among the highlights of this weeks news, legislators in Maryland have banned fracking in that state until at least October 2017, as their House passed a measure on Friday by a 102-34 margin to prohibit issuance of drilling permits for the process at least until that time...more than 100 business owners in the Western part of the state thought to have exploitable shale had signed a letter to the leadership of the General Assembly in support of the fracking moratorium...earlier in the week their Senate had passed a similar measure by a 45 to 2 margin, so although the governor has taken no position on the measure, the margin in both houses in obviously veto-proof...
the week also saw the publication of a new study by the Johns Hopkins Bloomberg School of Public Health that found elevated levels of toxic radon gas in Pennsylvania homes near sites where fracking was taking place...researchers analyzed more than 860,000 indoor radon measurements from a Pennsylvania Department of Environment Protection database and found that overall ambient levels of the gas, the 2nd leading cause of lung cancer after smoking, have been on the increase since 2004, and that buildings in areas with fracked wells nearby had significantly higher readings of radon compared with buildings in low fracking-activity areas...while there are several links to media articles on this below, what is not questioned is how this radioactive gas, which comes from decay of radium-226 originating in the Marcellus, makes its way into homes from fracked wells which are supposedly sealed off from the surface stratums of soil and bedrock...if the rock layers and well casings are permeable enough for radon to make its way to the surface, it seems logical to assume the entire raft of toxic and carcinogenic components of fracking fluid would also eventually do so also...
the news from Ohio included a spill of more than 2,000 gallons of waste oil into a wetlands in Vienna township, just down Route 82 past Route 11, on the other side of the Youngstown-Warren airport...discovered by a local property owner, the spill covered two private ponds and 3000 feet of Little Yankee Run before it was contained by booms...a neighbor let Youngstown TV station WKBN’s news cameras on to his property to see the dead fish, turtles and muskrats that filled his pond, where reports were that the cleanup is expected to take days...the spill was traced to a buried drain pipe on the site of Kleese Development Associates, a local family owned oilfield services company that also sells topsoil & slag...according to an Ohio EPA spokeswoman, there was no indication the oil came from the holding tanks used by the Kleese injection well facilities...concerned about possible well water contamination, hundreds of residents showed up at Mathews High School the next day, where they were advised to drink bottled water for the time being...Nestle, who bottles unlimited quantities of water in California, where residential water use has been curtailed by 25% due to the drought, donated thousands of cases of water to the township to help placate the residents...the cleanup by KDA and a private contractor they have brought in to help is ongoing, so at least the area has a few more of those promised fracking jobs...
the Mississippi River also saw an oil spill this week, which while not large as some of the spills we've reported on lately, was interesting in the way it came about...it seems that the Privocean, a 751-foot bulk coal carrier which was docked north of Convent in southern Louisiana broke free of its mooring on Monday afternoon and started drifting downriver...eventually this bulk cargo ship, which is 2 and a half football fields long, swung around and struck the 98-foot towing vessel which had been dragged downriver behind the coal carrier while trying to control it,..that boat was luckily able to ground itself on the river bank before sinking...but that's not where the spill occurred; the Privocean continued to drift downstream until it hit an even larger 816-foot oil tanker called the Bravo, which was discharging crude oil at dockside, and hence the collision caused a spill of roughly 420 gallons of oil into the river, and another 126 gallons on the deck of the Bravo...thus this 3 ship collision and small spill by Louisiana standards resulted in a two day closure of 9 miles of the Mississippi, which was finally reopened on Thursday for two way traffic along the entire stretch..
the news from the production and supply side of the oil patch was pretty interesting this week too, as US production and inventories rose again even as Saudi Arabia reported record crude output of 10.3 million barrels a day in March...and while major oil companies worldwide are cutting back on exploration budgets and American frackers are shutting down rigs at a record pace, the Saudis certainly seem to be engaged in an all out push to regain dominance over the global oil market, as they are investing in refineries and additional production capacity even in the face of a worldwide glut of oil and oil products which has brought prices down to half what they were early last summer...the financial times reports that the number of rigs drilling for yet more oil and gas in the Kingdom has increased by 15 to 120 while US rig counts have dropped by half since October to the lowest in four years...and it's not just the Saudis that are hitting records; recent weeks have seen reports that Russian oil output hit a post-Soviet record high average of of 10.71 million barrels per day in March, topping their record output last year, while Iraqi oil production has also hit a new record of over 4 million barrels of crude per day and saw record exports of 92.4 million barrels in March....we wont even speculate how much oil Iran, who produced 3,518,000 barrels a day in 2014, could add to their output if NATO sanctions are lifted as planned this year...and even though Canada is losing over $30 billion a year on tar sands oil, Canadian production continues to grow just as the money losing fracking in the US does...
on top of all that, the Chinese, who became the world's largest importer of oil and other fuels last year, suddenly cut their oil imports back in the middle of March...they had quietly started buying all the cheaper oil that became available when prices started falling in October, then accelerated their oil purchases to a record level as global oil prices approached $50 a barrel in January, buying up Russian and Venezuelan oil on the cheap as the US imposed sanctions on those countries...so why did they suddenly stop importing? apparently they had been filling a 600 million barrel Strategic Petroleum Reserve and it's now full...so like the US, it appears they are in a position where they really can't import much more, even if prices fall further..
meanwhile, US oil production, which had slipped last week, was back up again this week, though not to the record level of the third week in March, as our oil output for the week ending April 3rd ran at 9,404,000 barrels a day, up from 9,386,000 the prior week and 14.3% higher than the 8,229,000 barrels per day we were producing in the 1st week of April last year...meanwhile, our inventories of crude oil in storage rose by the most weekly in 14 years to reach yet another record, increasing by 10.95 million barrels from the last week in March to 482.39 million barrels, 25.6% more than the 384.12 million barrels of oil stored commercially in the US in the 1st week of April a year ago...(NB: this doesn't include Strategic Petroleum Reserve maintained by the government, which is another 691 million barrels in storage) so it's worth once again to take a look at what that looks like compared to the historical trend, as the graph below from the weekly Petroleum Status Report (62 pp pdf) will show us...
April 3rd oil inventories:
the shaded area in that graph above is the range of US oil inventories as reported weekly over the past 5 years for any given time of year, essentially showing us the normal range of oil inventories as they fluctuate from season to season...then the blue line is the recent track of US oil inventories over the period from mid 2013 to mid 2015....you can see that at the current level of over 482.4 million barrels, oil inventories are much higher than they've ever been in recent years, and in fact much higher than they've been in the 80 years of EIA record keeping...the debate about how much oil storage space we have left continues, with some reporting we'll hit our capacity this spring with our primary storage hub at Cushing now 90% full, while others say we've got plenty of space left...i have no special insight as to who's right, except to note that we've never in our recent history stored as much as 400 million barrels, much less 480 million...
now, in an attempt to dismiss this glut, an article appeared in Bloomberg this week that said this oil glut isnt really a problem, that refineries have been slack during the seasonal blend change, and that "refiners are poised to make gasoline at a record pace this year", quoting an energy analyst from Wood McKenzie and citing plans from a few smallish Gulf Coast refineries...apparently no one has bothered to look at gasoline inventories, which while they may not be 25% above prior records, have been holding above the range of the last five years since December...we have the chart for that below, too, which also comes from this week's Petroleum Status Report, and which like the crude oil inventory chart above shows the recent track of US gasoline inventories in blue, relative to 5 year of historical gasoline inventories as shown in grey...
April 3rd gasoline inventories:
what that chart shows is that although gasoline stocks have gone down seasonally in recent weeks, they're still well above the normal range for this time of year, rising to 229.95 million barrels in the week ending April 3rd, their highest level on record for the period, which put them 9.3% higher than the 210.4 million barrels of gasoline in storage in the first week of April last year...and if it isn't obvious to you just by looking at the two graphs, any attempt to quickly refine just 10% of our crude oil stocks into gasoline would lift our gasoline inventories right off that chart...
as crazy as it seems with all this oil and gasoline in storage, US oil imports nonetheless increased again last week, rising by 869,000 barrels per day from the previous week to over 8.2 million barrels a day in the week ending April 3rd...over the 4 week period ending April 3rd, our crude oil imports averaged over 7.6 million barrels per day, which was 4.8% higher than the same four-week period last year..last week's imports of gasoline, including blending components, averaged 526,000 barrels per day, down from 709,000 barrels a day the prior week but up from the 502,000 barrels of gasoline a day we were importing a year ago...
so, on top of the worldwide glut of oil caused by record production by nearly every major producer, we've managed to build ourselves quite a glut of oil in our own country, both by overproducing, and by importing in excess of our needs, both of which are likely tied to the financialization of oil, wherein the paper contracts are driving the physical commodity instead of the other way around...we've also learned this week how some of that papering over of the oil markets is going to play out...it turns out that the major US banks, including JPMorgan, Wells Fargo, Citigroup and Bank of America, will be on the hook for most of the losses that we expected to hit the frackers, because most of the frackers stand to get paid on insurance they bought to protect themselves against lower prices, and the sellers of most of that insurance were the same bankers who'd been loaning the drillers money to keep them operating...according to data compiled by Bloomberg, the value of the hedges held by the 57 U.S. companies in the Bloomberg Explorers and Producers index rose to $26 billion as of Dec. 31, a fivefold increase from the end of September...essentially, that means the frackers will get paid whatever they thought the oil was worth when they started drilling, irregardless of what the market price for oil is when they go to sell it, and the banks will pick up the difference, which still looks pretty close to that $26 billion figure as of today, since oil prices have not changed significantly in the interim...but if oil prices should fall more, the banks could be on the hook for a lot more, and since they're now all too big to allow to fail, ultimately the bailout could all be on Uncle Sugar and the US taxpayers...
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OEPA: 2,000 gallons of waste oil spilled into Vienna wetlands - Workers from Kleese Development were back at two ponds and the Little Yankee Run wetlands on Sodom Hutchings Road on Friday for a second day, cleaning up an estimated 2,000 gallons or more of “light waste oil” from Kleese’s oilfield-services company nearby. The company issued a statement late Friday saying the company was halting all operations at the Sodom Hutchings location, including brine injection “for the immediate future out of an abundance of caution.” Kleese and the spill are just north of Warren-Sharon Road. The oil came from a “buried drain pipe” associated with the Kleese site, but EPA officials still are studying the pipe to determine its origin, said Linda Oros, Ohio EPA spokeswoman. So far, there has been no indication the oil came from the holding tanks used in association with the Kleese injection facilities, Oros said. Two wetlands and a private pond were “severely impacted,” Oros said. Oil waste traveled 3,000 feet down a tributary stream of Little Yankee Run, but the leading edge of the oil has been contained, she said. When The Vindicator viewed the site Friday morning, it appeared that the oil had gotten into two ponds on the east side of Sodom Hutchings Road, but a third pond did not appear to have any oil on it. A resident living next to one of the two affected ponds, which are just north of the Kleese site, said he called the EPA on Monday after seeing a dead muskrat by the pond and a sheen on the water.
Vienna oil spill leaves slew of dead animals - – The Ohio EPA and Ohio Department of Natural Resources have contained a waste oil spill in Vienna Township Friday, but are still tracking down the source of the chemicals. The spill happened near 884 Sodom Hutchings Road near old Route 82, also known as Warren Sharon Road, Thursday evening. Township Trustee Phil Pegg said the business responsible for the spill, oil and gas developers KDA Inc., have voluntarily shut down operations for the day. “The facility voluntarily closed down. There is some type of foreign substance that has left the facility. It has gotten into some wetlands and several ponds. It has killed off the fish and the wildlife in that area,” Pegg said. The Ohio Department of Natural Resources said the spill was reported by a neighbor and confirmed by an inspector Thursday night. The neighbor let WKBN’s news cameras on to his property to see the dead fish, turtles and muskrats that fill his pond.Many people in the area have private wells for their water supply. Pegg said that the state is monitoring water quality for the closest resident that does have a well. The spill has been contained and is not spreading further. ODNR said it seems the problem may have been brewing for some time. Sources with the Ohio EPA said at least 2,000 gallons were spilled into a tributary of Little Yankee Run on Thursday. State officials said oil traveled 3,000 feet downstream. The state says the problem might have been going on for some time, but winter ice and snow hid the issues.
Hundreds attend public meeting on Vienna oil spill (WKBN) – Hundreds of Vienna residents received some answers Monday night about a waste oil spill that could have put their drinking and bathing water at risk. The meeting was held at Mathews High School in the township and began at 6 p.m., with some background information from officials about wells and the oil spill, but it was quickly obvious that residents were not there to hear that. In fact, it didn’t take long for them to express their urgency in wanting answers. Both residents and officials raised their voices trying to get their point across. “Everybody does not like the answers that you get and some of the non-answers. You don’t want them to make you feel like you are stupid,” Debbie Moy of Vienna said. As it approached the one-hour mark, residents still were not satisfied. Officials attended the special meeting, delaying the start of the township meeting that was supposed to start at 7 p.m. The biggest concern is the safety of their water. “The exact source of the oil is still under an investigation,” Kurt Kohler from the Ohio EPA said. An estimated 2,000 gallons of waste oil spilled into a private pond on Sodom Hutchings Road, killing some fish and other wildlife. The spill happened on Monday evening, but the Ohio EPA did not come out to investigate until Thursday. Officials said oil and gas company Kleese Development Associates, or KDA, is responsible for the spill. “The state is not doing a very aggressive job of going after them about it.
