about 6 percent of residents, live within a half mile of rail routes carrying crude oil from North Dakota, state officials said Thursday as they emphasized the need for greater rail safety. Crude oil trains travel on 700 miles of railroad from North Dakota's Bakken oil fields through the Twin Cities and other parts of the state on the way to the East Coast and Gulf Coast, while Canadian railroads carry shipments of Alberta heavy crude oil through International Falls and Duluth, the Minnesota Department of Transportation said. SponsorFive to seven trains of crude oil pass through the state daily, each carrying about 3.3 million gallons of oil, MnDOT said. Fears of a potential disaster have grown in recent years as the numbers of train cars shipping Bakken crude has jumped in the past few years. Casselton, N.D., not far from the Minnesota border, narrowly escaped tragedy after a train derailment set off an explosion of crude oil cars in December 2013. Derailments and explosions in other parts of the United States and Canada since then have increased those fears.
Hennepin County Board acts to block rail junction in Crystal - Hennepin County formally voted Tuesday to spend $1.8 million to buy up land in Crystal so freight haulers can’t use it as a pivot point for trains moving oil from North Dakota’s fields. The board claimed the property under the aegis of public safety, which “would be negatively impacted by a proposed rerouting of freight trains through Crystal, Robbinsdale, Golden Valley and Minneapolis,” according to a county statement. BNSF and Canadian Pacific tracks now cross each other in Crystal, but do not connect. The proposed connector would allow the trains to slow to 25 miles per hour and make a turn. That move alone could simultaneously block five intersections in Crystal and Robbinsdale. The mile-long trains would then continue to Theodore Wirth Park and across Nicollet Island on the Mississippi River, at the edge of downtown Minneapolis. Golden Valley, New Hope and Plymouth also would see more traffic and heavier trains if the connector were built.
Rail inspection finds missing bolts -- An inspection of the rail line that stretches from Fort Edward to southern Saratoga County last week found three “critical” problems, although all were in central and southern Saratoga County and none in Washington County. The track review by the state Department of Transportation and Federal Railroad Administration found missing bolts in rail joints in stretches of track in Saratoga Springs and Ballston. Those issues were considered “critical” and were repaired immediately by track owner CP Rail, said Beau Duffy, a spokesman for the DOT. Eleven less serious “non-critical” issues were found in Saratoga Springs and Clifton Park, Duffy said. Those problems included missing and loose “switch” bolts and a fouled track ballast, where mud had come through the ballast, Duffy explained. CP Rail had 30 days to repair those, he said. If “critical” problems aren’t fixed quickly, railroads risk the imposition of speed restrictions, Duffy said. CP Rail spokesman Jeremy Berry said CP inspectors accompanied state and federal staff members during the inspections, and the problems were corrected as soon as they were identified. He said the issues that were found were not considered “safety critical” by CP.
Utilities regulator orders disposal well reduction - Kansas has ordered drilling operations in two counties to cut back on a practice that may be causing earthquakes. The Kansas Corporation Commission issued the order Thursday. It requires drillers in five areas in Harper and Sumner counties in south-central Kansas to reduce the amount of water they inject into underground wells as a part of their businesses. The process is commonly part of the hydraulic fracking technique used to reach previously inaccessible oil and gas deposits. More than 200 earthquakes have been recorded in Kansas since 2013 in an unprecedented spike in seismic activity. Many have been in the two counties. Interim Director Rex Buchanan of the Kansas Geological Survey has said there is a strong correlation between the injection-well process and the dramatic increase in earthquakes.
Seismic activity lacking in ND compared to other oil states - Swarms of earthquakes have been rattling Oklahoma, Texas and other central states with a history of little or no seismic activity. The recent quakes, according to scientists, may be the fault of deep underground injections of wastewater left over from fracking. But in North Dakota, where wastewater injection wells are abundant, the ground has remained largely unshaken. So why are other oil-producing regions significantly more wobbly? “It’s actually a really good question,” said Michael Stickney, director of earthquake studies for the Montana Bureau of Mines and Geology. “And I don’t know that I have a good answer to it.” As it happens, a study published last month by researchers at the University of Texas at Austin explored the question, comparing drilling activity in Oklahoma and the Williston Basin, which holds the oil-rich Bakken Formation. The study found no definitive explanation as to why earthquakes are rare in the Bakken, but one reason may be that higher volumes of wastewater are injected into some Oklahoma wells. But more research is needed, said Clifford Frohlich, a seismologist who led the study, as well as an earlier one that examined increased seismicity in the Barnett Shale region in northeast Texas.
How Many Shale Oil Plays Make Money At $37 Per Barrel? (Spoiler Alert: None) -- I know Americans are math challenged and need a calculator to subtract 10 from 20, but I think even a CNBC bimbo or Princeton economic professor could get this one right. Last year there was much banter from the Wall Street shysters and Bakkan shale oil experts about the true breakeven price for shale oil not being $80 (which is the truth) but actually being as low as $58 a barrel. They were spreading this lie in order to keep idiot investors buying the stocks and bonds of these fly by night shale oil companies. Well, we are now six months further down the line and Bakkan shale oil this morning is selling for $37 per barrel. Where are the babbling baboons of bullshit with storylines of shale oil breakeven prices of $30? I guess even corrupt lying scum can’t work up the gumption to try and convince the ignorant masses of that doozy. Think about this for a minute. What business in their right mind would start a project that is guaranteed to lose $43 per barrel produced? How long will these small shale oil companies with gobs of junk bond debt last at these prices? The answer is easy. Not long. The bankruptcies have begun. The rig counts are collapsing at the fastest pace in history. And the number of layoffs is increasing exponentially. It’s like watching a devastating car crash in slow motion. And it has only just begun.
Radioactive waste landfills becoming contentious issue — A special waste landfill in far western North Dakota will seek to dispose of radioactive waste, if it becomes legal. Charles Slaughter, of Canada-based Gibson Energy, said his company plans to step up at its WISCO landfill west of Williston about 1 mile from the Montana line, The Bismarck Tribune reported. “We will modify our permit to participate in that market,” said Slaughter, adding that his company has experience with radioactive material landfills in Canada, where 20 times higher than North Dakota’s proposed 50 picocuries is allowed. Currently, the state bans anything above 5 picocuries. “The bottom line is it’s the right thing to do. You only have to go back to the mid ’70s and Love Canal to see what happens because there weren’t proper disposal techniques,” said Slaughter, whose operation is one of 10 licensed special waste landfills in the oil patch, where storage tank bottoms, dirty dirt from spills and leaks and drill cuttings are buried in lined pits. Another seven are in development. The State Health Department is moving on new rules that will allow operators, such as WISCO, to dispose of radioactive waste, possibly later this year. Scott Radig, the state department’s waste management director, predicts half the special waste landfill operators in the state will go into the radioactive materials business.
Nearly 19,000 gallons of saltwater spills north of Tioga - The state Department of Health says a pipeline has leaked nearly 19,000 gallons of saltwater in northwest North Dakota. The pipeline owned by Continental Resources ruptured after it was struck by equipment excavating at the site about 16 miles north of Tioga. The 450-barrel saltwater, or brine, spill was contained to the excavated area near the pipeline. The department says it has not impacted any waterways and is not a threat to public health at this time. Brine is an unwanted byproduct of oil production and is considered an environmental hazard by the state. It is many times saltier than sea water and can easily kill vegetation exposed to it. The Department of Health and the North Dakota Oil and Gas Division have responded and say cleanup is underway.
Nearly 12K gallons of saltwater spill in northern ND — North Dakota oil regulators say nearly 12,000 gallons of saltwater have spilled at a disposal well in the northern part of the state. Alison Ritter with the Oil and Gas Division says Petro Harvester Operating Company, LLC, reported the incident Wednesday. The operator says 11,970 gallons of saltwater were released at the Peterson 2 saltwater disposal well in Bottineau County, about six miles north of Maxbass. Saltwater is an unwanted byproduct of oil production and is considered an environmental hazard by the state. It is many times saltier than sea water and can easily kill vegetation exposed to it. Ritter says the operator reported that a piping connection leak caused the spill. The water was contained and recovered on site.
Geologist sees a path to easing fracking concerns: The natural gas boom that transformed the energy picture in the United States in the last decade is still in its infancy, says John Shaw, chair of Harvard's Earth and Planetary Sciences Department. Shaw expects natural gas to continue to displace coal in electricity generation. It is projected to become the nation's largest electricity-generating fuel by 2040. In addition, he said, opportunities for expanding the market lie in export to energy-hungry nations such as Japan, which has curtailed nuclear power in the wake of the Fukushima disaster, and, closer to home, in the U.S. transport sector, where trucking fleets provide another opportunity, perhaps first through the installation of natural gas filling stations along highways. Further, the low cost of natural gas has set a new standard for the energy sector. "Nothing has had a more profound impact on the U.S. and global energy economy in the past decade than the emergence of shale gas resources," Shaw said. "It has already essentially transformed the United States from a net gas importer to one that will be exporting natural gas. It has provided a low-cost fuel that has spurred the development of industry and, in many respects, it has become the preferred way that we generate electricity." Shaw said that some of the problems that have generated opposition to the process—contamination of water supplies, induced earthquakes, and methane release into the atmosphere—come not from the fracking, but from associated activities that could be improved upon.
Figuring Out Fracking Wastewater - Chemical & Engineering News: Almost 3 million gallons of concentrated salt water leaked in early January from a ruptured pipeline at a natural gas drilling site near Williston, N.D. The brine, a by-product of the oil and gas extraction method known as hydraulic fracturing, spilled into two creeks that empty into the Missouri River, according to news reports. Although a state health official said the salty water was quickly diluted once it reached the Missouri, the spill—large by North Dakota standards—raised questions about the contents of the brine. Accidental spills like this one occur with some frequency, so scientists would like to understand the contaminants they release into waterways and elsewhere in the environment. Their findings could help officials guide the cleanup of sites or mitigate damage. For every well they drill, fracking operators pump 3 million to 5 million gal of water thousands of feet underground. The water gets mixed with additives such as sand and surfactants to form fracking fluid, which is used to optimize the amount of fuel extracted. But what goes down comes up. Shortly after the water gets injected, it flows back out of the well. The well releases water over its lifetime, larger volumes in the early stages and smaller quantities later on. The early-stage water—the so-called flowback—still contains many of the additives from the fracking fluid. As oil and gas production continues, water from the geologic formation mixes with the fracking fluid, bringing with it brine and other substances from underground. This “produced water” can be many times saltier than seawater—the salinity varies with the mineral content of the geologic formation. The flowback and produced water together make up fracking wastewater.