Fracking waste stirs controversy in Athens — The tractor-trailers arrive at a steady pace, turning off Rt. 50 and climbing a hill to a collection of tall, green metal tanks. The trucks haul long, white tanks that are bare except for a number that identifies their company and one word that has riled a vocal population in Athens County: brine. Brine is another name for the fracking wastewater that bubbles up in oil and gas wells in Ohio, Pennsylvania and West Virginia. The wastewater is laced with toxic chemicals used during hydraulic fracturing, a process in which millions of gallons of water, sand and chemicals are pumped underground to crack shale and free oil and gas trapped within it. Much of the fracking fluids come back up and most often are sent to disposal wells, where they are pumped back underground. Athens County, known for its progressive politics and college-town vibe, took the third-highest amount of fracking wastewater in the state last year. A new injection well, approved last month by the Ohio Department of Natural Resources, could boost Athens to the top in wastewater injections. That’s a dubious distinction, according to Athens County activists and some elected officials. “There’s probably not a county in the state that has as much activism objecting to the injection wells as Athens,” . Almost 25 million barrels of wastewater were pumped into about 200 injection wells in Ohio last year, according to ODNR records.
Ohio Business Owner: Fracking Stifling Local Food Movement - - Sustainably produced foods are becoming more popular among consumers, but some Ohioans say the fracking boom is stifling the growth of the local food movement. According to the EPA, dozens of chemicals are used in hydraulic fracturing, which some growers say puts air, water and soil at risk for contamination. The Village Bakery and Café in Athens specializes in locally grown and organic foods, and owner Christine Hughes says some area farmers were unaware of the risks when they agreed to allow oil and gas companies onto their land. "Landowners were told, 'Oh no, we don't use chemicals, it's all safe,' so I don't blame those people for signing up," says Hughes. "But it has put all these sustainable farms at risk, and the conventional farms as well. The sustainable farmers are more aware of the damage it will do to their reputation." According to Hughes, soil and watershed resilience are likely to worsen as drilling continues to expand. A recent study found nearly 11 percent of the more than 19,000 organic farms in the U.S. share a watershed with oil and gas activity, and 30 percent of organic farms will be in the vicinity of a fracking site or injection well in the next decade.Hughes says many of her restaurant's suppliers are based in Ohio's fracking hotbed. The farm that sourced her flour was directly impacted by fracking after an old injection well was re-activated near the land. "They started bringing in truckloads of radioactive frack waste from West Virginia, Pennsylvania and Ohio," she says. "So they had to shut down their farm and ended up having to sell off their farm and move away and take jobs from their farm."
Fracking disposal well too close to Chesterhill water? - “The disposal well is right on State Route 792,” Village Administrator Gordon Armstrong told the Chesterhill Village Council. “That’s just right up the hollow from our water system.” “They’re putting a disposal well over top of ours?” Councilwoman Smedley asked. The administrator reported to the council that the EPA and the Ohio Department of Natural Resources have put a battery of tanks at an old well on State Route 792. He said that the Department of Natural Resources is in charge of overseeing it to ensure that there are no issues that could cause problems down the road. Mayor Wetzel asked how they were supposed to tell if something wasn’t right, and Armstrong said that they take samples regularly and it would come back in the test results.The mayor then asked where they were hauling the material to be disposed of from, and Armstrong said that it was coming in from all over the country. “From fracking?” Councilwomen Tabler and Smedley asked in unison, in reference to hydraulic fracturing, a highly controversial method for extracting oil and natural gas. “The EPA’s aware of it,” Armstrong said. “The Department of Natural Resources is aware of it. They’re following all the rules, but it is a concern. It’s something we have to keep an eye on.”
Kinder Morgan planning two natural gas liquids pipelines across northern Ohio -- Texas-based Kinder Morgan Energy Partners LP says it intends to add a second 12-inch pipeline to its previously announced plan to ship petroleum-based liquids through northern Ohio. The additional line would transport natural gasoline. The lines, dubbed Utica to Ontario Pipeline Access (UTOPIA) West and UTOPIA East, would run side by side along a 240-mile route from Harrison County through southern Stark and Wayne counties to Fulton County in northwest Ohio. Officials said the pipelines would be built at the same time. From Fulton County, UTOPIA West would carry natural gasoline through existing pipelines to Illinois, then another 1,900 miles to Fort Saskatchewan, Alberta. That line previously carried Canadian propane to the United States. UTOPIA East would connect with existing Kinder Morgan pipelines in Michigan. Its liquids, including ethane and propane from Ohio’s Utica Shale region, would be shipped to the NOVA Chemicals Corp. for eventual use as feedstock for producing plastics at its plant in Corunna, Ontario. That pipeline, a $500 million project, was announced in December 2013. The two pipelines do not require Federal Energy Regulatory Commission approval because the new sections are entirely within Ohio. Only interstate pipelines require approval from FERC.
Energy companies explore lower shales for greater yields of gas, liquids -- Low natural gas prices that have companies balancing spending cuts with promises of ramped-up production are driving some new development in the Utica and Point Pleasant shale, where deeper wells can yield more gas and liquids. Range Resources, Consol Energy, and Rice Energy are among Marcellus shale producers reporting positive results from their Utica and Point Pleasant wells, and are expecting to drill more there despite budget cuts of up to 45 percent. “It's relatively early days in the Utica so I think companies are still trying to figure out the optimal drilling and production and fracturing techniques, but I think you'll continue to see increasing production rates and ultimate recovery rates from these wells,” . The Utica shale formation in Ohio and Pennsylvania runs between 2,000 and 6,000 feet below the more popular Marcellus. It sits just above Point Pleasant, another layer of shale rich in oil and gas liquids. Deeper Utica wells typically have higher pressures than Marcellus wells, and can generate two to three times the gas. They're also more expensive, sometimes several million dollars more than a Marcellus well, depending on the depth and the kind of fracking that's required. “Certainly, even in a low commodity price environment, you can still, in essence, make up the difference by just the sheer volume of gas you're producing,” Yoxtheimer said. Service companies that frack wells and operate equipment on well pads have lowered their prices in response to producers' smaller budgets, making this is a less-expensive time to tap the Utica.
Utica oil wells called Ohio's gold mine - Despite the recent fall in gas and oil prices, the fracking and drilling exploration of the Utica shale in Ohio is nowhere near stopping. That was the takeaway from six speakers at Utica Upstream, hosted by the Canton Regional Chamber of Commerce and the Shale Directories at Walsh University. Speakers discussed the status of current oil drilling projects in the U.S., focusing on the Utica and Marcellus shale areas in eastern Ohio and western Pennsylvania. Most echoed the same thoughts that although the number of oil rigs being built in Ohio is lessening compared to the last few years, production will only increase as the U.S. rises to the number one natural gas producer in the world. In 2012 there were 371 permits issued to drill the Utica shale in Ohio. In 2015 the Ohio Department of Natural Resources estimates there will be around 600. That's about 200 less than originally predicted. Rick Simmers, chief of the Ohio Department of Natural Resources Division of Oil and Gas Resources Management, said the price of oil and gas is decreasing, but that is not the only cause for a slowdown in drilling. The efficiency of oil and gas drilling companies has improved so much they have cut their labor time in half."These companies are becoming more efficient. ... A drill that was 35 days per well now takes 15 days per well. You don't need as many rigs because your efficiency has improved so greatly," he said.
Utica and Marcellus well activity in Ohio -- While numbers in the Ohio Utica Shale and Marcellus Shale are about the same as last week’s well activity report, one company is selling all of its operations in the region. EV Energy Partners announced on Monday that it isselling its 21 percent interest in a dominant natural gas and liquids processing operation that is located in eastern Ohio. Utica Gas Services LLC, a subsidiary of Williams Partners LP, is purchasing the interest in the Utica East Ohio Midstream LLC for $575 million. Williams Partners conveniently already owns 49 percent of the midstream operation. According to EV Partners, the closing of the deal will take place in July. EV Energy shared that it has been trying to sell its stake in the midstream and other non-core Utica Shale assets located in eastern Ohio for the last year. The company also shared that it has invested $249 million into the midstream and its holdings consist of natural gas processing plants located in Columbiana and Carroll Counties and a liquids processing plant in Scio in Harrison County, along with complementary pipelines. The following information is provided by the Ohio Department of Natural Resources and is through the week ending on April 4th. The only change the Utica Shale has seen is regarding the number of drilled, drilling, permitted and producing wells the area has. According to this week’s report, there were 339 wells drilled (up 5), 242 drilling (down 4), 448 permitted (down 6) and 839 producing (up 5), bringing the total number of wells in the shale formation to 1,868. The Marcellus Shale in Ohio has zero change reported when compared to last week’s well report. The area is still sitting at 15 wells permitted, 15 drilled, 13 producing and one well inactive. There are a total of 44 wells in the Ohio Marcellus Shale.
Marcellus well permits in Pennsylvania - Marcellus well permits for the week ending on April 4th show activity is still going strong in the shale formation in Pennsylvania even though federal regulators are trying to tighten up drilling regulations. However, the Department of Environmental Protection (DEP) is now looking at the public for input regarding the possible regulations revision. Pennsylvania state environmental regulators are reaching out and making an effort to gather public comments on their proposal to make Marcellus Shale natural gas drilling regulations stricter. On Monday, the DEP announced it is allowing a 45-day public comment period and has scheduled three public hearings for the proposed regulation changes. DEP officials want stiffer reviews on proposed drilling sites that are within 100 feet of streams and wetlands, stricter rules on noise and waste storage and greater analysis of how each new well could impact drinking water, schools and playgrounds. The following information is provided by the Pennsylvania Department of Natural Resources and is for the week ending on April 4th. New Permits: 22 -- Renewed Permits: 9
Natural gas production, supply centers on rebound - Natural gas prices may be dropping, but the number of area companies involved in the natural gas industry shows no signs of decline. Area companies are involved in a wide range of natural gas services, including engineering and surveying, environmental consulting, excavation and construction and providing fuel. Compressed Natural Gas of New Holland, Lancaster County, operates a CNG refueling station in Earl Township. “Anything from a Honda Civic to a class 8 truck (tractor-trailer) can refuel here,” said Rick Bunn, partner in operations. Business has been good at the station since it opened in September 2013, Bunn said. “We see significant growth month over month,” he said. Compressed natural gas, which is methane stored at high pressure, can be used in place of gasoline, diesel fuel and propane. CNG-powered vehicles have several advantages, according to the company’s website. They are better for the environment than gasoline-powered vehicles. CNG generally is between 30 and 60 percent cheaper than gasoline. CNG-powered vehicles require less maintenance than other hydrocarbon-fuel-powered vehicles, and they’re safer than gasoline-powered vehicles.
Radon may be linked to fracking, researchers suspect - Radon levels in houses near fracking sites in Pennsylvania are higher than in those in areas where there is no oil and gas drilling, according to a new study by Johns Hopkins University researchers. The researchers cautioned that their findings don’t definitively tie hydraulic fracturing to higher levels of radon. But they say they found a “statistically significant association” between a building’s proximity to a fracked well and to the amount of radon detected. “The higher the gas production ... the higher the basement radon levels,” said Brian Schwartz, one of the study’s authors and a professor of environmental-health sciences at Johns Hopkins. Radon, an odorless, invisible gas, is the second-leading cause of lung cancer in the United States after smoking, according to the U.S. Environmental Protection Agency. The EPA estimates that about 21,000 people die each year from lung cancer caused by radon.
Increased Levels of Radon in Pennsylvania Homes Correspond to Onset of Fracking: — Johns Hopkins Bloomberg School of Public Health researchers say that levels of radon in Pennsylvania homes – where 42 percent of readings surpass what the U.S. government considers safe – have been on the rise since 2004, around the time that the fracking industry began drilling natural gas wells in the state. The researchers, publishing online April 9 in Environmental Health Perspectives, also found that buildings located in the counties where natural gas is most actively being extracted out of Marcellus shale have in the past decade seen significantly higher readings of radon compared with buildings in low-activity areas. There were no such county differences prior to 2004. Radon, an odorless radioactive gas, is considered the second-leading cause of lung cancer in the world after smoking. “One plausible explanation for elevated radon levels in people’s homes is the development of thousands of unconventional natural gas wells in Pennsylvania over the past 10 years,” “These findings worry us.” The study, conducted with Pennsylvania’s Geisinger Health System, analyzed more than 860,000 indoor radon measurements included in a Pennsylvania Department of Environment Protection database from 1989 to 2013. Radon levels are often assessed when property is being bought or sold; much of the study data came from such measurements. The researchers evaluated associations of radon concentrations with geology, water source, season, weather, community type and other factors.. In recent years, there has been a huge uptick in the drilling of unconventional natural gas wells in 18 states throughout the country. The disruptive process that brings gas to the surface can also bring heavy metals and organic and radioactive materials such as radium-226, which decays into radon. Most indoor radon exposure has been linked to the diffusion of gas from soil. It is also found in well water, natural gas and ambient air.
Dramatic Increases of Cancer-Causing Radon in PA Homes Linked to Fracking - Researchers in Pennsylvania have discovered that the prevalence of radon, a radioactive and carcinogenic gas, in people’s homes and commercial buildings that are nearer to frackingsites has increased dramatically in the state since the unconventional and controversial gas drilling practice began in the state just over a decade ago. Both odorless and tasteless, radon is a naturally-occurring gas released from bedrock minerals beneath the ground and is found in millions of homes across the country. However, in a study published Thursday in the journal Environmental Health Perspectives, scientists compared the results of state-wide radon testing in Pennsylvania to find a significant correlation between unusually high levels of the deadly gas in some buildings (mostly residential homes) and the proliferation of fracking in certain areas of the state. As State Impact Pennsylvania, the state’s NPR affiliate, reports: Researchers from Johns Hopkins University analyzed radon readings taken in some 860,000 buildings, mostly homes, from 1989 to 2013 and found that those in rural and suburban areas where most shale gas wells are located had a concentration of the cancer-causing radioactive gas that was 39 percent higher overall than those in urban areas. It also found that buildings using well water had a 21 percent higher concentration of radon than those served by municipal water systems. And it showed radon levels in active gas-drilling counties rose significantly starting in 2004 when the state’s fracking boom began.
Rise of deadly radon gas in Pennsylvania buildings linked to fracking industry - The Washington Post: A new study published Thursday reported a disturbing correlation between unusually high levels of radon gas in mostly residences and an oil and gas production technique known as fracking that has become the industry standard over the past decade. Writing in the journal Environmental Health Perspective, researchers analyzed levels of radon — a colorless, odorless gas that is radioactive and has been linked to lung cancer — in 860,000 buildings from 1989 to 2013. They found that those in the same areas of the state as the fracking operations generally showed higher readings of radon. About 42 percent of the readings were higher than what is considered safe by federal standards. Moreover, the researchers discovered that radon levels spiked overall in 2004, at about the same time fracking activity began to pick up. Hydraulic fracturing or "fracking" involves drilling 6,500 to 10,000 feet below the surface, and scientists theorize that radon trapped in rocks there is releasedinto the atmosphere. "By drilling 7,000 holes in the ground, the fracking industry may have changed the geology and created new pathways for radon to rise to the surface," one of the authors, Joan A. Casey from the John Hopkins Bloomberg School of Public Health, warned. Researchers have also reported concerns about similar radon releases in parts of Colorado where fracking is also booming. In a study published by the U.S. Geological Survey in 2012, government researchers found that the radiation in water in the Appalachian Basin in parts of New York and Pennsylvania near fracking work in the Marcellus Shale was unusually high.
Fracking fluids contain potentially harmful compounds if leaked into groundwater -- The organic chemicals in fracking fluid have been uncovered in two new studies, providing a basis for water contamination testing and future regulation. The research, published in Trends in Environmental Analytical Chemistry and Science of the Total Environment, reveals that fracking fluid contains compounds like biocides, which are potentially harmful if they leak into the groundwater. The authors behind the new study say it's time for the relatively new science to catch up with the extensive public awareness. They say an increasing research focus on contamination from fracking fluid will lead to more attention and regulation in the future. The fracking fluid comes back out at the surface as flowback water, which can contaminate the surface water and ultimately the groundwater if it is not properly disposed. Fracking companies add certain chemicals to prevent bacterial growth, for example, but until now the precise organic content had not been established. The new studies discuss the organic constituents, providing a way to detect contamination in the water system and proposing methods to recycle the water safely.
EPA seeks to ban fracking wastewater from going to public treatment plants -- The U.S. Environmental Protection Agency is proposing to ban publicly owned wastewater treatment facilities from taking untreated waste fluids from the unconventional oil and gas industry in a move that would guarantee the end of a disposal practice that the industry and states have already abandoned. In a notice Tuesday, federal regulators said they are taking comments on their plan to forbid publicly owned treatment works from accepting and discharging the wastewater, which often contains high concentrations of salt and lesser amounts of chemicals, metals and naturally occurring radioactive materials that are potentially harmful to human health and the environment. Public sewage treatment plants are not designed to remove those pollutants, which can flow through to streams untreated or interfere with the plant’s normal treatment processes. The rule would apply to wastewater that comes from production, field exploration, drilling, well completion or well treatment during unconventional oil and gas extraction, which generally uses the combined technologies of fracking and horizontal drilling to pull hydrocarbons from tight geologic formations, like the Marcellus and Utica shales. It would not apply to conventional oil and gas operations that generally use vertical wells to tap shallower formations and produce smaller amounts of waste fluids. It also would not apply to commercial wastewater plants that treat and discharge fluids to waterways, which are regulated separately.
Who Funds EDF Research? - The Environmental Defense Fund is one of the nation’s most venerable environmental organizations, and many consider it one of the most effective. But its industry-collaborative approach to the study of methane leaks in natural gas drilling has drawn scrutiny from other environmental groups, who worry EDF has strayed into a gray area where science and the fossil fuel industry collide. Those concerns stem from an ambitious project EDF embarked on in 2011, as an oil and gas boom swept the U.S. While environmentalists have increasingly called for an outright ban on hydraulic fracturing, or fracking, amid concerns that it pollutes the air and water, stifles growth of renewable energy, and might accelerate rather than slow climate change, EDF decided to probe the industry’s climate impacts. And it did so by collaborating with natural gas companies, which agreed to partially fund the research and give EDF access to gas sites for taking crucial measurements. Investigations on this scale are normally organized by the federal government or the National Academy of Sciences. Coordinating what’s become an $18 million series of 16 studies by more than 100 researchers has turned EDF into a heavyweight on the science of methane pollution. The project’s findings will influence government policy concerning the $292 billion-a-year U.S. oil and gas extraction industry and the regulation of fracking. “What EDF is trying to do is put filters on cigarettes,” said Sandra Steingraber, a prominent activist, biologist and scholar-in-residence at New York’s Ithaca College. “There’s no way we can frack our way to climate stability. There’s no scientific evidence for that.”
Berea City Council opposes fracking in areas near city reservoirs - Kentucky.com: — Berea City Council unanimously approved a resolution Tuesday expressing opposition to hydraulic fracturing, or fracking, in watershed areas near the reservoirs from which the city draws its drinking water.Additionally, Berea College President Kyle Roelofs issued a statement that the college's 10,000 acres of forest land "is not open to oil and gas exploration or development." In the resolution approved on a 7-0 vote Tuesday, the city council "expresses its opposition to hydraulic fracturing in Berea's watershed areas."The resolution "urges landowners in the area to consider the long-term impact associated with the leasing of their property for the purposes of hydraulic fracturing before taking any action."The resolution also urges Madison County Fiscal Court "to review land policies and zoning regulations with respect to the impact of industrial type activity, such as fracking, on water quality."Finally, the resolution asks the state legislature to study the impact of fracking on water quality.
New plan for old pipe: Carry fracking liquids - – With red dirt piled nearby on grassy green meadow, workers in a hole were welding a weak spot on Kentucky's latest controversial pipeline — putting on a Band-aide, as one of them described it. Just a few hundred yards from his home, physician James Angel approached the crew in his pickup truck, saying the maintenance only punctuated his fears about a Texas company's plans for the natural gas pipeline that crosses his Marion County farm. Under those plans, Kinder Morgan's pipeline will carry a more dangerous product, natural gas liquids, in pipes buried seven decades ago in what Angel, a well-known urologist, described as the patriotic rush of World War II. "If that line ruptures, it would kill me," he said. "It would kill my family, and it would poison our (community's) water supply. It's a threat to everybody I take care of in this county." Kentuckians across the commonwealth are voicing similar concerns this spring as Kinder Morgan's Tennessee Gas Pipeline Co. becomes the second pipeline company in two years to make a play to move valuable natural gas liquids from fracking zones in Ohio and Pennsylvania across Kentucky to the nation's petrochemical hub in Louisiana and Texas. While natural gas used in homes is methane, natural gas liquids are separated at the well site and can include a variety of hazardous hydrocarbons, including ethane, propane and butane. They are used to make plastics, rubber, solvents, antifreeze and refrigerants. They are more dangerous than natural gas because they pose not only an explosion risk but also an asphyxiation risk, said Samya Lutz, outreach coordinator with the Pipeline Safety Trust, a safety advocacy group.
Maryland Passes 2.5 Year Fracking Ban - Today, the Maryland House of Delegates passed legislation, voting 102 – 34, that would prohibit fracking permits in the state until October 2017. The bill will head to Republican Gov. Larry Hogan’s desk in the coming days. Earlier this week, the Maryland State Senate passed the legislation, voting 45-2, to prohibit fracking permits in the in the state. The governor’s position on the bill is unknown, but the Senate and House passed the bill with a veto-proof majority. “After months of campaigning, a bill that prohibits fracking for two and a half years passed overwhelmingly in the Maryland legislature today,” said Wenonah Hauter, executive director of Food & Water Watch. “This is a testament to the growing movement to protect our communities from the dangers of fracking. Conventional wisdom in the state was that we could never get a moratorium passed in Maryland, just as we were also told we could never get a ban in New York. But naysaying just inspired us all to work harder in bringing the voice of the people to Annapolis in this grassroots initiative. Now it is time for Governor Hogan to heed the call of the people and sign the bill that gives Marylanders more time to examine the impacts of fracking.”
Md. Lawmakers OK Fracking Ban Until Late 2017 « (AP) — The Maryland General Assembly has passed a measure to prohibit fracking permits in the state until October 2017.The House of Delegates voted 102-34 for the bill on Friday to stop the issuing of hydraulic fracturing drilling permits until that time.The process known as fracking has not been allowed in Maryland. There are portions of western Maryland that have been identified as potential drilling sites.The bill now goes to Gov. Larry Hogan, who has not taken a position on the bill. The Republican governor has said he’ll take a hard look at any fracking legislation that passes.The measure passed the House and Senate by veto-proof margins.Supporters of the prohibition say it will give lawmakers more time to evaluate the public health and economic dangers of fracking.
Maryland Fracking Moratorium Headed to Governor Hogan’s Desk - Today, the Maryland House of Delegates passed legislation, voting 102-34, that would prohibit fracking permits in the in the state until October 2017. In response, Wenonah Hauter, executive director of Food & Water Watch, issued the following statement: “After months of campaigning, a bill that prohibits fracking for two and a half years passed overwhelmingly in the Maryland legislature today. This is a testament to the growing movement to protect our communities from the dangers of fracking. Conventional wisdom in the state was that we could never get a moratorium passed in Maryland, just as we were also told we could never get a ban in New York. But naysaying just inspired us all to work harder in bringing the voice of the people to Annapolis in this grassroots initiative. Now it is time for Governor Hogan to heed the call of the people and sign the bill that gives Marylanders more time to examine the impacts of fracking.” More than 425 peer-reviewed scientific studies on the effects of shale gas development now exist, and 75 percent of those have been published since January 2013. Of the 49 studies that investigated the health effects of fracking, 47 – over 96 percent – found risks or adverse health outcomes.
Bill would prohibit compulsory pooling — A bill filed in the N.C. House of Representatives Thursday would prohibit compulsory or forced pooling, a practice that gives the state the right to compel non-consenting landowners to allow hydraulic fracturing companies to extract oil and gas from beneath their properties. House Bill 586, sponsored by Rep. Bryan Holloway (R-Rockingham, Stokes), would not only prohibit forced pooling, but it would also require drilling companies to obtain surface owners’ consent in cases where the owner of the surface property does not own the oil and gas rights to the property. “I was ecstatic to see it filed,” Rep. Robert Reives II (D-Lee, Chatham) said of the bill. “My hope is that bills like this will start a discussion, and I think they already have at the House level. We can’t do much as far as making the Senate do anything, but I’m just hoping that it starts the discussion.” Rep. Brad Salmon (D-Lee, Harnett) said forced pooling was one of the biggest problems in the state’s fracking rules. “I fully support this bill to prohibit forced pooling in North Carolina,” Salmon said. “Property owners should not be required to participate in fracking unless they so choose. For North Carolina to allow otherwise would be a disgrace to time-honored property rights.”
Chicago at heart of crude oil shipments, data show -- More highly volatile crude oil passes through the Midwest, specifically the Chicago area, via railroad tank cars than anywhere else in the country, according to newly released data from the federal government. The latest information on crude-oil-by-rail movements, the government's first accounting of such shipments, showed that 437,000 barrels of Bakken shale crude oil were shipped daily in January from North Dakota to East Coast refineries. Since freight moving across the nation is funneled through Chicago, the nation's busiest rail hub, that crude oil is passing through the city and suburbs, experts say. The volume of crude oil is enough to fill as many as 42 mile-long "unit trains," each with a hundred or more tank cars, traveling through the area each week. Indeed, such trains have become a common sight throughout the city and suburbs in recent years. The new data corroborate a Tribune report last Julythat put the number of crude oil trains passing through the region at about 40 a week. Concerns about the increasing number of crude oil trains have grown as a result of several fiery derailments in Illinois and elsewhere. A BNSF Railway train with 103 tank cars containing Bakken crude derailed and exploded in flames in a sparsely populated area south of Galena on March 5. If that incident had occurred in the metropolitan area, thousands of people would have been forced to evacuate and enormous damage could have resulted, officials said.