Wait— How many jobs cut? - At this point in the oil slump, dreaded jobs cuts hardly come as a surprise anymore; this week, Talisman Energy let go of 200 employees while Neven energy cut 400. But how many total American jobs have low oil prices cost? A recent Forbes article estimates at least 75,000—about 12 percent of the nation’s oil and gas workforce—so far. According to the article, America’s shrinking rig count dwindled by more than 700 rigs in just one year, with an estimated 40 jobs lost per rig closure. The greatest losses, however, have been suffered by oilfield services companies, whose job cuts totaled 59,000; Halliburton cut 6,600, Baker Hughes cut 7,000, Weatherford cut 8,000, and Schlumberger topped the list with 9,000 job cuts. The sector within the O&G industry suffering the second largest losses was exploration and production, which slashed 10,000 jobs, followed by pipe manufacturing, which cut 7,100 jobs. Some have cited over-production of oil for abysmal fuel prices, but the article suggests that’s it’s not necessarily how much oil is produced as it is what kind. While America produces an abundance of light, sweet crude, we still import about 5 million barrels per day of heavy, sour crude. The article’s author, Christopher Helman, suspects that if America could export light crude, producers could leverage higher prices than what Americans are willing to pay for domestic crude. “And if all else fails?” Helman writes, “Some of these laid off workers could find a new future in Saudi Arabia, where Aramco is reportedly wooing shale workers to ‘join our team.’”
100,000 Layoffs and Counting: Is this the New Normal? - This time a year ago, the oil industry's biggest problem was finding a way to deal with the “retirement tsunami” about to crash down on it as older oilfield workers hung up their cork boots to enjoy freedom-55. Now, with oil prices still in the doldrums, many of those same workers are lucky to be hanging onto their jobs, while others have been booted from the payroll as an ugly wave of layoffs takes hold. One of the worst-affected areas is the Canadian oil sands, where a higher per-barrel cost of production than conventional sources has oil companies scrambling to cut capital expenditures and in several cases, put long-term projects on ice. On Thursday one of the region's big players, Husky Energy, announced that about 1,000 construction workers employed by a contractor at its Sunrise oilsands project, would be issued pink slips. The bad news for the workers came a day after Husky said that it had started to produce from the $3.2 billion, steam-assisted gravity drainage (SAGD) Sunrise operation, which it co-owns with BP. The layoffs by Husky followed Suncor's decision in January to cut 1,000 employees and Royal Dutch's Shell's announcement that it will shed close to 10 percent of the workforce at its Albian sands project – around 300 workers. The Canadian Association of Oilwell Drilling Contractors, which closely tracks drilling activity, said in February that up to 23,000 jobs could be lost as the number of rigs fall. Since the price started dropping last September, about 13,000 positions in the Alberta natural resources sector, mostly oil and gas, have been eliminated, according to Statistics Canada.
The (not so secret) Plan to Export America’s Propane Reserves Overseas - By the one company that controls the propane pipeline system. And their Washington lobbyist. What does this mean to you ? Higher propane prices and seasonal shortages. A propane market reform bill steered clear of the political minefield of propane exports, which are increasingly distorting the domestic market. Weekly U.S. propane production is up 35% since 2010, but exports are growing even faster, according to the EIA. In 2013, production rose by 1.5 billion gallons, but propane exports grew by 2.0 billion gallons. That gap is expected to widen. “Announced plans to construct additional propane export capacity would triple propane export capacity in the next three years,” Roldan testified last March. Enterprise owns the second largest of five existing propane export facilities, and it owns the largest of seven planned propane export facilities, according to ICF International. While propane exports cut into domestic supplies and tend to drive U.S. prices higher, they are a geopolitical bargaining chip, and they affect many powerful players within the United States and abroad. Even Rose of PGANE, the New England retailers group, supports propane exporting. “We need to export to stimulate propane production,” Rose said. “If we don’t export it, there’s no place to store it.” The 2014 reform bill was never very ambitious because it never addressed the politically sensitive issue of exports. Regardless, it was effectively neutered. The GAO investigation of propane pipeline affiliates was stripped away, as was the mandate to consider regional propane storage sites. President Obama finally signed a version that includes relatively minor training and research items.
Could another LNG facility be headed for Louisiana's coast? -- Senator David Vitter (R-Louisiana) is proving a boon to the energy industry in his home state. This week, Vitter advised the Federal Energy Regulatory Commission (FERC) to pay particular attention to the proposal for a liquefied natural gas (LNG) export terminal in St. Charles, Louisiana, by Magnolia LNG LLC. Magnolia’s facility is just one in a wave of LNG export terminals being proposed for the Gulf Coast. According to Natural Gas Intelligence, Vitter asserted that the sooner Magnolia receives authorization, the sooner it can come online, which could be as early as 2018. “The Magnolia LNG Project is now nearly 24 months into the FERC process,” Vitter said to FERC commissioners. “The window of opportunity for the United States to become a significant contributor to the global LNG market is closing quickly.” Louisiana’s position in the U.S. LNG market is as strong as ever, despite uncertain global outlooks for the resource’s demand. With the Haynesville shale offering a close supply of natural gas and extensive energy sector infrastructure already in place, it is a prime location for growth in the LNG industry. Vitter hopes that Magnolia will receive approval by the end of the year, which would strengthen the state’s role in the future of LNG. In order to do so, FERC would need to request more data and schedule an environmental review before the end of March, reports Law360. Magnolia LNG, the wholly-owned subsidiary of Australia-based Liquefied Natural Gas Limited (LNGL), is a newly formed player in the market. The company will be the owner and operator of the Lakes Charles facility, should it be approved. The pre-filing process with FERC began on March 12, 2013. Magnolia LNG hopes to receive approval from FERC early in 2015, according to their website, and will ideally finalize investment decisions in the middle of the year.
Cruz, Bridenstine author proposed energy bill - U.S. Sen. Ted Cruz, R-Texas, and Rep. Jim Bridenstine, R-Okla, introduced on Wednesday the “American Energy Renaissance Act” that would rollback or end several federal regulations on the nation’s oil and gas industry. The proposed legislation, introduced into the U.S. Senate and House of Representatives, would leave the regulation of hydraulic fracturing, or fracking, to the states rather than the federal government. Additionally, the proposed legislation would speed up the permitting process for new refineries, phase out and repeal the Renewable Fuel Standards over five years, end federal regulation of greenhouse gases that have been linked to global climate change, open up national reserves in Alaska and Native American reservations for oil and coal production, and immediately approve the Keystone pipeline, among others. Bridenstine said the legislation is needed to empower the private sector to create good-paying American jobs, spur economic growth and expand opportunity. “Oil and gas production on private lands created the entire energy boom over the past few years,” Bridenstine said. “Our proposed changes in law and policy will open federal lands and reverse policies that cripple the free market and inhibit innovation and private investment. Opening federal lands to oil and gas development, allowing exports and infrastructure improvements, and stopping regulatory overreach will greatly expand U.S. energy production.”'
Feds: Oil leasing in Gulf slows due to oil price drop - — Regulators say only 195 bids were placed on the 41 million acres of the Gulf of Mexico up for new oil and gas leasing off of Louisiana, Mississippi and Alabama. That’s the lowest number since 1986 when 129 bids were offered, according to the Bureau of Ocean Energy Management. It says the low price of oil accounts for the lackluster interest. Still, the agency is upbeat about the future of offshore drilling, a prime source of income for the federal government. The lease sale is taking place Wednesday at the Louisiana Superdome. Interior Secretary Sally Jewell is attending. The sale encompasses productive and sought-after leases in an area of the Gulf roughly the size of Washington state. In a first, the Interior Department is offering leases along the Mexican-U.S. border.
Feds eye oil, gas drilling off East Coast, Alaska, Gulf — Environmentalists say allowing offshore drilling along the U.S. East Coast from northern Virginia to the Georgia-Florida border could lead to a catastrophic oil spill devastating to the crucial tourism industry. But business and petroleum groups say they want to be able to explore whether significant oil and gas reserves exist that could stabilize energy prices and help the economy overall. The federal Bureau of Ocean Energy Management proposes opening up a stretch of the East Coast in its latest five-year plan, scheduled to take effect in 2017. The agency also is proposing drilling off the northern Alaska coast and in the western and central Gulf of Mexico between Texas and Alabama. A final decision on the proposals should be made by the end of 2016. At a public hearing Wednesday in Atlantic City, New Jersey, environmentalists said an oil spill could devastate the environment and economies in states where tens of millions of people live. “If something happens to an offshore windmill, a pelican gets hurt; an oil spill is a genuine catastrophe,” said Jeff Tittel, director of the New Jersey Sierra Club. “People don’t realize where this is is less than 100 miles from the Jersey shore. The president says he wants to do something about climate change, and he proposes this?”
While We’ve Been Debating Keystone, The U.S. Has Grown Its Pipeline Network By Almost A Quarter -- Americans have been waiting for the federal government to come to a decision over the Keystone XL pipeline for more than six years, enduring countless protests, Congressional hearings and even a Presidential veto over the controversial project. But during that time, pipeline construction in the U.S. hasn’t slowed — in fact, it’s surged. The U.S. has added 11,600 miles of oil pipeline in the last decade, increasing its network of pipelines shipping oil through the country by almost a quarter, according to a report published Monday by the Associated Press. Since 2012, according to the AP, more than 50 pipelines have been constructed, approved, or are in the process of being built. Also since 2012, 3.3 million barrels of oil per day of pipeline capacity has been built in the U.S. — a figure that dwarfs Keystone XL’s capacity to ship about 800,000 barrels per day. Some of those pipelines have been approved even after facing harsh opposition in the states where they were proposed. The Flanagan South pipeline, which has the capacity to ship 600,000 barrels of diluted tar sands and Bakken crude each day, was completed in December of last year. The pipeline, which runs from Pontiac, Illinois to Cushing, Oklahoma, endured multiple lawsuits and opposition from local anti-tar sands groups, who said that the way the pipeline was being permitted allowed it to skip key environmental reviews. More pipeline projects are going through the approval process, and are dealing with local landowners and environmental groups that don’t want an oil pipeline running through their state. In Iowa, citizens groups, environmental organizations, and a local tribe are fighting to stop a pipeline proposed by Dakota Access LLC. That project would ship up to 570,000 barrels of oil each day from North Dakota’s Bakken region to Patoka, Illinois.