Fewer Oil Trains Ply America’s Rails - WSJ: The growth in oil-train shipments fueled by the U.S. energy boom has stalled in recent months, dampened by safety problems and low crude prices. The number of train cars carrying crude and other petroleum products peaked last fall, according to data from the Association of American Railroads, and began edging down. In March, oil-train traffic was down 7% on a year-over-year basis. Railroads have been a major beneficiary of the U.S. energy boom, as oil companies turned to trains to move crude to refineries from remote oil fields in North Dakota and other areas not served by pipelines. Rail shipments of oil have expanded from 20 million barrels in 2010 to just under 374 million barrels last year, according to the U.S. Energy Information Administration. About 1.38 million barrels a day of oil and fuels like gasoline rode the rails in March, versus an average of 1.5 million barrels a day in the same period a year ago, according to a Wall Street Journal analysis of the railroad association’s data. Oil-train traffic declined 1% in the fourth quarter of 2014 as crude-oil prices started to tumble toward $50 a barrel. More recently, data from the U.S. Energy Department show oil-train movements out of the prolific Bakken Shale in North Dakota have leveled off as drillers there have begun to pump less, though oil-train shipments from the Rocky Mountain region have risen.
Buffett Bailout? Rail-Based Oil Transit Tumbles To Lowest In Over A Year -- It appears time for the Oracle of Omaha to start pressing his bought-and-paid-for Washington well-be-dones as his immensely profitable rail freight business - built on the back of massive deflation-inducing malinvestment in US Shale businesses thanks to ZIRP and QE - is running out of steam. As WSJ reports, in March, oil-train traffic was down 7% on a year-over-year basis amid safety concerns and with lower crude prices, "the extra cost of rail makes it a tougher choice," notes on analyst, adding that the WTI-Brent spread needs to increase "for the economics of crude by rail" to make sense.
BNSF is running more oil trains through Nebraska: BNSF Railway has raised the number of big oil trains passing through Nebraska, from about a dozen in mid-February to as many as 30 a week now. That's the largest number the railroad has reported since it started doing so last year. BNSF is required to report the number of trains carrying at least a million gallons of Bakken crude oil, which would fill about 35 tank cars, to the Nebraska Emergency Management Agency. Most trains carry far more than 35 cars. BNSF and other railroads typically do not comment on traffic volume, routes and customers' cargo. Trains carrying oil from the Bakken shale formation in North Dakota and Montana to and through Nebraska -- 20 to 30 a week now -- move south from Sioux City, Iowa. Most turn east near Ashland, cross Cass County and the Missouri River into Iowa, according to documents filed with NEMA. BNSF has added safety measures for crude oil shipments because of four recent high-profile derailments in the U.S. and Canada, the railroad said Monday. BNSF is slowing down crude oil trains to 35 mph in cities with more than 100,000 people. The latest NEMA figures show two to seven oil trains passing through Lincoln each week, and few, if any, through Omaha, unchanged from mid-February. The number of rail accidents remains small compared with total rail traffic, but fiery accidents of exploding crude oil have occurred as U.S. and Canadian oil production is booming.
Federal data: Not many oil trains for Keystone XL to displace - New data on crude oil shipments by rail released by the Department of Energy this week show that there are relatively few oil trains taking the path of the controversial proposed Keystone XL pipeline.In its first monthly report on crude by rail, the U.S. Energy Information Administration shows that the bulk of oil shipments by rail are moving from North Dakota’s Bakken region to refineries in the mid-Atlantic and the Pacific Northwest.Far less is moving from either Canada or the Midwest to the Gulf Coast, the location of 45 percent of U.S. refining capacity. Only about 5 percent of the crude oil moved by rail nationwide in January was bound for the Gulf Coast from either Canada or the Midwest.A series of derailments has brought increased scrutiny to oil transportation by rail. Since the beginning of the year, four oil trains have derailed in the U.S. and Canada, leading to spills, fires and evacuations.The White House Office of Management and Budget is reviewing new regulations intended to improve the safety of oil trains. They’re scheduled for publication next month.Some supporters of the 1,700-mile Keystone project have claimed that it would reduce the need for rail shipments. The pipeline would have a projected capacity of 830,000 barrels a day, and would primarily move heavy crude oil from western Canada to the Gulf Coast.The government’s new data confirms, however, that the primary flows of oil by rail are not to the Gulf Coast. Northeast refineries, concentrated in Delaware, Pennsylvania and New Jersey, have come to rely heavily on Bakken crude delivered by rail, and to a lesser extent, Canadian oil.
The Arrival of Man-Made Earthquakes - Outside homes around Prague and nearby Meeker, Keranen and her students, along with Austin Holland, the head seismologist of the Oklahoma Geological Survey, buried their equipment. The researchers wanted to install them quickly, since the ground was still shaking. Shortly before 11 P.M., people in Prague heard what sounded like a jet plane crashing. It was another earthquake, this time a 5.6, followed, two days later, by a 4.7. (The earthquake scale is logarithmic, so a 5.0 earthquake shakes the ground ten times more than a 4.0, and a hundred times more than a 3.0.) No one was killed, but at least sixteen houses were destroyed and a spire on the historic Benedictine Hall at St. Gregory’s University, in nearby Shawnee, collapsed. Few noticed that Keranen and her team had gathered likely the best data we have on a new phenomenon in Oklahoma: man-made earthquakes. Until 2008, Oklahoma experienced an average of one to two earthquakes of 3.0 magnitude or greater each year. In 2009, there were twenty. The next year, there were forty-two. In 2014, there were five hundred and eighty-five, nearly triple the rate of California. Including smaller earthquakes in the count, there were more than five thousand. This year, there has been an average of two earthquakes a day of magnitude 3.0 or greater. William Ellsworth, a research geologist at the United States Geological Survey, told me, “We can say with virtual certainty that the increased seismicity in Oklahoma has to do with recent changes in the way that oil and gas are being produced.” Many of the larger earthquakes are caused by disposal wells, where the billions of barrels of brackish water brought up by drilling for oil and gas are pumped back into the ground. Disposal wells trigger earthquakes when they are dug too deep, near or into basement rock, or when the wells impinge on a fault line. Ellsworth said, “Scientifically, it’s really quite clear.”
As Quakes Rattle Oklahoma, Fingers Point to Oil and Gas Industry -- “As long as you keep injecting wastewater along that fault zone, according to my calculations, you’re going to continue to have earthquakes,” said Arthur F. McGarr, the chief of the induced seismicity project at the federal Earthquake Science Center in Menlo Park, Calif., who has researched the Prague quakes. “I’d be a little worried if I lived there. In fact, I’d be very worried.” But in a state where oil and gas are economic pillars, elected leaders have been slow to address the problem. And while regulators have taken some protective measures, they lack the money, work force and legal authority to fully address the threats.More than five years after the quakes began a sharp and steady increase, the strongest action by the Republican governor, Mary Fallin, has been to name a council to exchange information about the tremors. The group meets in secret, and has no mandate to issue recommendations.The State Legislature is not considering any earthquake legislation. But both houses passed bills this year barring local officials from regulating oil and gas wells in their jurisdictions. The state seismologist’s office, short-staffed, has stopped analyzing data on tremors smaller than magnitude 2.5 — even though a recent study says those quakes flag hidden seismic hazards “that might prove invaluable for avoiding a damaging earthquake.”
Earthquake Case Could Doom Fracking In Oklahoma - The rise in earthquakes as a result of fracking poses a massive problem for the oil and gas industry. It is not hydraulic fracturing per se that is causing the earthquakes. Rather, the injection of wastewater back into the ground that contributes to fault lines “slipping,” which results in heightened seismic activity. Oklahoma has become the earthquake capital of the United States, surpassing even tremor-prone California. Oklahoma has averaged less than two earthquakes of a magnitude 3.0 or greater over the last 30 years. Shockingly, however, that rate has skyrocketed in recent years. In 2013, the state experienced 585 earthquakes with at least a 3.0 magnitude. And if the current rate of earthquakes continues, Oklahoma could have 875 by the end of 2015. The oil and gas industry in Oklahoma has downplayed the induced seismicity from disposal wells, but the frequency of earthquakes – rising to several earthquakes each day – has become too hard to ignore. That is leading to the prospect of a flurry of lawsuits against fracking companies. Continental Resources, one of the most active companies in Oklahoma, even included legal action and state regulation related to seismic activity on its list of risks in its financial statements. Legal action in neighboring states offer an indication that costs will rise for Oklahoma drillers as the backlash ensues. Chesapeake Energy and BHP Billiton paid an undisclosed sum to settle a 2013 case in Arkansas over earthquake activity.
Louisiana oil port, made for import, rents domestic storage - — Louisiana’s offshore oil port, with huge underground storage caverns, was built to handle imported oil but is now leasing space to traders who need to store U.S. crude. The Louisiana Offshore Oil Port recently auctioned 11.3 million barrels of monthly storage space and has scheduled another auction Tuesday, The Advocate reports. “For us, it’s an innovative new product. It’s another service to our customers. We hope to attract new customers with it,” said Terry Coleman, vice president of business development at LOOP. Global production now exceeds consumption by about 1.5 million barrels a day. U.S.-produced crude is piling up at Cushing, Oklahoma, the country’s major oil hub — but that’s getting close to capacity, and some storage fees are going up, said Brian Busch, director of oil markets and business development for data analysis firm Genscape. He said storage at Cushing generally runs 30 cents per barrel per day, but some operators are charging up to $1 — though few contracts have been signed for that proce. That’s about the same amount it costs to store crude aboard tanker ships, which some traders have done while waiting for prices to rebound.
Coast Guard: Ship hits 2 others on Mississippi; oil spills - — About 420 gallons of oil spilled into the Mississippi River and a nine-mile stretch of the waterway was closed after a ship broke free of its mooring in southern Louisiana and hit two other vessels, the U.S. Coast Guard said. The Privocean, a 751-foot bulk carrier, broke free near Convent around 4:00 p.m. Monday, drifted downriver and struck a 98-foot towing vessel, the Texas, according to a statement from the Coast Guard. The Texas began taking on water but was able to ground itself on the river bank before sinking, according to Petty Officer Carlos Vega. The Privocean continued to drift downriver and hit the 816-foot tank ship Bravo, which was discharging crude oil, the Coast Guard said. Initial assessments show about 420 gallons of oil discharged into the river, which is closed from mile marker 163 to 154, according to the statement. Another 126 gallons spilled on the deck of the Bravo but was contained and will be cleaned up. All three ships have been secured. The cause of the incident is under investigation, and Coast Guard response teams and an environmental services company are responding to the spill. The crew of the Texas was taken to a hospital for evaluation but no injuries were reported, the statement said.
Texas-sized Dose of Hypocrisy Served Up To Local Governments Statewide in an Effort to Overturn Denton’s Fracking Ban -- On March 24, the Texas House of Representatives’ Energy Resources Committee passed a bill that would rescind the fracking ban in Denton and other efforts by local Texas municipalities to protect themselves from the oil and gas industry. Once language in the bill is finalized, which could happen today, the legislation will make its way to the full Texas Senate for a vote. “The oil and gas industry are getting what they always wanted – to get these pesky cities out of the way. They’re utilizing the lack of diligence and gullibility of state government – who are bought and paid for by industry, by using the Denton fracking ban to get what they want,” Denton Councilman Kevin Roden told DeSmogBlog. “It is a political cliché to take advantage of a good crisis. And the fracking ban gave them a good crisis.” Roden said. Instead of fighting the ban in the courts, industry made a preemptive move to eliminate local ordinances altogether by pushing representatives to pass laws against ordinances in their way. On March 23, hundreds turned up to speak out against State Rep. Drew Darby‘s (R – San Angelo) proposed House Bill 40 at a hearing in Austin that lasted more than eight hours. A vote was not taken on HB40 then. However, the next day, the Texas Senate Natural Resources & Economic Development Committee voted unanimously to approve SB 1165, a similar bill that would assert the state’s preemptive right to regulate oil and gas development. Senate Bill 1165 is pretty much the same as HB40, according to Kathy McMullen, head of the Denton Drilling Awareness Group. “It is a common tactic to submit two bills that are nearly identical in hopes one of them goes through, and that is what happened,” McMullen told DeSmogBlog. “The day following the marathon hearing, citizens and local politicians had to go home, but industry stayed and got what it wanted,” McMullen said.
The Lite Guv and the Frack Master - Faulkner is CEO of Breitling Energy Corp., and during the last three years he has become the media’s go-to voice from Texas in favor of hydraulic fracturing, also known as fracking. His 45-minute Powering America show and one-minute “Oil and Gas Today” spots were heard all last year on KRLD, the CBS radio affiliate in Dallas-Fort Worth. As Quest got almost right, Faulkner goes by the moniker “Frack Master.” Outlets that have turned to the Frack Master for news and commentary include CNBC, Bloomberg TV and the BBC. The New York Times cited him eight times in 2014. He’s quoted by reporters for Reuters and in stories by The Associated Press. He’s sharp and snarky with an impressive memory for facts and figures. And he’s unusual in the energy industry; while most executives dodge the press, Faulkner is happy to appear on a chat show to discuss the latest in oil prices or rig counts. Faulkner alternates between Rush Limbaugh-style self-righteousness and sympathetic acceptance of criticism. He says people have a right to worry about noise, earthquakes and mysterious fracking fluids. But he says that fracking can be done well, and that it should be. Faulkner also has become a high-dollar contributor to several statewide officials and members of the Legislature. Texas Ethics Commission records show he has given almost $300,000 to state candidates. That includes a gift of $5,000 to George P. Bush’s race for Texas Land Commissioner. His $100,000 contribution to the campaign of Railroad Commission candidate Ryan Sitton made him Sitton’s biggest individual donor. He also gave $87,500 to Dan Patrick’s campaign for lieutenant governor and a combined $65,000 to two candidates for state attorney general.
Earthquakes have shaken up the Permian - According to data gathered from the U.S. Geological Survey (USGS), over the last two weeks, three earthquakes have rattled the Permian Basin in its oil and natural gas regions. The information collected from the USGS shows that the earthquakes occurred along the Pecos and Reeves county lines. The first earthquake hit the Richter scale with a 2.8 magnitude and was recorded near U.S. Highway 285 and Mendel Road, which is just northwest of Fort Stockton. The reading came at 1 a.m. on March 21st. The second quake was occurred at 10:30 a.m. on March 28th, and was recorded to be a 2.9 magnitude earthquake. This one registered near U.S. Highway 285 and FM 1776. The final and largest earthquake registered a magnitude of 3.3. It shook the area just southeast of Pecos at U.S. Highway 285 and County Road 108 at 7:16 p.m. last Friday. The San Antonio Business Journal reports that since 1976, the USGS has recorded at least 19 earthquakes shaking the southern edge of the Permian Basin. According to reports, no damage has been caused or reported during the most recent three. Earthquakes have been an ongoing issue in the oil and gas industry. Some researchers believe that hydraulic fracturing, or fracking, is the main cause of the recent spike in earthquakes. The USGS has recorded 31 earthquakes since New Year’s Day in the Barnett Shale and five in the Eagle Ford Shale. In the area just north of the Red River in Oklahoma, 650 earthquakes have been recorded by the USGS since New Year’s Day.
Despite Historic Drought, California Used 70 Million Gallons Of Water For Fracking Last Year -- Even in the midst of its historic, ongoing drought, California used millions of gallons of water for hydraulic fracturing last year, according to state officials.The state used nearly 70 million gallons of water to frack for oil and gas in 2014, Reuters reported last week. That amount is actually less than the 100 million gallons officials previously estimated the state uses for fracking operations every year. Steven Bohlen, California’s oil and gas supervisor, noted to Reuters that not all water used for fracking operations is freshwater: some of it is produced water, which rises to the surface during the fracking process and can’t be used for drinking or irrigation. In all, Bohlen said, fracking uses the same amount of water as about 514 households each year. But Patrick Sullivan, spokesperson for the Center for Biological Diversity and Californians Against Fracking, says that while this figure may be correct, using water for fracking isn’t the same as using water for household tasks, like brushing teeth or washing dishes. That water is cycled back into the overall water supply, while water used for fracking is typically too contaminated to be used again for things like irrigation or drinking. “It is water that most likely cannot be put back into the water cycle,” he told ThinkProgress. “It’s water that is by and large gone for good.”Sullivan also said that he didn’t think the figure included all forms of oil and gas development, including things like steam injection — a method commonly used in California oil production. Reuters reported last week that environmentalists estimate that the state’s oil and gas industry uses 2 million gallons of fresh water a day for oil production. At a time when California is enduring a historic, four-year drought, the state shouldn’t be using its precious water resources to frack, Sullivan said.
5 Ridiculous Things Liberals Say About Fracking - The Environmental Protection Agency’s comprehensive study on environmental effects of hydraulic fracturing, or fracking, is set to be released in the near future, and environmentalists are groaning that it’s tainted with oil and gas industry influence. Why the complaining? It’s likely environmental groups know something about the report the general public doesn’t — namely, it probably takes a more favorable view of fracking than activists would like. The potential loss of the EPA in their anti-fracking campaign probably has environmentalists scrambling to rehash their stance on the well-stimulation process. Too bad for them they’ve already made some pretty ridiculous claims about fracking. The Daily Caller News Foundation has taken the liberty of listing the top five most ridiculous anti-fracking claims here:
- 1. Fracking Causes Earthquakes
- 2. Your Water Will Be Poisoned.
- 3. Watch Out, You’ll Get Cancer - Filmmaker Josh Fox of “Gasland” again makes unsubstantiated claims about fracking, this time claiming that an area atop Texas’s Barnett Shale saw “a rise in breast cancer throughout the counties.”
- 4. Fracking Will Make You A Drug Addict - Probably In 2013, liberal media outlets pushed an article by Vice saying that “with the heavy drilling machinery that is hitting the United States’ one horse towns are workingmen with an insatiable appetite for raw sex and hard drugs.” “The use of meth is also on the rise in fracking boom areas,” Vice reported.
- 5. Rape? STDs?
Frac sand industry feels the effects of low oil prices, less drilling - Low oil prices and reduced drilling in shale regions like North Dakota are hurting the once fast-growing frac sand industry, slashing demand and forcing price cuts that have led some players to reduce jobs. U.S. sand mines, including 63 in Wisconsin and six in Minnesota, are projected to ship significantly less sand to oil drillers in 2015, compared with last year, when companies like Fairmount Santrol, U.S. Silica and Superior Silica Sands set production records, industry officials say. “This whole ripple effect has taken hold and it is going to continue,” . “There are peak cycles and trough cycles, and we have hit a trough.” The nation’s $4.2 billion industrial sand industry is increasingly tethered to the oil and gas sector, which now buys about 72 percent of the output. Sand production more than doubled in five years, and Wisconsin is the leading producer. Minnesota is fourth, behind Illinois and Texas, according to the U.S. Geological Survey. Sand is used in hydraulic fracturing, or fracking, a process that injects sand, water and chemicals into shale to free oil and gas. As crude oil prices have dropped — by nearly 50 percent since June — drillers have idled rigs, reducing demand for sand and putting pressure on its price, industry officials say. The number of U.S. rigs drilling for oil and gas fell last week for the 17th straight week to 1,028, which is about half the number operating in November 2011, according to oil field service company Baker Hughes. North Dakota’s rig count slipped to 90 from a high of 203 in June 2012.
Five Bakken producers ordered to restrict production - Following North Dakota State’s implementation of new rules to reduce flaring, the North Dakota Oil and Gas Division is taking regulatory action on five oil and gas operators that are flaring more gas than the permitted amount, according to the Forum News Service (FNS). Beginning this month, these companies are required to decrease production to 100 barrels per day on wells where flaring restrictions weren’t met. If the production restrictions aren’t met, companies could be subject to daily penalties. As reported by Lauren Donovan for FNS, spokeswoman for the Oil and Gas Division Alison Ritter said that since the flaring restriction order was put into effect, this is the highest number of companies ordered to restrict production. The flaring regulations, implemented January 1 of this year, require operators to capture 77 percent of produced gas. Ritter explained that the restriction orders will be in effect for a full month. The restrictions will either be continued or lifted after the affected companies submit production reports for the month. The companies currently being restricted include Emerald Oil, Oxy, QEP, Abraxas Petroleum and Enerplus. Emerald Oil was the only company to have production restricted for each month of the New Year. The Associated Press reached out to Emerald Oil Vice President for Finance and Investor Relations Mitch Ayer on the matter. He said the company hasn’t been able to meet the state’s new regulations at some of its well sites due to the rules going into effect before its new midstream systems went online. The systems help capture more natural gas. Ayer told the AP, “It was basically a timing issue between the two.” Ayer added that the new system will transport natural gas from McKenzie County to a plant outside of Watford City that came online late March.
After two pipeline breaks, federal regulations scrutinized - Two pipelines have dumped 70,000 gallons of crude into the nation’s longest free-flowing river in the last four years. What they have in common is that right up until breaking, both were considered safe. That “all clear” by regulators has sparked concern about whether the federal government is setting the bar too low for pipeline safety and ignoring destructive river conditions. There are 39 gas and oil pipelines beneath the Yellowstone River, and many, like the two that have polluted the Yellowstone since 2011, are buried less than 10 feet beneath the riverbed. The federal government requires a minimum of only 48 inches of cover over pipelines in rivers 100 feet or wider. The Yellowstone River is constantly rechanneling, in some places migrating several hundred feet during a few decades. It’s not only moving outward, but also downward, carving deeper trenches in the river bottom in some places. The river’s flows fluctuate widely, from 3,000 cubic feet of water per second in downtown Billings this week to more than 60,000 cubic feet during runoff last spring. At some pipeline crossings, the changing river conditions are not only significant, but also unique. Federal pipeline regulations aren’t addressing those site-specific hazards, “I guess my issue with the pipelines is that there are very general requirements for the pipelines, and it’s really hard to take into account all those things,”
Broken pipeline that spilled into Yellowstone to be removed — The company responsible for a 30,000-gallon oil spill into Montana’s Yellowstone River will try to remove its breached pipeline Wednesday as regulators investigate the cause of the accident that contaminated downstream water supplies. The broken section of pipeline will be sent to a laboratory for a metallurgical analysis as required under a federal order, Bridger Pipeline spokesman Bill Salvin said. The January breach in the Casper, Wyoming company’s pipeline temporarily fouled water supplies for thousands of people downstream in Glendive. Only about 2,500 gallons of crude were recovered from the river. It was the second large spill into the Yellowstone since 2011, renewing calls for pipelines to be buried more deeply at river crossings. Bridger’s Poplar Line carries oil from the Bakken region of Montana and North Dakota. The damaged section was installed in 1967, in an 8-foot-deep trench dug into the river bottom, according to documents submitted to regulators. Officials are investigating whether high waters or an ice jam on the river near the spill last year played a role in the breach. A large enough ice jam can scour a river bottom and scrape away the cover over a pipeline. Federal law requires pipelines to be buried just 4 feet beneath major water bodies. Despite criticism those rules were inadequate, the U.S. Transportation Department determined in 2014 that 4 feet was sufficient.
Pipeline that leaked into Montana river was split at weld — A Montana pipeline that spilled 30,000 gallons of oil had been split at the site of an exposed weld where the line crosses beneath the Yellowstone River, officials said, prompting a warning for pipeline companies nationwide to take precautions against flooding. The damaged section of the 12-inch pipeline that crosses the Yellowstone upstream of the city of Glendive was pulled from the river Wednesday. It will be sent to a laboratory in Oklahoma for analysis, said Tim Butters, pipeline safety administrator at the U.S. Department of Transportation. The cause of the split has not been determined. “There are a number of different scenarios,” Butters said in a telephone interview with The Associated Press. “Was it metal-related? Was it external force related? All of that needs to be looked at.” The Yellowstone spill in January contaminated water supplies for about 6,000 residents of Glendive and raised public health concerns in communities downstream in North Dakota.
The State Department ‘Secretly Approved’ Two Pipeline Projects, Lawsuit Alleges - Tribal and environmental groups are suing the State Department for allegedly “secretly” approving two pipeline projects last year, approvals that the groups say violated national environmental regulations. The lawsuit was filed last year by Minnesota’s White Earth Nation tribe along with environmental groups including the Indigenous Environmental Network, the Sierra Club, and Center for Biological Diversity, but the groups filed a motion for summary judgment in Minnesota federal court this week. In it, the groups claim that in 2014, the State Department “short-circuited” the approval process for the expansion of Enbridge’s Line 67 — also known as the Alberta Clipper. They also claim the department approved the construction of a new pipeline that would carry tar sands oil from Alberta, Canada to Superior, Wisconsin, without necessary public input. According to the summary judgment motion, the State Department sought to build the new pipeline by using “an existing permit for another pipeline known as Line 3.” Doug Hayes, staff attorney for the Sierra Club, told ThinkProgress that Enbridge, while waiting on the State Department to conduct an environmental analysis on the Alberta Clipper expansion, found a way to replace parts of Line 3 to allow it transport tar sands at a higher volume while the analysis was taking place.