CSIS helped government prepare for expected Northern Gateway protests - Canada's spy agency helped senior federal officials figure out how to deal with protests expected last summer in response to resource and energy development issues — including a pivotal decision on the Northern Gateway pipeline. The Canadian Security Intelligence Service prepared advice and briefing material for two June meetings of the deputy ministers' committee on resources and energy, documents obtained under the Access to Information Act show. The issue was driven by violence during demonstrations against natural-gas fracking in New Brunswick the previous summer and the government's interest in "assuming a proactive approach" in 2014, says a newly declassified memo from Tom Venner, CSIS assistant director for policy and strategic partnerships. Release of the material comes amid widening concern among environmentalists and civil libertarians about the spy agency's role in gathering information on opponents of natural resource projects. Those worries have been heightened by proposed anti-terrorism legislation that would allow CSIS to go a step further and actively disrupt suspected extremist plots. Traditional aboriginal and treaty rights issues, including land use, persist across Canada, Venner said in the memo to CSIS director Michel Coulombe in advance of a June 9 meeting of deputy ministers. "In British Columbia, this is primarily related to pipeline projects (such as Northern Gateway)."
CN Rail says some oil product spills in Manitoba derailment (Reuters) - Thirteen cars on a Canadian National Railway Co train went off the tracks in rural Manitoba on Wednesday night and spilled some petroleum product on the ground in the company's third derailment in a week. There were no injuries and no threat to the public from the latest derailment, CN spokesman Brent Kossey said on Thursday. The train was carrying refinery cracking stock, which spilled from one car. Canadian Transport Minister Lisa Raitt used the accident to reiterate her calls from earlier in the week that the company should be called to answer questions before a parliamentary committee. "What's going on operationally?" Raitt told reporters following a speech. "I can hear from CN, but I think CN should talk to Parliament and should talk to Canadians." On Saturday, a CN oil train derailed and burned in northern Ontario. Also in Ontario, a train hauling empty tank cars that had recently held hazardous liquids went off the tracks on March 5.
Federal report: 200 crude oil train derailments predicted over the next 20 years: Millions of gallons of crude oil travel through Ogle County every month on trains. Monday night, first responders prepare for the worst when it comes to these loads on the heels of a major train derailment last week in Jo Daviess County. These are accidents some government officials say could keep happening. 13 News obtained an Illinois Emergency Management Agency document through a Freedom of Information Act request showing how many crude oil trains run through the area. That 2014 report says dozens of trains do each week, which is why one county wants to be ready if one of their trains goes off the tracks. Four days ago, one area of rural Jo Daviess County was up in smoke. Things are now just getting back to normal after a train carrying crude oil derailed. This type of accident could happen on any track at any time. "But, the odds of a derailment or odds of any hazardous material being released are very, very slim," says Illinois Fire Service Institute Instructor and Rockford Fire Department Division Chief Matt Knott. The U.S. Department of Transportation released a report predicting derailments like the one in Jo Daviess County will happen an average of 10 times a year. But, the Association of American Railroads says that federal document is filled with speculation. "It's our position that this report is based on assumptions," says AAR spokesman Ed Greenberg. There is one issue both sides agree on. Rail cars aren't safe enough. "It is important that tank cars are strengthened; increases in shell thickness, the use of jacket protection, thermal protections," Greenberg says.
Leaders join broad coalition on oil trains - Several Clark County leaders have joined a growing coalition of elected officials across the Northwest who say they want to raise awareness about the risks of transporting coal and oil by rail. The Safe Energy Leadership Alliance includes more than 150 members from Washington, Oregon, Idaho, Montana and British Columbia in Canada. Among them are representatives from the cities of Vancouver, Camas and Washougal. "I'm not sure I've ever seen a coalition like this," said Vancouver City Councilor Jack Burkman, one of the group's members. "I can't think of one that spans that large of an area." The new coalition gathered last week in Portland for its third meeting. The group is led by King County Executive Dow Constantine but represents a broad range of interests that span the political spectrum, Constantine said. Its focus includes both coal and oil, but a string of recent train derailments and explosions involving crude oil have shifted much of the public's attention to oil trains. "Everyone, I think, is concerned about the possibility of a catastrophic event," Constantine said. The group aims to be a unified voice for local communities that are among the most impacted by the recent rise of oil by rail, Constantine said. Those jurisdictions often lack direct authority over the forces that have dramatically changed the energy landscape during the last few years. But joining together can help them influence the state and federal authorities that do, he said.
Rail industry pushes White House to ease oil train safety rules — — The U.S. rail industry is pushing the White House to drop a requirement that oil trains adopt an advanced braking system, a cornerstone of a national safety plan that will soon govern shipments of crude across the country. Representatives of large rail operators met with White House officials last week to argue against the need for electronically controlled pneumatic brakes, or ECP brakes, saying they “would not have significant safety benefits” and “would be extremely costly,” according to a handout from the meeting. ECP brakes trigger all axles simultaneously rather than one at a time in current design. Reuters reported last month that the national oil train safety plan now under review at the White House Office of Management and Budget would require the advanced braking system. The Transportation Department has concluded that ECP braking would deliver meaningful safety improvements but the industry officials argued that the department estimates “grossly overstate benefits and understate costs.” The industry claims fitting rail stock with ECP brakes would not prevent accidents, but merely limit the number of cars that derail in an accident.
Oil industry must join U.S. railroads to boost train safety – Rail operators are going to great lengths to prevent oil train derailments but the energy sector must do more to prevent accidents from becoming fiery disasters, the leading U.S. rail regulator said on Friday. Oil train tankers have jumped the tracks in a string of mishaps in recent months that resulted in explosions and fires. Several of those shipments originated from North Dakota’s Bakken energy fields. Officials have warned that fuel from the region is particularly light and volatile. Sarah Feinberg, acting head of the Federal Railroad Administration, said the energy industry must do more to control the volatility of its cargo. “(We) are running out of things that we can put on the railroads to do,” she said. “There have to be other industries that have skin in the game.” A national safety plan for oil trains, due to be finalized in May, would require trains to have toughened tankers, advanced braking and other safety improvements. The plan, however, would do nothing to mute the dangers of the fuel itself.
Are the good times over for growth in U.S. shale gas? - U.S. natural gas production could decline in 2016 for the first time in 10 years, driven by low oil prices after a decade of gangbusters growth from shale plays. While most analysts forecast gas production will continue growing year-over-year, albeit at a slower pace, a couple of outlier analysts believe low oil and gas prices will prompt drillers to cut spending enough to reduce gas production next year. Any talk of cutbacks is an early sign that low oil prices have slowed the U.S. shale gas boom that has revolutionized global markets and is expected to transform the nation into a net exporter of gas by the end of the decade. U.S. gas production has increased every year from 51.9 billion cubic feet per day in 2005 to a record 74.4 bcfd in 2014, a 43 percent increase. The U.S. Energy Information Administration expects gas output to reach 78.4 bcfd in 2015 and 80.0 in 2016. The lack of consensus among analysts shows how much still depends on what oil prices do in the coming months.
US shale industry shows remarkable resilience - FT.com: At its latest meeting in November, Opec, the oil producers’ cartel, decided against a cut in output to support the crude price, sending it into freefall. Saudi Arabia, the cartel’s most powerful member, has insisted that this was not intended to be a “war on shale”, but Ali al-Naimi, the country’s oil minister, used a speech in Berlin this month to stress that it was not the role of Middle East nations to “subsidise higher-cost producers”. North American shale companies are among those higher-cost producers, and evidence of the impact on them of the near 60 per cent fall in US crude since last summer is now mounting: in declining profits, cuts in jobs and investment and idled equipment. A handful of shale producers have gone bankrupt, while some others are struggling with large debts. The number of rigs drilling for oil in the US has dropped 46 per cent from its peak last October, and this is starting to affect output. The US government’s Energy Information Administration said last week that in two of the three principal shale regions — the Bakken of North Dakota and the Eagle Ford of south Texas — oil production was expected to fall marginally next month. Only in the Permian basin of west Texas is it still rising. But, so far, overall US output seems to be only levelling off, rather than collapsing. If US crude stays at its present level of about $45 per barrel, then it seems likely that production will start falling later this year. But Wood Mackenzie, a consultancy, is forecasting that US oil production will grow this year and next, if there is a rebound in prices to about $60 per barrel. The industry’s ability to keep growing at lower prices than in recent years will depend on how far it can reduce its costs. Adam Sieminski, head of the EIA, says: “We have seen that shale oil works very well at $100 per barrel. Now we are going to find out if it works at $50 to $75.” The round of earnings and outlook statements in recent weeks from the US exploration and production companies — the small to midsized independents that led the shale revolution — showed that while they are all cutting activity sharply, none is expecting a corresponding fall in output.
U.S. oil supply update -- The EIA released a new drilling productivity report last week, allowing us to update our graph of the drilling rig count in the four major tight oil regions. Active rigs in those areas are now 32% below their peak last October, the lowest level in 3 years. The DPR’s forecasting model nevertheless predicts that production from these four regions will be half a million barrels/day higher this month than it was in October, and will only begin to decline starting next month. But folks over at the Peak Oil Barrel note that while the DPR is estimating for example that Bakken production rose 27,000 b/d between December and January, the North Dakota Department of Mineral Services reported last week that Bakken monthly production was down over a million barrels in January, or about a 35,000 b/d drop from December. In any case, U.S. crude oil inventories continued to increase last week, signaling that so far supply continues to outstrip demand. And the Wall Street Journal reports a strategy followed by some companies that could enable them to bring production back up quickly if prices recover: Now many are adopting a new strategy that will allow them to pump even more crude as soon as oil prices begin to rise. They are drilling wells but holding off on hydraulic fracturing, or forcing in water and chemicals to free oil from shale formations. The delay in the start of fracking lets companies store oil in the ground in a way that enables them to tap it unusually quickly if they wish– and flood the market again. The backlog of wells waiting to be fracked– some are calling it fracklog– adds to the record above-ground inventories to restrain any significant price resurgence. Eventually, however, the economic fundamentals have to prevail, and we will settle down to a price around the true long-run marginal cost.
North America Crude Oil Production Remains Strong -- There are signs that crude oil production in the US remains strong, despite the strong correction in prices recently. The American Association of Railroads (“AAR”) publishes rail traffic data for a variety of commodities in the US and Canada. The subset for petroleum and petroleum products can provide a sense of crude oil volumes being railed across North America (although it also includes refined products like gasoline, distillates, jet fuel and so on). Here’s the latest monthly data for the US. Monthly volumes up until last January remained strong, far higher than January of the prior year, although slightly below the high recorded last September. Volumes in Canada were even stronger.
Alberta faces structural deficit even if oil rebounds, TD says - The government of Alberta could be facing a long-term deficit situation for reasons beyond the temporary plunge in oil prices, TD Bank said in a report Thursday. Economists Jonathan Bendiner and Derek Burleton say the province's current estimate of a $7-billion budget shortfall might not be realistic and the government could be facing much more serious fiscal challenges — namely, a structural deficit. By the numbers: Alberta's $6 billion budget shortfall Ontario poised to grow as Alberta slows down, TD says Unlike what's known as a cyclical deficit, which is when governments temporarily dip into the red because of a temporary slowdown in the business cycle, a structural deficit is a situation where a government spends more than it earns even after the real economy rebounds, because of the compounding impact of debt payments. Alberta is set to unveil its latest provincial budget next Thursday. Policymakers have already signalled to expect spending cutbacks, but the bank's report says it doubts those alone will be enough to fix Alberta's long-term financial problems. "While the government has discussed a number of policy tools to address its fiscal challenge, a slash and burn approach to achieving fiscal balance in quick time can be costly to the economy and does not address current inefficiencies in program spending and an over-reliance on non-renewable-resource revenues," the TD report says.
OPEC says low oil prices may hit U.S. output by late 2015 - – U.S. oil output could start to take a hit by late 2015, OPEC said on Monday, suggesting the oil price collapse will take time to impact on the shale oil boom. In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) left its forecast for non-OPEC supply this year unchanged, but said output of U.S. tight oil, also known as shale, could be curbed. “Tight crude producers are aware that typical oil wells in shale plays decline 60 percent annually, and that losses can only be recouped by drilling new wells,” OPEC said in the report. “As drilling subsides due to high costs and a potentially sustained low oil price, a drop in production can be expected to follow, possibly by late 2015.” In the report, OPEC left its forecast for 2015 world oil demand growth unchanged and made virtually no change to its estimate of the demand for its crude this year.
What is the Baker Hughes Rig Count Trying to Tell Us? - Oilpro: One of the questions dominating oil service company C-Suites and boardrooms this quarter has been debate about US drilling activity and where it will head next. Will LNG exports drive a recovery in the gas-drilling market? Will $50 oil be sustained? Will we see $20 before we see $200? How deep do we cut and for how long? While our crystal ball is as foggy as anyone’s in the industry, we do believe a glance back in the rearview mirror can help explain how we got here and provide some insight as to where we might go next. When Baker Hughes started publishing an oil and gas rig count in 1987 we had 559 oil rigs, 337 gas rigs and 26 rigs that were either geothermal or tight holes. Within two years, the gas-directed rig count matched the oil-directed count. By the end of the 90s, some began to refer to the US “gas and oil” industry, rather than the “oil and gas” industry. Production from the unconventional gas plays more than satisfied the US markets and in September 2008 market sentiment collapsed. The gas-directed rig count, shown in Chart 2, peaked at 1,606. Lower gas prices would not support dry gas development, and attention shifted to wetter plays where oil and natural gas liquids (NGLs) production could drive acceptable economic returns. Oil and gas companies pivoted, if they could, away from dry gas and towards oil and NGL plays. The gas-directed rig count fell precipitously. Despite a significantly lower gas-directed rig count, shale-gas production rose and has continued to rise since, despite a declining rig count. More efficient drilling techniques, an increase in the number of wells drilled per rig, attractive economic returns on wet gas (NGLs) wells, and more production per well have more than offset the production decline from the existing conventional well population.
Oil Investors, Beware The “Fracklog” -- “Fracklog” is the latest term running around the oil world, a new game that oil producers are playing to try and outlast temporarily depressed oil prices. The Catch-22 is that the more doggedly shale players hold on to production, the longer prices stay depressed and the more difficult it will be to carry on. Recently, one of the techniques that US oil producers have been using to keep production in reserve without relinquishing acreage is to delay well completions. The economics of shale drilling can be difficult for the oil producer; most leases require oil companies to develop at least some of the acreage in order to maintain control of the mineral rights, and several standard clauses allow landowners to renegotiate leases should production fall under a certain level. So, many smaller oil companies choose to partially develop lease acreage but stop short of ‘completion’ – the point in drilling when oil finally comes out of the ground. The completion stage is by far the most expensive. It’s a trick of necessity, allowing tremendous Capex reductions while still controlling the prime acreage at the same lease rates that were initially negotiated. But it has created what is being called a ‘fracklog’ – a backlog of ready production that companies plan to turn on as soon as market conditions allow. In other words, there’s a lot of oil out there waiting for oil prices to rally. And there’s the problem – oil waiting for a rally puts continuing pressure on oil prices, and the more oil you’ve accumulated under a ‘fracklog’, the more pressure you’ll get. Already, the EIA has estimated 9.35m barrels a day of US production for 2015, up 50,000 barrels a day from its last estimate and 200,000 barrels a day from last year. Add our ever increasing ‘fracklog’ of wells awaiting completion, and it’s going to make a significant oil rally practically impossible for many months ahead. I’ve watched so many investors (even private equity firms) recently chase an oil sector they know to be too cheap to last. They are right: economics do not ultimately support oil prices below $75 a barrel. But the instinct to jump on here is wrong – there is still far too much pressure on oil prices for them to even think about turning around substantially.
Majors Could Be The Big Winners Of The Oil Price Crash - The dominos are starting to fall, and it hasn’t been a good March so far for three Texas oil and gas operators. As prices take another nosedive, here come the Chapter 11 filings as struggling producers decide the mounting pressure of debt payments and other obligations won’t wait for prices to turn. Tuesday, Quicksilver Resources Inc., a Ft. Worth, Texas shale operator, announced voluntary Chapter 11 filing in the United States Bankruptcy Court in Delaware. BZP Resources Inc. of Houston similarly filed on March 9, saying the current oil price environment made debt refinancing difficult. And as things seem to come in waves of three, Houston’s Cal Dive International, Inc. initially tripped the dominos on March 3rd. This kind of thing was not unexpected, and has been heavily discussed in the media, corporate boardrooms and over many business lunches, as prices started to sink below the magical $70 per barrel number that makes lenders quiver. Debt that worked all day long at $100 oil, but cannot be sustained at prices barely flirting above or below break-even. Which begs the question, what will happen to those assets? Some smaller shale operators have been quietly paying as they go, building cash, and could easily be positioned to snatch-up distressed assets. Perhaps best poised to strengthen themselves amidst this draught would be the most major of the majors, ExxonMobil. Even though profits were down by almost $2 billion in the fourth quarter, they still banked $6.5 billion.
How long will oil stay cheap: I'm in Alberta, the province that produces most of Canada's oil, and there's only one question on everybody's lips. How long will the oil price stay down? It has fallen by more than half in the past nine months - West Texas Intermediate is $48 per barrel today - and further falls are predicted for the coming weeks. This hits jobs and government revenues hard in big oil-producing centers like Alberta, Texas and the British North Sea, but its effects reach further than that. "Clean" energy producers are seeing demand for their solar panels and windmills drop as oil gets more competitive. Electric cars, which were expected to make a major market breakthrough this year, are losing out to traditional gas-guzzlers that are now cheap to run again. Countries that have become too dependent on oil revenues are in deep trouble, like Russia (where the ruble has lost half its value in six months) and Venezuela. Countries like India, which imports most of its oil, are getting a big economic boost from the lower oil price. So how long this goes on matters to a great many people. The answer may lie in two key numbers. Saudi Arabia has $900 billion in cash reserves, so it can afford to keep the oil price low for at least a couple of years. The "frackers" who have added 4 million barrels/day to U.S. oil production in the past five years (and effectively flooded the market) already owe an estimated $160 billion to the banks. They will have to borrow a lot more to stay in business while the oil price is low, because almost none of them can make a profit at the current price. Production costs in the oil world are deep, dark secrets, but nobody believes that oil produced by hydraulic fracturing ("fracking") comes in at less than $60-$70 per barrel.
Removing U.S. oil ban would create jobs beyond drilling: report - – Lifting a 40-year-old U.S. ban on crude exports would create a wide range of jobs in the oil drilling supply chain and broader economy even in states that produce little or no oil, according to a report released on Tuesday. Some 394,000 to 859,000 U.S. jobs could be created annually from 2016 to 2030 by lifting the ban, according to the IHS report, titled: “Unleashing the Supply Chain: Assessing the Economic Impact of a U.S. crude oil free trade policy.” Only 10 percent of the jobs would be created in actual oil production, while 30 percent would come from the supply chain, and 60 percent would come from the broader economy, the report said. The supply chain jobs would be created in industries that support drilling, such as oil field trucks, construction, information technology and rail. Many of the jobs would be created in Florida, Washington, New York, Massachusetts, and other states that are not known as oil producers. “The jobs story extends across the supply chain, right across the United States,” said Daniel Yergin, a vice chairman at IHS and an oil historian. “It’s not just an oil patch story, it’s a U.S. story.”