Swinomish suing BNSF over trains - — The controversy over the growing number of crude oil shipments by rail in Skagit County took a new direction Tuesday when the the Swinomish Indian Tribal Community filed a lawsuit against BNSF Railway in federal court. The tribe is accusing the railroad of violating terms of a 1991 easement agreement that specifies how many trains may cross reservation land daily and that requires the railway to notify the tribe of the cargo being transported. The tribe seeks a permanent injunction to stop BNSF from running more than one train of 25 cars in each direction per day, as per the agreement, and to prevent it from shipping Bakken crude oil across tribal land, Swinomish Chairman Brian Cladoosby said. The tribe also seeks judgments and unspecified damages for trespass and breach of contract, according to the lawsuit. BNSF transports oil to the Tesoro refinery in Anacortes. The Tesoro refinery was the first in the region to start accepting Bakken crude back in September 2012. Six trains, often 100-cars long, come in and out of the facility per week. Shell is seeking to build an unloading facility that will allow it to also process six trains a week carrying Bakken crude. BNSF is reportedly running more than four times as many rail cars daily as permitted by the easement, according to the lawsuit.
Cantwell: Act now on oil trains - Now is the time to act to reduce the continued risk of crude oil moving through the region by rail, U.S. Sen. Maria Cantwell said during a visit to Vancouver on Wednesday. The Washington Democrat and local leaders repeatedly stressed the volatility of the oil itself. Speaking inside Pacific Park Fire Station No. 10 in east Vancouver, the group noted that responders are ill-equipped to handle the kind of fiery derailments and huge explosions that have characterized a string of oil-train incidents across the country recently. In some cases, the fires burned for days after the actual derailment, Cantwell said. “No amount of foam or fire equipment can put them out,” she said. “The best protection we can offer is prevention.” Cantwell last month introduced legislation that would immediately ban the use of rail cars considered unsafe for hauling crude oil, and create new volatility standards for the oil itself. The bill would require federal regulators to develop new rules limiting the volatile gas contained in crude that is transported by rail — an important and somewhat overlooked facet of the larger debate over oil train safety, Cantwell said. Much of the oil that now rolls through Clark County comes from the Bakken shale of North Dakota. Regulators there this month imposed new rules on the volatility of that oil, but critics argue they don’t go far enough. North Dakota, currently in the midst of a historic oil boom, lacks the infrastructure and facilities for more thorough oil stabilization that are commonplace elsewhere.
Industry still failing at transparency - Last week, the Natural Resources Defense Council (NRDC) released a report identifying the top 10 oil and gas companies based on spills and legal violations from operations. Moreover, in their endeavor the NRDC along with the Frac Tracker Alliance found that only three out the 36 states with active oil and gas operations make information about companies’ spills and legal violations readily available to the public, thus bringing the issue of industry transparency into the spotlight. “People deserve to know what’s happening in their own backyards, but too often homeowners aren’t even informed if there’s a threat to their health,” said Amy Mall, report co-author and senior policy analyst at NRDC in a press release. “Our representatives have a responsibility to protect the people who elect them, not help keep a dangerous industry shrouded in secrecy. States are falling down on their responsibility to be a watchdog for the people who live there.” The groups discovered that only Colorado, Pennsylvania and West Virginia post accessible public data about companies’ violations. According to their report, even the information that is provided often incomplete, misleading, and/or difficult to interpret. Incidents include a wide range of violations such as spills, drinking water contamination, air pollution, improper construction or maintenance of waste pits, failure to conduct safety tests, improper well casing, and nonworking blowout preventers. “The limited information that is actually available is eye-opening, both in terms of frequency and the sometimes shocking nature of the impacts when things go wrong,” said Matt Kelso, FracTracker’s Manager of Data and Technology. “This industry is already immense and rapidly growing. It develops in residential communities, sensitive ecological areas, and everywhere in between. Our research shows the need for increased transparency about the compliance record of the industry, especially given those vulnerable areas and populations.”
Creditors Pulling The Rug From Under U.S. Shale Sector -- Back in early 2007, just as the first signs of the bursting housing and credit bubble were becoming visible, one of the primary harbingers of impending doom was banks slowly but surely yanking availability (aka "dry powder") under secured revolving credit facilities to companies across America. This also was the first snowflake in what would ultimately become the lack of liquidity avalanche that swept away Lehman and AIG and unleashed the biggest bailout of capitalism in history. Back then, analysts had a pet name for banks calling CFOs and telling them "so sorry, but your secured credit availability has been cut by 50%, 75% or worse" - revolver raids. Well, the infamous revolver raids are back. And unlike 7 years ago when they initially focused on retail companies as a result of the collapse in consumption burdened by trillions in debt, it should come as no surprise this time the sector hit first and foremost is energy, whose "borrowing availability" just went poof as a result of the very much collapse in oil prices. As Bloomberg reports, "lenders are preparing to cut the credit lines to a group of junk-rated shale oil companies by as much as 30 percent in the coming days, dealing another blow as they struggle with a slump in crude prices, according to people familiar with the matter. Sabine Oil & Gas Corp. became one of the first companies to warn investors that it faces a cash shortage from a reduced credit line, saying Tuesday that it raises “substantial doubt” about the company’s ability to continue as a going concern. It's going to get worse: "About 10 firms are having trouble finding backup financing, said the people familiar with the matter, who asked not to be named because the information hasn’t been announced."
The Oil Industry's $26 Billion Life Raft - - For U.S. shale drillers, the crash in oil prices came with a $26 billion safety net. That’s how much they stand to get paid on insurance they bought to protect themselves against a bear market -- as long as prices stay low. The flipside is that those who sold the price hedges now have to make good. At the top of the list are the same Wall Street banks that financed the biggest energy boom in U.S. history, including JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. While it’s standard practice for them to sell some of that risk to third parties, it’s nearly impossible to identify who exactly is on the hook because there are no rules requiring disclosure of all transactions. The buyers come from groups like hedge funds, airlines, refiners and utilities. “The folks who were willing to sell it were left holding the bag when prices moved,” The swift decline in U.S. oil prices -- $107.26 on June 20, $46.39 seven months later -- caught market participants by surprise. Harold Hamm, the billionaire founder of Continental Resources Inc., cashed out his company’s protection in October, betting on a rebound. Instead, crude kept falling.
Wall Street's Biggest Banks May Have To Make Good On $26 Billion In Oil Hedges - Selling billions of dollars worth of insurance on things that turn out to, on occasion, exhibit extraordinary volatility can be a dangerous thing — just ask AIG which was sucked dry by collateral calls from a certain vampire squid when the M2M value of the MBS the company so foolishly insured cratered in 2008 and Goldman came banging on the door for its money. And while the value of the price hedges (i.e. insurance contracts) the US banking sector has sold to the country’s now beleaguered shale drillers may not be large enough to present an imminent systemic risk, as Bloomberg notes, “$26 billion is still $26 billion”: For U.S. shale drillers, the crash in oil prices came with a $26 billion safety net. That’s how much they stand to get paid on insurance they bought to protect themselves against a bear market -- as long as prices stay low…The fair value of hedges held by 57 U.S. companies in the Bloomberg Intelligence North America Independent Explorers and Producers index rose to $26 billion as of Dec. 31, a fivefold increase from the end of September, according to data compiled by Bloomberg. Though it’s difficult to determine who will ultimately lose money on the trades and how much, a handful of drillers do reveal the names of their counterparties, offering a glimpse of how the risk of falling oil prices moved through the financial system. More than a dozen energy companies say they buy hedges from their lenders, including JPMorgan, Wells Fargo, Citigroup and Bank of America… Of course, as Bloomberg goes on to point out, these are the same banks which helped to finance the shale bonanza in the first place and as we recently saw with Standard Chartered, collapsing crude prices can spell trouble if you’re in the commodities loans business.
"I’m The First To Say: I Can’t Do It" - The Energy Junk-Bond Implosion Just Claimed Its First Victim -- The universe of entities who have blown up in the past year trading oil and commodities is getting increasingly more crowded and includes among them such former luminaries as one-time oil trading god (if mostly in the eyes of Citigroup) Andy Hall. However, until now there not been any prominent casualties among the group of indirect investors in the energy space, those investing in the stocks or debt of energy names, and especially those most at risk from the oil price collapse: junk bond investors. That changed today when as WSJ reported earlier, Kamunting Street, which managed about $1 billion at its peak, announced it was returning capital to investors, as a result of plunging oil prices and wrong way junk bond bets tied to hard-hit energy companies which had gone sour over the past nine months.
EIA report pegs Permian as only oil-producing shale -The latest U.S. Energy Information Administration’s (EIA) monthly drilling report has revealed some very encouraging news for the Permian Basin, but as for other major shale plays—not so much. Among the Bakken, Eagle Ford, Haynesville, Marcellus and Niobrara shale plays, the Permian stood alone as the only shale to sustain continued oil production. According to the EIA’s March report, the Permian’s oil production grew by 21,000 barrels per day in April compared to a month ago. That increase brings the Permian’s overall oil production up to 1.982 million barrels a day. The Eagle Ford shale play, also in Texas, came in second with 1.723 million barrels per day, but saw a decrease in its monthly oil production of 10,000 barrels. Also dropping in oil production for the month is the Bakken Shale in North Dakota and the Niobrara Shale in parts of Colorado, Wyoming and western Nebraska. The Bakken saw an 8,000 barrel per day loss over the past month to bring the Bakken to a total of 1.320 million barrels per day of oil production. The Niobrara, which relies less on oil, saw a 5,000 barrel per day loss, dropping it to 413,000 barrel per day production level. Both the Haynesville and Marcellus shales saw no change in its oil production over the past month. In fact, they both sit at 57,000 barrels per day of oil production.
America's Top 100 Oil Fields - With everyone's attention in recent months falling squarely on the US oil industry, and specifically how much longer various shale companies will be able to keep operating now that Saudi Arabia is openly on a war path with US marginal producers, we thought it may be an opportune time to remind readers just where America's Top 100 oil fields are located based on the EIA's most recent report. A recap, if you will, of the domestic oil theater of war with America's "closest ally" in the middle east. The top 100 oil fields accounted for 20.6 billion barrels of crude oil and lease condensate proved reserves, which was 56% of the U.S. total (36.5 billion barrels). A map of all the major reserve locations around the continental US. Next, a summary of the changes with America's top 100 fields since the last major ranking was conducted in 2009. In 2009, the United States had 22.3 billion barrels of crude oil and lease condensate proved reserves, and its top 100 oil fields had 62.3% of that total, or 13.9 billion barrels of proved reserves. In 2013, the United States had 36.5 billion barrels of crude oil and lease condensate proved reserves, and its top 100 U.S. oil fields had 56.4% of that total, or 20.6 billion barrels of proved reserves (Table 1). Prominent new additions to the top 10 are two fields from the Eagle Ford Shale Play in Texas, Eagleville and Briscoe Ranch. Eagleville, discovered in 2009, spans 14 counties in South Texas and is the country’s largest oil field as ranked by estimated proved reserves. Prudhoe Bay Field in Alaska (the largest U.S. oil field in 2009) declined in rank to third place, also behind the Spraberry Trend Area of Texas. Finally, here is the list of the top 100 fields, ranked by their proved reserves, and as estimated by the EIA.
Can't stop, won't stop; will producers be forced to cut production? - Ever since the exponential boom of light tight oil (LTO) production flowing from the major shale plays began, American refineries have worked vigorously to process greater LTO volumes. Now a new report has stated that the load is beginning to become a burden, and the cheapest options for refineries to take on the growing amounts of LTO are over. On Monday, the U.S. Energy Information Administration (EIA) released a report that began the process of solving the issue increased LTO. Most notably, the EIA stated that with low-cost investments exhausted, refiners will have to rely on costlier splitters and new unit installations to refine more shale oil in the future. Essentially, without excessive spending there just isn’t anywhere for the new light crude to go. The additional domestic LTO production that refiners can process by increasing capacity utilization rates is limited and crude oil refinery inputs already reached record levels last year. According to the EIA, refiners have exhausted relatively low-cost investments in equipment modifications to remove restrictions on throughput, also known as crude unit debottlenecking. So far, debottlenecking investments have largely been to replace the gathering trays and condenser units needed to collect the greater volumes of lighter distillation products at the top of an Atmospheric Distillation Unit (ADU) column resulting from processing the surplus LTO. Because the opportunities for such investments are limited, so too is their potential impact on the amount of additional LTO that U.S. refiners will be able to process.
Top 12 Media Myths On Oil Prices - The upstream oil and gas industry is not a black hole. There’s no mystery wrapped in an enigma here. There are a lot of meetings with engineers, chemists and geologists. There’s a constantly evolving learning curve. And then there’s all the regulations and compliance. But all-in-all it’s pretty straight forward, that is, until the media gets a hold of it. That’s when it becomes complicated. It’s as though we are getting reports from the mysteries of the deep ocean or life in the great galaxies beyond. There is so much hyperbole and unsupported guesswork that investors don’t have a chance. So, in a small effort to set the record straight, let’s see if we can’t dispel some of the misinformation.