Debunking America’s Energy Fantasy: Shale Gas and Tight Oil Peak in Next Decade -- Yves Smith - We’ve written from time to time on how reports of America’s coming energy independence and continuing access to lots of affordable domestic shale gas and oil are based on studies that more careful geological work have demonstrated to be optimistic, and by a large margin. We’ve repeatedly pointed out, for instance, that shale gas production will peak in 2020 and decline gradually for a few years after that, then tail off more rapidly. Oil and gas expert Arthur Berman gave a detailed talk last month about hype versus reality as far as the outlook for US shale gas and oil production is concerned (hat tip Pwelder). The presentation is followed by Q&A with geologists, so the level of discourse is higher than what you typically see. Since the presentation is long, I’ve also embedded the slides. A quick and dirty way to get much of the content is to read the slides, and then zero in on the sections that interest you, or just listen to the Q&A, which starts is at 1:08. Some key points from Berman’s remarks:
- The US is a much smaller player, in global terms, than the cheerleading would have you believe
- The EIA (which if anything has a bullish bias) projects that US oil production will peak in 2016
- Shale gas production is falling for all US plays except Marcellus, and that is estimated to peak in 2020
- LNG export is a bad idea; the US can’t compete with Russian prices
He also has a long and intriguing discussion of how ZIRP and financialization have played into what he calls “the beautiful story”. And he’s not terribly optimistic about the prospects for US shale gas operators: “a lot of these companies are toast….There’s not a nice, easy solution to this.”
Lipstick on a pig: America as the world's swing producer of oil - Most people have heard the old saying: "You can put lipstick on a pig. But it's still a pig." That's sort of what is happening in the American oil patch as producers try to put a positive gloss on the devastation that low oil prices are visiting on the industry. Perhaps the most inventive redefinition is as follows: The part of the U.S. oil industry devoted to extracting tight oil from deep shale reservoirs in places such as North Dakota and Texas has made the United States the world's "swing producer." A swing producer is a country or territory that has large production in relation to the total market, substantial excess capacity and the ability to turn its capacity on and off quickly in response to market conditions. The term makes the U.S. oil industry sound powerful and important. And, while the U.S. industry remains an important player in the world--third in production behind Russia and Saudi Arabia--it is most definitely not powerful in the sense that the moniker "swing producer" would imply. To understand why this is so, we need only examine the history of the world's other two swing producers. Prior to 1970, Texas was the world's swing producer. Starting in the 1930s the state of Texas began regulating the amount of oil that an oil company could produce from its wells. It did this when overproduction drove the price of oil down to a mere 13 cents a barrel. No one was making any money. By 1970 the world needed all the oil that Texas could pump and so the commission announced 100 percent "proration."* The commission essentially stopped regulating oil well output based on market demand. The inability of Texas to maintain significant excess capacity while supplying the market with adequate amounts of petroleum meant that the days of Texas as the swing producer were over. Saudi Arabia had oil that was cheap and easy to produce just as Texas had had when it first became the world's swing producer. And, the Saudis had the will to exercise discipline in raising and lowering production to moderate price declines and spikes.
Big Oil’s business model is broken -- Many reasons have been provided for the dramatic plunge in the price of oil to about $60 per barrel (nearly half of what it was a year ago): slowing demand due to global economic stagnation; overproduction at shale fields in the United States; the decision of the Saudis and other Middle Eastern OPEC producers to maintain output at current levels (presumably to punish higher-cost producers in the U.S. and elsewhere); and the increased value of the dollar relative to other currencies. There is, however, one reason that’s not being discussed, and yet it could be the most important of all: the complete collapse of Big Oil’s production-maximizing business model. Until last fall, when the price decline gathered momentum, the oil giants were operating at full throttle, pumping out more petroleum every day. But Big Oil was also operating according to a business model that assumed an ever-increasing demand for its products, however costly they might be to produce and refine. This meant that no fossil fuel reserves, no potential source of supply — no matter how remote or hard to reach, how far offshore or deeply buried, how encased in rock — was deemed untouchable in the mad scramble to increase output and profits. How things have changed in a matter of mere months. With demand stagnant and excess production the story of the moment, the very strategy that had generated record-breaking profits has suddenly become hopelessly dysfunctional.
Energy Credit Risk Soars Most In 2015 As Bankruptcies, Liquidations Loom -- While investors have grown to used to knife-catching heroics in equity markets, the Energy credit markets have been a poster child of yield-reaching, bottom-guessing, dip-buying exuberance in the past six months. As every leg lower in oil was met with more Oil ETF buyers and bond buyers (or loan financers) as "the bottom is in," so each low has failed and new lows are made. The last few days have seen credit risk soar the most in 2015 in the energy sector as numerous firms enter bankruptcy or approach it with huge looming coupon and principal due. What is even more telling is the news of a huge liquidation sale of energy heavy equipment which will be the 'tell' for the entire industry if it is weak... On March 25, Ritchie Bros., the world's largest industrial auctioneer, will conduct a massive multi-million dollar crane and transportation auction for Energy Transportation in Casper, Wyoming. Energy Transportation is the largest supplier of fully operated and maintained crane services, specialized rigging, and heavy haul transportation in the state of Wyoming. More than 750 items will be sold in the one-owner unreserved public auction, including 14 rough terrain cranes (ranging from 20 – 150 tons), seven all terrain cranes (225 – 600 tons), seven hydraulic truck cranes (75 – 110 tons), six crawler cranes (230 – 660 tons), related rigging equipment, as well as heavy-spec trucks, trailers and other equipment.
Banks Struggle to Unload Oil Loans - WSJ: Citigroup Inc.,Goldman Sachs Group Inc.,UBS AG and other large banks face tens of millions of dollars in losses on loans they made to energy companies last year, a sign of investor jitters in a sector battered by the oil slump. The banks intended to sell the loans to investors but have struggled to unload them even after cutting prices, thanks to a nine-month-long plunge that has taken Nymex crude futures to their lowest level since 2009. The losses mark a setback for Wall Street, after global banks earned $31 billion in fees over the past five years by financing energy-company stock sales, borrowing and mergers-and-acquisition transactions, according to Dealogic. Wall Street’s losses on the loans could have a chilling effect on some oil companies’ ability to fund their operations as investors take a more cautious view of the sector. “We’ve been pretty shy about dipping back into the energy names,” “We’re taking a wait-and-see attitude.” Energy-sector deals have been a bright spot at a time when once-lucrative businesses, such as fixed-income trading and consumer lending, are flagging thanks to tighter rules, low interest rates and uneven economic growth, analysts said.
Oil Firms’ Debt Is Helping Drive Prices Lower, BIS Says - High levels of borrowing at many energy-sector firms may be magnifying a historic slump in the oil markets, according to a new report from the Bank for International Settlements. This has created a vicious cycle in which companies are forced to keep up production to meet short-term debt obligations even as prices fall, exacerbating the downturn, the BIS says in its latest quarterly review of world financial conditions. The BIS, based in Basel, Switzerland, is an international organization of central banks. Debt in the oil and gas sector surged to $2.5 trillion last year from $1 trillion in 2006, according to BIS economist Dietrich Domanski and his three co-authors. “Greater leverage may have amplified the dynamics of the oil price decline,” the authors write. The authors say the trend reveals risks to the financial system that go well beyond traditional banking. “Rapidly rising leverage creates risk exposures to the nonfinancial corporate sector that may be transferred across the global financial system,” the paper says. “A selloff of oil company debt could spill over to corporate bond markets more broadly if investors try to reduce the riskiness of their portfolios.” For that reason, it is harder to view the rapid plunge in crude oil prices as an unequivocal good, even for crude importers, the authors say. “Oil sector leverage complicates the assessment of the macroeconomic implications of lower oil prices.”
Junk-Rated Oil & Gas Companies in a “Liquidity Death Spiral” -- Wolf Richter - West Texas Intermediate plunged over 4% to $45 a barrel on Friday.. The boom in US oil production will continue “to defy expectations” and wreak havoc on the price of oil until the power behind the boom dries up: money borrowed from yield-chasing investors driven to near insanity by the Fed’s interest rate repression. But that money isn’t drying up yet – except at the margins. Companies have raked in 14% more money from high-grade bond sales so far this year than over the same period in 2014, according to LCD. And in 2014 at this time, they were 27% ahead of the same period in 2013. You get the idea. Even energy companies got to top off their money reservoirs. Among high-grade issuers over just the last few days were BP Capital, Valero Energy, Sempra Energy, Noble, and Helmerich & Payne. They’re all furiously bringing in liquidity before it gets more expensive. In the junk-bond market, bond-fund managers are chasing yield with gusto. Last week alone, pro-forma junk bond issuance “ballooned to $16.48 billion, the largest weekly tally in two years,” the LCD HY Weekly reported. Year-to-date, $79.2 billion in junk bonds have been sold, 36% more than in the same period last year. But despite this drunken investor enthusiasm, the bottom of the energy sector – junk-rated smaller companies – is falling out.
Oil Bonds Lose Investors $7 Billion in 10 Days - Investors lured back into junk-rated energy bonds by their juicy yields are getting burned. Oil prices have fallen more than 15 percent since March 4 to a six-year low of $42.3, wiping out $7 billion of market value of high-yield debt issued by energy companies. Prices on $1.45 billion of notes sold less than two weeks ago by Energy XXI Ltd., an oil producer that was being squeezed by its lenders, have fallen by as much as 10 percent. Comstock Resources Inc.’s $700 million of securities have declined by more than 7 percent since March 6. The latest slump in crude is rekindling concern that oil companies will struggle to service the $120 billion of high-yield, high-risk debt they took on in the past three years amid the U.S. shale boom. That’s a sharp reversal from February when yield-starved bond investors were loading up on the debt again, pushing down borrowing costs to a two-month low. “We had a whole month where prices were at a level that it seemed to have bottomed and provided a false sense of security for investors,” “They are constantly hunting for yield and the short-term opportunity in this low-rate environment.” Junk-rated energy borrowers have sold about $9.4 billion in bonds this year, doubling the amount issued during the last three months of 2014, according to data compiled by Bloomberg. The companies raised more than $17 billion during the third quarter of last year. Oil prices are plunging as U.S. output climbs to the highest in three decades even as explorers idle drilling rigs. The drop to less than $43 a barrel follows a month of relative stability, when prices hovered around $50 after sliding from as high as $107 in June.
Oil Prices Drop as Production Hums Along Despite a Brimming Supply - — Just as the oil market appeared to be stabilizing, the price of crude resumed its descent on Friday.The drop, of about 4 percent, came after a report from the International Energy Agency warning that oil pouring into tank farms in the United States might “soon test storage capacity limits.”The agency, whose reports are closely monitored by oil traders, said that overflowing storage “would inevitably lead to renewed price weakness.” American production of oil continues to increase despite recently announced cutbacks in new drilling by producers.The price of West Texas Intermediate, the American benchmark, fell to around $45 a barrel on Friday, while Brent, the international benchmark, fell below $55 a barrel. The Department of Energy has proposed adding five million barrels of oil to the Strategic Petroleum Reserve. The purchase, which requires congressional approval, would be added in June and July. But 9.4 million barrels of oil a day are being produced in the United States. Kevin Book, an analyst with ClearView Energy Partners, said that the proposed purchase was not an attempt to support falling prices but instead “appears to derive from a statutory obligation.”with winter coming to an end in much of the world, the oil market was most likely due for a spell of softness. Refineries in Europe and Asia will now be undergoing routine maintenance, leading to a period of weaker demand for crude. “We are expecting another period of weakness,” Mr. Mallinson said in an interview. Additionally, striking refinery workers in the United States reached a tentative deal this week to end their walkout. Although the walkout affected 12 refineries, it had minimal impact on production as managers and other workers kept the plants running
Oil prices drop on strong dollar, U.S. crude hits six-year low (Reuters) – Oil prices fell sharply in early Asian trade on Monday, with U.S. crude dropping more than 2 percent to a six-year low after the dollar hit fresh highs and concerns grew that the United States might run out of oil storage. Both U.S. crude and Brent have dropped steeply this month on a stronger dollar and worries over an oil supply glut. U.S. crude fell to $43.57, the lowest since March 2009, while Brent slipped to $53.34 in early trading on Monday after the dollar index closed above 100 on Friday for the first time since April 2003 to hit fresh 12-year highs. By 2330 GMT, U.S. crude was down 93 cents, or 2.1 per cent, at $43.91 a barrel, and Brent was down 97 cents at $53.70 a barrel.
WTI Crude Oil Falls Close to $43 per Barrel -- From the WSJ: Oil Prices Fall to Six-Year Intraday Low Crude prices extended losses in early New York trading on a report, issued by a private data provider, that showed rising oil stockpiles at a key U.S. storage hub. Earlier, oil dropped as traders weighed the prospect of more Iranian crude hitting the global market, as negotiators came closer to a tentative political agreement on Tehran’s nuclear program...Recently, light, sweet crude for April delivery recently fell $1.65, or 3.7%, at $43.19 a barrel on the Nymex. It dipped as low as $42.85 a barrel, the lowest intraday price since March 12, 2009. Oil is now on pace for a five-session losing streak and is down nearly 14% in that span.This graph shows WTI and Brent spot oil prices from the EIA. (Prices today added). According to Bloomberg, WTI has fallen 2.8% today to $43.52 per barrel, and Brent to $53.23.WTI oil prices are off almost 60% from the peak last year, and there should be further declines in gasoline prices over the next couple of weeks. Nationally gasoline prices are around $2,42 per gallon, and gasoline futures are down about 4 cents per gallon today.
U.S. Oil Prices Fall to Six-Year Low - Oil prices fell to six-year lows on Monday in the face of concerns that a glut in the United States was outpacing already-brimming storage facilities.Additionally, the Organization of the Petroleum Exporting Countries published a report suggesting that the cartel remained reluctant to intervene to prop up prices.The direction of oil prices, which had risen sharply from January lows, has fallen back in recent days. Traders are now focused on the second quarter of the year, when demand for oil is traditionally weak because of the end of winter and scheduled refinery shutdowns for maintenance.On Monday, the price of West Texas Intermediate crude, the main United States benchmark, fell about 2 percent to about $44 a barrel, a six-year low, while Brent crude, the international benchmark, fell by about 2 percent to about $53 a barrel.Oil markets continue to focus on OPEC because its members could quickly alter the markets’ balance by cutting production. But while some members, including Nigeria and Venezuela, would like to see cuts, Saudi Arabia and its Gulf allies show little inclination to change the policy they agreed to in the fall: Protect market share regardless of what happens to prices.
Oil Plunges To Lowest Since March 2009 ($43 WTI) As EURUSD 1.05 Battle Continues -- Despite 'trouble' in Saudi Arabia, and chatter of SPR buying, it appears the re-opening of all Houston shipping channels, comments from Greenspan, yet another refinery shut (Exxon's Joliet lost power), and the rapidly filling storage capacity has awakened the realization that the month-long dead-cat-bounce is over in crude. Brent broke below $53.50 and WTI back to a $43 handle (close to the lowest levels in 6 years) at the open. One can only imagine the pressure on USO (Oil ETF) holders as the contango continues to gap wider. EURUSD is teasing the crucial 1.05 level again...
WTI Plunges To $42 Handle On Massive API Inventory Build -- For what appears to be the 10th week in a row, API reports a massive 10.5 million barrels (far bigger than the 3.1 million barrel expectation) and a 3 million barrel build at Cushing. If this holds for DOE data tomorrow (and worryingly API has tended to underestimate the build in recent weeks) it will be the biggest weekly build since 2001. WTI has plunged on this news hitting $42.60 on the April contract.
U.S. shale oil firms brace for more pain as crude resumes slide – With the prospect of another plunge in crude prices looming after two months of stability, U.S. shale oil producers may face another round of spending cuts to conserve cash and survive the downturn. A deeper retrenchment would have far-reaching effects. Additional cutbacks would further gut the already-hemorrhaging oilfield services industry and may heighten expectations for a steeper drop in U.S. crude output later this year. They would also reinforce the United States’ emerging role as the world’s “swing producer,” with dozens of independent companies that can quickly ramp up production in good times and dial it back in a downturn. “If I were an oil company today, I would talk about one thing: how far can you cut costs,” said Fadel Gheit, an oil analyst at Oppenheimer in New York. “They cannot control anything else.” Gheit said he expected a new wave of capital budget cuts starting in May, when much of the energy industry reports quarterly results. U.S. oil companies have slashed spending 20 to 60 percent since the price of oil fell by half from June to January, and oilfield services firms shed more than 30,000 jobs, according to Reuters compilations of public disclosures. Debt rating agency Moody’s estimates that about a fifth of the North American exploration and production companies it follows will slash budgets by more than 60 percent this year while more than half will cut spending by at least 40 percent. After a pause brought a sense of relief, the price slide has resumed. U.S. benchmark West Texas Intermediate (WTI) has fallen 12 percent in a week to $42 on concerns about lingering global oversupply. Citibank and Goldman Sachs have said oil could tumble to $30 or even $20.
Oil Prices Will Recover: Market Fundamentals Are Working: On St. Patrick’s Day the U.S. Energy Information Administration (EIA) reported that oil production from three of America’s largest shale plays is in decline. The EIA is forecasting that total U.S. oil production will be in decline in the 3rd quarter. The South Texas Eagle Ford, North Dakota’s Bakken/Three Forks and the Niobrara in Colorado & Wyoming are in decline. Since horizontal shale wells have very steep production decline rates (more than 50% in the first year), the oil supply “glut” will be corrected by market forces. Shale plays require continuous drilling or they quickly go on decline. Baker Hughes reported March 13, 2015 that the land rig count was down to 1,069. I am forecasting the active onshore rig count in the U.S. to fall below 800 by the end of April. The price of West Texas Intermediate (WTI) crude oil is testing the 5-year low as I write this article. Oil traders are dealing with some facts and a lot of fiction these days. The physical market is obviously oversupplied today, but the word “glut” is being way overused. There is no doubt in my mind that some of the “narrative” coming from Wall Street analysts is purposely meant to drive down the price of oil. More than 90% of the NYMEX futures contracts are now held by non-commercial “speculators”. Many of them are now “short” oil, hoping the price of WTI will fall. Once Wall Street gets oil prices as low as they can, they will suddenly change their tone and point out that demand for oil is going up and supplies are falling. I have seen this happen several times in my 35+ years in the industry. What’s happening now is not new.
WTI Slumps As Cushing Inventory & Production Hit New Record High -- Following last night's massive 10.5mm barrel build (according to API), this morning's DOE inventories data was highly anticipated (with an expectation of just over 5 million barrels). It did not disappoint... printing at 9.622 million barrel inventory build, this is now the fastest inventory build on record... with record total inventory and record Supplies at Cushing. Storage concerns are growing. But, despite the collapse in rig counts, high-grading and cash-flow deparation remains as crude production also hit a new record high.
Brent oil falls below $53 as industry data shows record U.S. inventories – Brent oil prices fell below $53 a barrel on Wednesday on oversupply concerns as industry data indicated U.S. crude stocks had hit a new record high. U.S. crude inventories rose by 10.5 million barrels to 450 million barrels in the week to March 13, American Petroleum Institute (API) figures showed on Tuesday. A Reuters poll showed that analysts had expected a 3.8-million-barrel build. Brent for May delivery was down 70 cents at $52.82 per barrel by 1305 GMT after ending the previous session up 7 cents. U.S. crude for April delivery fell $1.25 to $42.21 per barrel, after hitting a six-year low of $42.05 earlier in the session. Crude stocks at the Cushing, Oklahoma delivery hub rose by 3 million barrels, the API said. “That’s a big build, especially given the rate of inventory increases we’ve seen recently,”
Kuwait "Over-Supply" Concerns Send WTI Tumbling Back To $42 Handle - Reversing all of yesterday's FOMC-inspired idiocy, WTI has plunged back to reality this morning. Following comments by Kuwait's comments that OPEC had no choice but to keep production steady, refocusing the market on global oversupply, April WTI is back down to a $42 handle. All of yesterday's idiocy unwound... As Reuters reports, Kuwait's oil minister said on Thursday he was concerned by the 50 percent drop in oil prices since June because of its impact on the Gulf Arab state's budget, but said OPEC had no choice but to keep output steady. "We don’t want to lose our share in the market," Ali al-Omair told reporters.