Who’s To Blame For The Oil Price Crash?: Probably no one would dispute that the price plunge began with the eager and copious production of oil from shale formations in the United States. From the American perspective, that was beneficial because it was bringing energy self-sufficiency to a country with the reputation as the world’s largest importer of oil. Despite unproven concerns about hydraulic fracturing, or fracking, a common way to extract oil and gas from underground shale rock, the practice has proven extremely productive. And that’s the source of the oil glut that began driving down prices in late June 2014. Even one of fracking’s biggest supporters, legendary oil man T. Boone Pickens, blames the US shale boom for triggering the price slough that’s been hammering the energy industry. He’s doesn’t subscribe to the environmental concerns about fracking, but he says he can also recognize when his industry has latched on to too much of a good thing. “I’ve fracked over a thousand wells,” Pickens, the chairman of BP Capital Management, said March 23 at a panel discussion in Monterey Calif. “I’ve never had a failure on one of them. … Texas, Oklahoma lead in fracking wells and it has been a great success for both those states.” Yet Pickens thinks it’s time for US companies to take a break from their frantic production to allow oil prices to achieve some balance. In an interview with the Financial Times published March 18, he said shale companies have “overproduced,” and that it’s up to them to rein in output to help restore oil prices to a more profitable level.
Why The Oil Price Collapse Is U.S. Shale’s Fault - The present oil price collapse is because of over-production of expensive tight oil. The collapse occurred because of the inability of the world market to support the cost of the new expensive oil supply from shale, oil sands and deep water. Demand was progressively destroyed during the longest period of sustained high oil prices in history from 2010 through 2014. Since the early 2000s, the price of oil was largely insensitive to the fundamentals of supply and demand as long as prices were less than about $90 per barrel. The chart below shows world liquids supply minus demand (relative supply surplus or deficit), and WTI oil price. In mid-2004 and mid-2005, the relative supply surplus was much greater than it has been during the 2014-2015 price collapse yet prices continued to rise. When oil traders perceive supply limits and rising prices, price below some critical threshold is not an issue. They are willing to carry the cost of storage and interest to hold the commodity in the future when it will be more valuable. Tight oil boomed after late 2011 when oil prices moved higher than $90. An endless flow of easy money was available to fund spending that always exceeded cash flow. The table below shows full-year 2014 earnings data for representative tight oil E&P companies.These companies out-spent cash flow by 25%, spending $1.25 for every $1.00 earned from operations. Only 3 companies–OXY, EOG and Marathon–had positive free cash flow. Total debt increased from $83.4 to $90.3 billion from 2013 to 2014. Debt must be continually re-financed on increasingly poorer terms because it can never be repaid from cash flow by many of these companies. The U.S. E&P business has, in effect, become financialized: investment in this class of company has become the sub-prime derivative of the post-Financial Crisis period. There is no performance requirement by investors other than the implicit need to maintain net asset values above debt covenant trigger thresholds.
As oil price slump drags, companies fight to adapt- In January, Gary Evans, the CEO of the oil and gas firm Magnum Hunter Resources, shut down his entire drilling operation in response to low commodity prices. But for weeks now, he has been listening to executives from rival companies talk about negotiating rate cuts from drilling contractors and field service companies. After hearing about discounts of 25 to 40 percent, Evans said he’s thinking about restarting. “Most firms are already offering some discount. But you typically have to negotiate with them, offer to make a longer-term commitment, if you want them to give you a good deal,” he said. “It’s getting closer, but I don’t think it’s quite there yet.” It’s been nine months since oil prices began their decline, first slowly and then rapidly before leveling off around $50 a barrel, about half what they were last summer. But as the downturn drags on, the initial panic that swept the industry has moderated as companies begin to adapt to drilling in a low-priced crude world. Layoff announcements are still flowing, but not as quickly as they were earlier this year. Likewise, the U.S. rig count, which serves as a barometer for the industry, has lost 164 rigs over the past four weeks. In February 276 rigs were taken out of service, according to the Houston oilfield services company Baker Hughes. “There will continue to be declines in rigs and employment. But we’re expecting things to stabilize in the second half of 2015,” said Chris Lafakis, a senior economist at Moody’s.
The U.S. Oil Story in Seven Charts - The oil price crash has been rippling through the global economy since last summer. Now it’s hitting more corners of the U.S. economy. Since mid-2014, the price of a barrel of crude has fallen by nearly half. That is offering a boost for American consumers–a net benefit to the overall U.S. economy–but constraining budgets at oil and gas companies. The result so far has been big cuts in capital spending, layoffs and rising production. The effects are showing up in more national economic data. The Labor Department last week said employment in mining, a category that includes oil and gas, fell by 11,000 in March. So far this year, the industry has lost 30,000 jobs, after adding 41,000 in 2014. Employment losses in the first quarter of this year have been concentrated in support activities. The dropoff in employment makes sense in the context of a falling U.S. oil rig count, which is down for 17 straight weeks. At 802 at the end of last month, the number of drilling rigs–a proxy for activity in the industry–is down 36% from the October peak of 1,609. New drilling is in decline because oil prices have fallen sharply since mid-2014. But unlike past crashes, that’s largely been because of rising supplies rather than tumbling demand. The U.S. is a big reason for the oil glut. North American producers have been heavy adopters of hydraulic fracturing, or fracking, technology that has allowed oil to be pumped out of shale formations. U.S. production has climbed despite lower prices. While the U.S. is still far from energy-independent, growing domestic production has led to a big drop in petroleum imports. That’s helped keep the country’s trade deficit from growing even wider.
Crude Tumbles After API Reports Largest Inventory Build In 30 Years -- Who could have seen that coming? For 2 days, oil has surged on every headline (good or bad) as algo-mania created the 2nd best performance in 4 years.. and then API reports an absolutely massive 12.2 million (almost 4 times larger than the 3.4mm estimate). If this corresponds to the DOE inventory data tomorrow - this is the biggest inventory build since 1985... Crude prices are... not up...
Record Gasoline Output to Curb Biggest U.S. Oil Glut in 85 Years - Refiners are poised to make gasoline at a record pace this year, keeping the biggest U.S. crude glut in more than 80 years from overflowing storage. They’re enjoying the best margins in two years as they finish seasonal maintenance of their plants before the summer driving season. They’ll increase output to meet consumer demand and they’ve added more than 100,000 barrels a day of capacity since last summer, when they processed the most oil on record. Booming crude production expanded inventories this year by 86 million barrels to 471 million, the highest level since 1930. Analysts from Bank of America Corp. to Goldman Sachs Group Inc. have said storage space may run out. What looks like an oversupply to banks is turning into an all-you-can-eat buffet for those making gasoline and diesel fuel. “A lot of the excess crude we’ve been sitting on is going to get chewed up quickly,” . “We’re going to move from a stock build to a stock draw.” Goldman Sachs and Bank of America have said storage builds are increasing the risk of breaching storage capacity, sending prices tumbling. West Texas Intermediate oil, the U.S. benchmark, already has lost more than half its value since June as growing U.S. shale production led to a global oversupply. WTI for May delivery added $3 to settle at $52.14 a barrel on the New York Mercantile Exchange on Monday.
U.S. crude oil stocks surge 11 mln bbls, biggest rise since 2001 – U.S. crude stocks surged nearly 11 million barrels last week, the biggest gain in 14 years, as imports jumped, while gasoline inventories unexpectedly increased, government data showed on Wednesday. Crude inventories rose 10.95 million barrels in the week to April 3 to 482.4 million, hitting record highs for the 13th consecutive week, according to data from the Energy Information Administration (EIA). Analysts had forecast an increase of 3.4 million barrels on average. Crude stocks at the Cushing, Oklahoma, delivery hub rose 1.2 million barrels, which was also a bigger-than-expected build. U.S. crude imports rose 869,000 barrels per day (bpd) to 7.7 million bpd. Both U.S. and Brent crude futures extended losses after the EIA report. U.S. May crude was down $2.40, or 4.5 percent, at $51.58 a barrel at 11:20 a.m. EDT, having fallen as low as $51.38. Brent May crude was down $2.01, or about 3.5 percent, at $57.09, having slumped as low as $56.90. “They are the most bearish numbers I’ve seen in quite some time, very surprising, even to a bear like me,” Refinery crude runs rose 201,000 bpd to 15.9 million bpd, EIA data showed, remaining at record highs for this time of year. Refinery utilization rates rose by 0.7 percentage point to 90.1 percent of total capacity. Gasoline stocks rose 817,000 barrels, compared with analysts’ expectations in a Reuters poll for a 1.0 million barrels drop. At 229.95 million barrels, gasoline stocks were at their highest level on record for the period, according to EIA data.
Oil dives 6 percent from 2015 high as stocks swell, Saudis pump (Reuters) - Oil prices dived 6 percent on Wednesday after closing at their highest this year, as a mammoth rise in U.S. crude stockpiles and news of record Saudi oil production scuttled talk of a sustained recovery. U.S. crude oil inventories surged 10.95 million barrels - three times more than expected - to a modern-day record 482.39 million last week, U.S. government data showed, the biggest one-week increase since 2001. Stockpiles in Cushing, Oklahoma, rose by 1.2 million barrels, much more than expected. The data added to earlier losses triggered by comments that Saudi oil production rose to 10.3 million barrels per day (bpd) in March, the highest monthly total on record. Brent May crude fell $3.55, or 6 percent, to settle at $55.55 a barrel. U.S. May crude fell $3.56, or 6.6 percent, to settle at $50.42 after closing at nearly $54 a barrel on Tuesday, the highest close since Dec. 30. The U.S. data were "very bearish," . The rise in crude stocks was fueled in part by a 869,000-bpd increase in imports. Gasoline inventories rose 817,000 barrels, compared with analysts' expectations for a 1.0 million-barrel drop, as refiners increased capacity utilization.
Oil settles down 6.6% as US crude inventories continue to surge -- Oil futures settled nearly 7 percent lower on Wednesday after government data showed the largest weekly increase in U.S. crude inventories since 2001 and a day after Saudi Arabia reported record production in March.U.S. May crude closed down $3.56, or 6.6 percent, at $50.42 a barrel. The commodity has erased 2015's gains and is now down 5.4 percent on the year. Meanwhile, Brent May crude was down $3.30 at $56.90 a barrel. U.S. crude oil inventories surged 10.95 million barrels to a record 482.39 million in the week to April 3, the Energy Information Administration (EIA) said in its weekly report. A Reuters survey of analysts had yielded a forecast for a build of 3.4 million barrels. "The report is very bearish with the large crude oil inventory build and the somewhat surprising rise in gasoline inventories," U.S. crude oil imports rose by 869,000 barrels per day (bpd) to 7.7 million bpd. Gasoline inventories rose 817,000 barrels, compared with analysts' expectations for a 1 million barrel drop, as refiners increased capacity utilization.
Cushing Storage Around 90% Full As Inventories Surge Most In 14 Years, Crude Plunges -- Following last night's huge 12.2 mm barrel inventory rise estimate from API, DOE has just confirmed last week saw an almost all-time high 10.95 million barrel inventory build. This is the higest since March 2001. With today's 1.232 million barrel addition at Cushing, Goldman estimates only about 10% of storage capacity is left. And to complete the trifecta, crude oil production ticked back up again after last week's hope-strewn reduction.
US oil and natural gas rig count drops by 40 to 988 - — Oilfield services company Baker Hughes Inc. says the number of rigs exploring for oil and natural gas in the U.S. declined by 40 this week to 988 amid depressed oil prices. It was the first time the weekly count was below 1,000 since September 2009. Houston-based Baker Hughes said Friday 760 rigs were seeking oil and 225 explored for natural gas. Three were listed as miscellaneous. A year ago, 1,831 rigs were active. Among major oil- and gas-producing states, Texas plummeted by 29 rigs, Oklahoma was down five, New Mexico by four and North Dakota dropped two. Colorado, Ohio and Wyoming declined by one each. Arkansas and Kansas each rose by one. Alaska, California, Louisiana, Pennsylvania, Utah and West Virginia were all unchanged.
Total Rig Count Decline Fastest Since 1986 As Weekly Rig Count Drop Re-Accelerates -- With crude production and inventories hitting record highs this week, it is likely no surprise that rig counts continued to decline - falling 40 to 988 total rigs (and down 42 to 760 oil rigs). This is the 18th week in a row of total rig count declines - equal to the record series from 2008/9. At 48.5%, this is the biggest 18-week decline since 1986.
U.S. oil rig slide picks up again after false bottom - The fall in U.S. rigs drilling for oil quickened this week, data showed on Friday, suggesting that a recent slowdown was temporary, after slumping oil prices caused half of the country’s rigs to be closed since November. The oil rig count fell by 42 this week to 760, the biggest drop in a month after the loss of 11 and 12 rigs in the prior two weeks respectively, according to data from oil services firm Baker Hughes. U.S. natural gas rigs, meanwhile, rose by three to 225. The slowing decline in March had caused some analysts to wonder whether oil drillers had finished making deep cuts for now, with U.S. crude prices stabilizing at around $50 a barrel or so. But after Friday’s data, prices rose 2 percent on the day and 5 percent on the week, to above $51 a barrel, partly on signs that more cuts may come. “It’s a sign of the tumult the oil industry is still going through,” said John Kilduff, partner at New York energy hedge fund Again Capital. “The price recovery in crude isn’t really to the degree that’s helping, and there are lots of job losses being reported in the oil industry, so I won’t be surprised to see more rig losses hereon.” With this week’s decline, the oil rig count has fallen for a record 18th week in a row, reaching December 2010 lows, according to Baker Hughes data going back to 1987. U.S. energy firms have slashed spending, cut jobs and idled wells over the past several months as crude prices plunged over 50 percent since the summer on oversupply concerns and lackluster world demand. Despite the 53 percent reduction in oil directed rigs from a record high of 1,609 in October, oil output has remained at a 40-year peak, declining only one week in the last couple of months.