Commodities Fall to 12-Year Low as Dollar Rises Amid Surplus - -- Slumping energy prices led commodities to a 12-year low as the dollar’s best rally since 2008 reduced the investment appeal of raw materials amid surpluses of everything from oil to sugar. The Bloomberg Commodity Index fell 1.4 percent to 97.5777, the lowest level since August 2002, dragged down by crude oil and raw sugar. The Bloomberg Dollar Spot Index, tracking the greenback against 10 currencies, is set to climb the most since 2008 this quarter and reached the highest level in data going back to the end of 2004. A stronger dollar tends to deter investment in raw materials. Commodities are tumbling as economies expand in the U.S. and cool in other nations, driving the dollar higher. The Federal Reserve will hold a policy meeting next week as strength in the U.S. labor market fuels speculation that the central bank will lay the groundwork for higher borrowing costs. The European Central Bank started a bond-buying plan this week, adopting so-called quantitative easing to spur growth. Goldman Sachs Group Inc. said commodities may drop 20 percent over the next six months amid rising supplies. “The combination of prospective Fed rate hikes versus QE in Europe and Japan suggests that dollar strength can continue,” Nic Brown, the London-based head of commodities research at Natixis, said by e-mail on March 10. “This stronger dollar inevitably implies downward pressure on the dollar-denominated price of commodities. Those used as a safe-haven store of value are most at risk.” West Texas Intermediate crude slid 4.7 percent to end at $44.84 a barrel in New York, the lowest settlement since January. A glut of oil in storage in the U.S. expanded for a ninth straight week, the Energy Information Administration said March 11. Natural gas dropped for a second day, losing 0.3 percent to $2.727 per million British thermal units.
US oil and natural gas rig count drops by 56 to 1,069 - Oilfield services company Baker Hughes Inc. says the number of rigs exploring for oil and natural gas in the U.S. tumbled by 56 this week to 1,069 amid slumping oil prices. Houston-based Baker Hughes said Friday 825 rigs were seeking oil and 242 exploring for natural gas. Two were listed as miscellaneous. A year ago, 1,803 rigs were active. Among major oil- and gas-producing states, Texas lost 36 rigs and Louisiana 18. New Mexico declined by five, North Dakota and Ohio each dropped three and Arkansas and Kansas lost two apiece. In related news, EIA: Eagle Ford production set to slow down in April. Alaska gained four rigs, Pennsylvania and West Virginia were up three, Colorado and Oklahoma two and California one. Utah and Wyoming were unchanged. The U.S. rig count peaked at 4,530 in 1981 and bottomed at 488 in 1999.
Oil retreat losing steam? U.S. oil rig count drop the smallest in three weeks - The biggest retreat from U.S. oil fields on record is showing signs of subsiding. Oil explorers sidelined 41 drilling rigs this week, the smallest drop in three weeks and down from the average 59-rig decline in February. The count has fallen for 15 straight weeks to 825, reaching the lowest level in more than five years, Baker Hughes Inc. said on its website Friday. The country has lost an unprecedented 750 oil rigs in the past 15 weeks as collapsing prices force drillers to let go of thousands of workers and retreat from shale formations. The slide in the rig count threatens to bring to a halt the oil production boom that turned the U.S. into the world’s largest fuel exporter. “While we’re still going to see declines on a weekly basis, the retreat is definitely losing steam,” James Williams, president of energy consulting company WTRG Economics, said by phone on Friday from London, Arkansas. “We’re unlikely to see a 100-rig drop again. Eventually these declines will get smaller every week, if for no other reason than we have fewer rigs out there to stop drilling.”
US oil rig count falls to lowest since March 2011 - The number of US rig counts fell by 41 last week to 825, according to the latest data from oil driller Baker Hughes. This is the lowest oil rigs in use since March 2011. Combined oil and gas rigs fell by 56 to 1,069, the lowest since October 2009. Since hitting a peak of 1,609 in late October, the number of oil rigs is use is down about 49%. In previous downturns in the price of oil, the number of oil rigs in use has declined by around 40%-60%, according to comments made by Baker Hughes on its first quarter earnings conference call. And while the market has been looking at the decline in rig count, the bigger story in the oil market may be quickly dwindling amount of storage for the oil that US producers continue to pump out. Here's the latest chart of the decline in rig count.
Rig Count Plunge Continues: Total Rigs Lowest Since March 2011, Fastest Drop Since 1986 -- The rig collapse continues, with "only" 1,069 rigs currently operating, down 5.0% from last week's 1,125, and the lowest since March 2011. The hope (because lately that's all there is) is that since oil rigs are plunging at an annual pace last seen 1986, that sooner or later production will be mothballed. However, as the blue line in the chart below shows, quite the contrary is happening as plummeting oil rigs simply means even more record production.
U.S. Oil Rig Count Keeps Falling - WSJ: The U.S. oil rig count fell by 41 to 825 in the latest week, according to Baker Hughes Inc., making the 15th straight week of declines. The number of U.S. oil drilling rigs--a proxy for activity in the oil industry--has fallen sharply since prices headed south last year. There are now about 49% fewer rigs working from a peak of 1,609 in October. That hasn’t yet translated into a drop in actual output, which is currently running at a multiyear high of 9.4 million barrels a day in the U.S., even though it has squelched production capacity. U.S. crude prices held gains following the data and were recently up 3.1% to $46.95 a barrel. According to Baker Hughes, gas rigs were down 15 to 242 this week. The U.S. offshore rig count is at 37, down 11 from last week and down 18 from the previous year. For all rigs, including natural gas, the week’s drop was 56 to 1,069, down 734 from 1,803 at this stage a year ago.
Oil heading to $20: Expert: A strengthening dollar and economic weakness in Europe and China could drive crude prices as low as $20 per barrel, according to Raoul Pal of The Global Macro Investor newsletter. The dollar has been climbing recently against the euro and the yen, pushing oil prices lower and sending fear across the markets. He said crude could still fall another 60 percent before the downturn is done. Pal said the strengthening dollar is a big part of why oil could continue to drop. "If we look back historically at how these big dollar bull markets go, I think it's going to go, using the (dollar index), at least to 125, maybe even further," he said in an interview Tuesday on CNBC's "Fast Money." Historically the price of oil moves inversely to the strength of the dollar. According to Pal, that relationship, along with weak demand in Europe and China, has led oil companies to put crude into storage in hopes of waiting out the downturn in prices. Crude stores in America are filling "at an incredible rate" and could be full by summer, he said, which could lead to even more dire consequences. "Any oil that is then brought out of the ground will either have to be sold into the normal market, which will be at much cheaper prices, or they're going to have to shut down production," he said. "I think that shutdown of production is something that people haven't really thought through yet."
Data Suggests An Oil Price Recovery Could Be Sooner Rather Than Later: World oil demand increased by 1.1 million barrels per day in February. This is a potentially important data point that suggests a crude oil price recovery sooner than later. It is also important because it further supports the view that a production surplus and not weak demand is the main cause for the recent oil-price fall. The latest data from EIA shows that February world liquids production was flat with January but consumption increased 1.1 million barrels per day. This reduces the relative production surplus (production minus consumption) from 1.68 million barrels per day in January to 0.56 million barrels in February. The chart below shows production (supply) in blue and consumption (demand) in red. The gap between production and consumption shrunk to its lowest level since April 2014, before the drop in world oil prices as shown in the chart below. The EIA forecasts that consumption will be lower in the next 3 months before returning to and exceeding the February demand level in June and thereafter for the rest of 2015 as shown in the chart below. IEA data released today is somewhat less optimistic indicating lower demand through the second quarter of 2015 with higher demand in the second half of the year.
Pickens: Expect $70 per barrel this year | bakken.com: Could an oil and gas bounce-back loom in America’s near future? During his appearance on CNBC’s “Squawk Box,” energy magnate Boone Pickens seems to think so, forecasting prices to rise to $70 per barrel by the end of the year. Pickens noted producers’ efforts to balance the rocky market with rig cuts, but blamed overzealous production habits for slashing oil prices by half since June. Today, U.S. crude prices reached as low as $43. Baker Hughes reported a rig count of 866; a far cry from the U.S. high of 4,530 in 1981, but still well above the low of 488. Pickens also offered forecast for natural gas prices, which he predicted would rise from the current price of $2.84 to $6 in the next five years. “We were so efficient, the industry did such a good job, the industry showed up with too much gas,” he said in the interview. “So, at one time—around 5 years ago—we had 1,400 rigs running on natural gas. Today we have 300. We oversupplied the market, and boy, we did it big time.”
Growing U.S. oil export debate has now spread to geopolitics – Lifting the longstanding ban on U.S. crude oil exports would boost the country’s economy and enhance its global leadership, a former senior Obama administration official will tell senators on Thursday, introducing a strategic dimension to the growing debate over selling American oil abroad. In testimony submitted ahead of a Senate energy committee hearing on U.S. crude export policy, the Pentagon’s former undersecretary of defense for policy, Michele Flournoy, argues “policymakers in the United States should embrace these various benefits to our allies and ourselves and liberalize our crude export rules. “Market conditions merit such a step and security dividends will not be fully realized without it,” said Flournoy, co-founder of the Center for a New American Security. A host of economic and geopolitical factors, from plummeting oil prices, near-capacity storage facilities and sanctions against Iran and Russia, are forcing both sides of the debate to address strategic questions. “Members of Congress are starting to focus on this issue in a big way,” said George Baker, executive director of Producers for American Crude Exports – a group representing independent companies demanding an end to the export ban.
U.S. Oil Export Ban No Solution to Oil Prices | Art Berman: Tight oil producers are hoping for an end to the U.S. oil export ban. They hired IHS to write the second report on this topic in less than a year. In Unleashing The Supply Chain,, IHS argues that U.S. jobs are the casualty from the export ban. The problem, they say, is that the U.S. lacks the capacity to refine all of the light tight oil being produced and that lowers the price. But there were plenty of jobs over the last several years when oil prices were high even though the export ban was in place. That is because over-supply has lowered oil prices and over-production, not the export ban, is the problem. The chart below shows that tight oil production from the U.S. and Canada is the anomaly responsible for global over-supply. And it’s a world problem of over-supply, not just an American problem. Oil companies everywhere are cutting staff and budgets. All companies are being hurt by low oil prices because they need $100 oil to break even. The IHS report claims that the oil export ban causes lower oil prices in the U.S. compared to international prices. Actually, U.S. oil pricing has nothing to do with international prices. It is a simple matter of supply and demand. When U.S. companies supply more oil than is needed, the price goes down. If there were less supply, the price would be higher. In fact, there was no difference between U.S. WTI and International Brent prices until late 2010 when tight oil started to become a big factor in U.S. production (see chart below). If the U.S. export ban were removed, U.S. companies would make more money per barrel for a short time until the extra U.S. supply pushed down the price of world oil even further.
The Senate Had A Hearing On Oil Exports And Didn’t Mention The Environment Once -- On Thursday, the Senate Energy Committee convened a hearing to discuss the U.S. ban on crude oil exports, which has been in place since 1973. With the United States in the midst of an oil boom — and with Americans using less gas than ever before — lifting the ban would have profound implications both at home and abroad, issues that dominated the panelists’ testimony and committee’s questions. “The national security side will be an extremely important part of this going forward,” Chairwoman Sen. Lisa Murkowski (R-AK), said during the hearing. “We all recognize that the world is a very, very volatile place right now.” Lifting the export ban, several panelists argued, would allow the United States to leverage more power over potential oil sanctions by assuring that the international market would remain stable. It would also, panelists said, move the center of the international oil market away from unstable countries — both Russia and Iran merited a mention — stabilizing the overall supply. Domestically, Carlos Pascual, fellow at the Center on Global Energy Policy at Columbia University, argued that lifting the export ban would lower gas prices and boost the U.S. economy. “The critical focus on the part of Americans is price,” Pascual said. “Every single study that has been done by a major institution has come to the same conclusion: lifting the export ban will reduce the price of gasoline in the United States,” while adding $38.1 billion to the U.S. GDP by 2020. In all these calculations, however, there was one glaring omission: no panelist — or senator — talked about how lifting the export ban would impact the environment.
Saudi looking beyond oil price slump as rig count spikes - – As the global energy industry stares transfixed at a spectacular drop in U.S. rigs, Saudi Arabia is ramping up the number of machines drilling for oil and gas despite a sharp fall in the price of crude. Industry sources and analysts say the OPEC kingpin is looking beyond the halving of global oil prices since June 2014 to a time when crude could again be in short supply. Riyadh is therefore keen to preserve what is known as its spare capacity – the kingdom’s unique ability to raise oil output quickly at any given moment. But to achieve that, Saudi Arabia has to drill much more than in the past, after boosting output to record levels to compensate for global supply outages in the past four years. “The Saudis are probably worried about everyone else reducing capex as a result of low oil prices and about non-OPEC output falling off a cliff at some point. We all know that supply disruptions are unpredictable but they are certain,” “The increase in Saudi rig numbers is like a signal to the industry – let’s be rational. We will need supply growth in the future.” State oil giant Saudi Aramco used a record-high 210 oil and gas rigs in 2014, up from around 150 in 2013, 140 in 2012 and some 100 in 2011, according to previous industry estimates. Amin Nasser, Aramco’s senior vice-president for upstream operations, said this month his firm had yet to decide whether to increase the rig number in 2015 from the 212 currently in use.
After Ending US Shale Jobs, Saudis Look to Hire 'Em - You've got to hand it to the Saudis: this tactic of driving down global oil prices to eliminate marginal shale producers in the United States seems to be working. There's been a non-stop drop in the number of oil rigs operating Stateside as the OPEC bigwig's decision to keep pumping despite falling oil prices has worked as intended. Being endowed with massive foreign exchange reserves, the Saudis could play a game of chicken for much longer than debt-dependent shale producers. We now know who's blinked first. But wait a minute: the plot thickens. Since there are now legions of unemployed workers with shale production expertise, the Saudis are now looking to hire them. Saudi Aramco is not exactly known for homegrown expertise in cutting-edge extractive technologies, preferring to hire foreigners to get the job done. So it is now decreed that, having seen the potential of shale drililng, the Saudis are looking to get into the game. What better way, then, other than to hire Americans laid off by its price wars? This is quite rich, but there are apparently takers for Aramco's "help wanted" ads. They've even hired headhunters to pick off Americans who've presumably lost their jobs in the downturn in oil prices induced by the Saudis: In February, Saudi Aramco posted several new ads on websites including Rigzone and LinkedIn that focused on shale expertise. One recent LinkedIn listing for a petroleum engineer with shale experience drew 160 applicants in a month, according to data from the professional networking website. “Consider the opportunity to join our team and help shape the future of key global unconventional resource development,” the ads say, referring to shale-rock exploration that’s led to a renaissance in U.S. oil and natural gas production. Additionally, since the start of the year, Saudi Aramco has added an “unconventionals” category to its recruiting website, where 35 job listings require specific experience in shale. A recruiting company, Whitney Human Resources, has also written directly to prospective employees on Saudi Aramco’s behalf.
OPEC, non-OPEC oil talks on ice, Iran return unlikely to change that – OPEC efforts to bring non-member countries such as Russia on aboard in cutting output have made little progress, officials say, and even the chance of more Iranian exports hitting prices if sanctions end is unlikely to boost cooperation. Since the oil price collapse, top OPEC exporter Saudi Arabia has said it wanted non-OPEC producers to cooperate with the group. But a plan for a meeting between the two sides this month appears to have been shelved. “At first we have been planning to meet in March, but so far no-one has come forward with such an initiative. The situation has calmed down a bit,” Russian Energy Minister Alexander Novak told Reuters. Novak was part of a Russian delegation that held talks with OPEC ministers before OPEC’s November meeting. But no supply cut deal was reached then, OPEC refused to act alone and Brent crude prices fell, reaching a near six-year low close to $45 in January. The Organization of the Petroleum Exporting Countries’ position, according to a delegate from a Gulf producer, remains that it might consider cutting output if outside producers were willing to contribute. “If big non-OPEC producers are willing to cooperate effectively, not only by saying but effectively, to make plans to decrease production, here OPEC may take a decision,” the delegate said.
Saudi oil: Peak conspiracy- The oil world’s been full of speculation about the shift of strategy last year by Saudi Arabia which saw it keep the pumps running even as the price fell, turning an initial drop into a plunge. There may be a simpler explanation for Saudi’s willingness to see prices slide than an attack on US shale or a “political plot” against regional rival Iran, though: a change in the Saudi view on peak oil. The Saudis have two choices with their oil: sell it now, or sell it later. If they think oil is running out, it is reasonable to think prices will keep rising in future – perhaps rising much faster than the returns they could earn by deploying the money elsewhere, particularly since they invest a lot of their excess foreign exchange in US Treasury bonds paying almost nothing. The logical thing to do is to keep as much oil in the ground as possible, pumping only enough to keep the global economy ticking over. On the other hand, if peak oil is so much bunkum, at least for the foreseeable future, then it makes sense to pump a lot more oil. Worse, if peak oil is the opposite of the truth – that demand for oil might go into a long-term decline – then it makes sense to pump as much as possible as soon as possible, whatever the price, because it will only be worth less in future. Not being a senior member of the Saudi royal family I don’t know the truth. Perhaps the Saudis did a secret deal with the US to hurt Russia. Perhaps they are trying to pressure the Russians to cut off Bashar al-Assad in Syria.. But new technologies are making it easier to access oil from shale, Brazilian pre-salt formations and Canadian oil sands, while global warming, ironically, is making the Arctic look like a potential new source of wells.
Saudi Arabia Needs More Oil to Feed Local Refinery Expansion - -- Saudi Arabia’s plans to expand local refineries while maintaining its share of the global crude market point to one thing: higher production. The world’s largest oil exporter will probably increase output this year to feed new refineries, deepening a global supply glut, according to analysts at Societe Generale SA and DNB ASA. The kingdom may go as high as 10 million barrels a day by April, according to Torbjoern Kjus, an analyst at DNB in Oslo. That would be the most in more than two years, according to data compiled by Bloomberg. “Saudi Arabia will do the same thing as other OPEC members have always been doing: They’ll produce as much as they can,” Kjus said by phone March 11. Fellow OPEC members, the United Arab Emirates and Kuwait, will probably do the same because “they don’t want to be holding back on any potential exports.” Crude’s rebound from the lowest in almost six years has faltered amid speculation that a global supply surplus may worsen. U.S. production and stockpiles continue to rise from the highest level in three decades, even after last year’s price slump of almost 50 percent. The Organization of Petroleum Exporting Countries has pumped more than its daily production target of 30 million barrels for nine months. A February rally in the price of oil has been followed by two weeks of declines. West Texas Intermediate, the U.S. benchmark, traded at $43.68 a barrel in electronic trading on the New York Mercantile Exchange at 12:42 p.m. Singapore time. The contract fell to $42.85 Monday, the lowest since March 2009.
Fears of Violence Against Western Oil Workers In Saudi Arabia: US international security officials said Washington’s embassy in Riyadh has suspended all consular services in three major Saudi cities because of concerns that an unnamed “terrorist organization” may be intent on violence against Western oil workers in the country. The State Department’s Overseas Security Advisory Council (OSAC) issued a statement on its website on March 14 that consular offices would be closed on Feb. 15 and 16 in Riyadh, Jeddah and Dhahran due to “heightened security concerns.” It said that even the consular section’s telephone lines won’t be open during the suspension. Further, all US citizens in Saudi Arabia were urged to “be aware of their surroundings, and take extra precautions when traveling throughout the country. The Department of State urges US citizens to carefully consider the risks of traveling to Saudi Arabia and limit non-essential travel within the country.” In Washington, the State Department said it could not elaborate on the message. The warning was issued a day after the OSAC warned that Western oil workers in Saudi Arabia’s Eastern Province, including US citizens, could be the targets of attacks or kidnappings by “individuals associated with a terrorist organization.” Neither message identified the suspected terrorists.