U.S. oil production is probably peaking right now -- U.S. crude production will peak this month, according to revised forecasts published by the country’s Energy Information Administration (EIA). Output will average 9.37 million barrels per day (bpd) in April and the same in May before falling to 9.33 million bpd in June and 9.04 million bpd by September, the EIA predicted in the April edition of its Short-Term Energy Outlook (STEO). Production is expected to peak a month earlier and 10,000 bpd lower than the EIA forecast in the January STEO, reflecting continued low wellhead prices and a sharper-than-expected slowdown in new well drilling. Production is forecast not to exceed this month’s level for another 18 months. The EIA has cut its forecast for the end of 2016 by 230,000 bpd compared with three months ago.While the EIA’s Brent price forecast is largely unchanged, prices for West Texas Intermediate crude have been marked down through the rest of 2015 and 2016, reflecting the build-up of crude stocks and persistent weakness of U.S. grades. The number of rigs drilling for oil has fallen further and faster than was anticipated last year. Baker Hughes reported there were 802 rigs drilling for oil last week, down exactly 50 percent since early October. It is unlikely a halving of the rig count can be completely offset by greater target selectivity and other efficiency improvements such as employing only the most powerful rigs, drilling longer laterals and reaching target depth faster.
Greenpeace Activists Are Refusing To Leave Oil Rig Headed For The Arctic, Despite Legal Threats --On Monday, some 750 miles northwest of Hawaii, six Greenpeace activists boarded a Shell oil rig en route from Malaysia to the Port of Seattle in protest of the oil company’s plans for drilling in the Arctic. A mere 24 hours later, Shell filed a lawsuit in federal court, hoping to kick the activists off of the rig. “These acts are far from peaceful demonstration,” Shell said in a press release following the injunction, which it filed in federal court in Alaska. “Boarding a moving vessel on the high seas is extremely dangerous and jeopardizes the safety of all concerned, including both the people working aboard and the protestors themselves.” The protesters, who had been following the rig’s trans-Pacific journey on a Greenpeace ship named the Esperanza, used inflatable boats and climbing gear to approach the vessel carrying the rig — called the Blue Marlin — and scale the rig. The Esperanza, which has several other Greenpeace members on board, is continuing to follow the Blue Marlin, bringing protesters food and supplies as needed. The 400-foot-tall rig, dubbed the Polar Pioneer, is intended to be staged for Arctic drilling once it reaches Seattle. It is one of two rigs eventually bound for the Arctic Ocean north of Alaska, an area that Shell — pending federal permits — intends to develop for offshore drilling.
British Companies Find Oil Off Falklands; Argentina Threatens Prosecution: The UK and Argentina marked the 33rd anniversary of the start of their 10-week Falklands War with British energy companies announcing the discovery of oil and gas off the islands and the Argentine Foreign Ministry immediately countering with a threat of prosecution. The energy discovery at the Zebedee well about 200 miles north of the Falklands was announced by Premier Oil Plc. and Falkland Oil and Gas Ltd., the first strike in a regional drilling campaign that began last summer. The discovery included an oil reservoir 81 feet deep and a gas basin 55 feet deep. The Zebedee well is part of a larger drilling enterprise by the British companies called Sea Lion, and uncertainty remains about its development for now, according to analysts at the US brokerage Stifel. “A full appreciation of the significance of today’s result may have to wait until the conclusion of the drilling campaign later this year,” they wrote. The Falklands, which Argentina calls the Malvinas, have long been part of a tug-of-war between Buenos Aires and London, which both claim the islands in the South Atlantic off the Argentine coast. They have been under British control since 1841. Argentine forces invaded them on April 2, 1982, and claimed them in an effort to establish sovereignty under Buenos Aires. Britain responded by sending a naval task force, and on June 14 Argentina surrendered, returning the islands to British control.
Stop Fracking: Increases Risks of Serious Health Problems - Health experts and activists warning that fracking can promote serious negative health effects are facing government and market hurdles in their effort to protect people. Under the UK’s Climate Change Act, successive British governments are obliged to minimize the greenhouse gas emissions. Yet, the current government, led by Prime Minister David Cameron, has pushed forward an Infrastructure Bill completely at odds with the Climate Change Act 2008. The Infrastructure Bill obliges governments to produce strategies for “maximising the economic recovery of UK petroleum” and includes provisions “to introduce a right to use deep-level land” for “petroleum or deep geothermal energy.” Rather than taking a precautionary approach to protect people and the environment from the possible severe effects of fracking, David Cameron has – quite irrationally – engaged in a publicity war for the fracking industry, and sought popular support for it by arguing that it “has real potential to drive energy bills down." But, Cameron won’t listen to prominent health experts who have labelled fracking “inherently risky” for its potential health impact. Nor will he will explain how his attempts at eliciting public support for fracking by outlining economic gains square with those of Former BP chairman Lord Browne, now chairman of fracking company Cuadrilla, who has contradicted Cameron, indicating that there will be no downward trend on household energy bills in the UK as a result of gas and oil derived from fracking in the country. We cannot rely on our governments to provide solutions to the UK’s energy problems, nor to uphold their commitments to reduce greenhouse gas emissions.
OPEC Revenues Suffer In Oil Price War Of Attrition -- The 9-month-old plunge in the price of oil combined with a decrease in exports cut into OPEC’s net earnings in 2014, according to estimates by the US Energy Information Administration (EIA). With the exclusion of Iran, 11 of OPEC’s 12 member countries earned about $730 billion in net export revenues last year, an 11 percent drop from 2013, when the cartel earned $824 billion, and “the lowest earnings for the group since 2010,” the EIA said. These and all other dollar figures in the EIA report are not adjusted for inflation. The IEA said Iran was excluded from the report because it is difficult to estimate the country’s earnings because of sanctions that forbid payments for oil to Tehran and any price discounts it may offer to some customers. In its four-page “OPEC Revenues Fact Sheet”, issued March 31, the EIA projected that the cartel’s net export revenues in 2015 will be even lower, around $380 billion, even though OPEC’s production and exports aren’t expected to change from their levels in 2014. There are two main reasons for that: First, OPEC decided in November to maintain production levels at 30 million barrels per day rather than cut production in an effort to shore up prices. Second, oil prices were high for nearly half of 2014 before they began their fall in late June. This year has begun with low oil prices, and so far there’s no evidence that oil prices will rebound meaningfully before year’s end.
Middle East state spending throws lifeline to oilfield services – Oil majors may have slashed capital spending but national oil companies (NOCs) in the Middle East and North Africa show no sign of cutting investment, buoying oilfield services that the stock market has beaten down. Investors sold in the second half of 2014 as benchmark fuel prices sank, expecting a dire performance from a sector reliant on investment in oil and gas projects for its revenues. Names such as Saipem and Subsea 7 notched up double-digit share price declines from June to December as oil majors put projects on hold or scaled back expenditure. But while offshore drillers and seismic companies continue to suffer, oil services stocks with chunky exposures to Middle East spending, such as Petrofac, have bounced back. Petrofac’s order backlog was up 26 percent at the end of 2014, and its share price has risen by almost 27 percent since it reported full year earnings on Feb. 25. Recent wins include a contract for the first phase of Kuwait Oil Company’s Lower Fars heavy oil development program and two strategic contract agreements with Algeria’s Sonatrach. “There is a building differentiation in the backlog profiles of those companies exposed to onshore construction in the Middle East and those not,” said Mick Pickup, managing director at Barclays Capital. “While some of this is gas related, it signals a continued robust construction market in the region.” In contrast, a JBC Energy analysis found that ExxonMobil , BP, Shell, Total, Chevron and ConocoPhillips had slashed capital expenditure by 12.7 percent for 2015, or almost $21 billion.
Saudi Stocks Are Plunging Following Rejection Of Russian Embargo Proposal; Death Toll Mounts -- Earlier this morning, RT reports that Saudi Arabia rejected Russia’s amendments to a Security Council draft resolution which would see an all-inclusive arms embargo on all parties in the Yemeni conflict. Saudi stocks did not like the news and began to tumble - now down over 3%, back at January lows as the fighting continues to spiral out of control with civilian death toll climbing. At least 185 people were left dead and more than 1,200 wounded as a result of fighting in Aden, a medical official told AFP Saturday, three-quarters of them civilians. In the meantime, Reuters reports The Houthis are gaining ground in Aden, despite the onslaught of airstrikes; and the Saudi ambassador to the United States, said sending ground troops remained "on the table."
Saudi Arabia crude output at record high in March - Saudi Arabia raised its crude output to 10.3 million barrels a day in March, its oil minister Ali al-Naimi said, signalling an unexpected strong demand from its customers. Mr. Naimi did not give a reason for the increase in output, according to the official Saudi News Agency. The Kingdom's previous record peak was 10.2 million barrels a day in August 2013. It told the Organization of the Petroleum Exporting Countries that it produced 9.64 million barrels a day in February. Mr. Naimi said that the kingdom's production will continue at around 10 million barrels a day, signalling that his country is determined to ride out the price slide without making any output cut. "In terms of petroleum, I expect that prices will improve in the near future, that the Kingdom's production will continue at approximately 10 million barrels per day," Mr. Naimi said in a speech at an energy event in Riyadh. Saudi Arabia is willing to participate in restoring market stability and steering prices back up, but it can only do so with participation from major oil-producing countries inside and outside OPEC, he said. "The burden cannot be borne by Saudi Arabia, the GCC [Gulf Cooperation Countries], or OPEC countries, alone," he said.
"Saudi Arabia Is Going For it" - Why The Saudis Just Boosted Oil Production To A Record High --Instead of leaving its own production flat in an attempt to stabilize oil prices and hit its "optimistic" outlook sooner rather than never, Saudi Arabia would boost production quite sharply to claw back market share. Specifically al-Naimi, revealed that the kingdom’s oil production in March was 10.3-million barrels a day – a record high. .. Why is Saudi Arabia opening the spigot? There is no doubt that country’s own domestic demand is rising, thanks to heavy investment in new refineries, requiring more production. But it also appears that Saudi Arabia is making renewed push for market share for fear that a gusher of Iranian oil will soon hit the export markets as the Iranian embargo is ratcheted back
Saudi Arabia Maneuvers to Retain Oil Crown - WSJ: Saudi Arabia is struggling to maintain its share of the global oil market in a contest that pits the world’s largest crude exporter against traditional allies in the U.S. and Persian Gulf. The Saudi kingdom’s oil exports declined 5.7% in 2014 compared with 2013. Oil shipments to its fastest-expanding customer, China, reached their lowest levels since 2011 in the first two months of 2015, according to the China General Customs Administration. And its U.S. sales nearly halved in January compared with a year earlier, according to the U.S. Energy Information Administration. China and the U.S. are Saudi Arabia’s biggest importers, with 10% and 8%, respectively, of the kingdom’s production. Saudi Arabia is suffering from depressed demand and better deals being offered by its rivals in Russia, Kuwait and the United Arab Emirates. In the U.S.,it faces competition from domestic shale producers whose flood of crude has helped shove down world oil prices. It is an unfamiliar position for Saudi Arabia, long considered the linchpin of the world oil market, and reflects a new order emerging in the global crude market since oil prices plunged more than 50% since last June. The situation also underscores the risks Saudi Arabia took last November when it persuaded fellow members of the Organization of the Petroleum Exporting Countries to forsake their traditional role of boosting prices when the market tanked. Instead, Saudi Arabia said it and OPEC would keep pumping and let oil prices fall. Instead, the kingdom has been forced into a fight with OPEC members, cutting its selling price to Asian customers six times in nine months. But Russia and Saudi Arabia’s Persian Gulf allies have outmaneuvered it, cutting better deals with Chinese, Indian and European refineries, industry analysts said. Kuwait, for instance, boosted its exports by signing a 10-year supply deal last year with China’s largest refiner, China Petroleum & Chemical, known as Sinopec.
Saudi strategy to retain oil dominance - In the face of lower oil prices the world’s biggest energy players have slashed spending, cut jobs and pulled back on the number of rigs drilling for oil and gas. But as the oil price rout has forced companies into a deep retrenchment, Saudi Arabia’s energy behemoth has set its sights on longer term ambitions. After all, the kingdom has a $750bn buffer to allow it to do so. To be sure, Saudi Aramco is also using the downturn to “sharpen” its fiscal discipline, according to its chief executive Khalid Al Falih, negotiating better deals with services companies and other contractors to trim spending. But it is making a bet that running its energy sector hard, investing in oil, gas and refining and pushing for new business in troubled times, will enable Opec’s largest producer to retain its dominance. Ali Al Naimi, Saudi oil minister, last month said the kingdom was producing about 10m barrels of crude a day, up from an average of about 9.7m b/d in the second half of 2014, according to data from JODI, the global oil database. At the same time, the number of rigs drilling for oil and gas has jumped more than 15 per cent since June to 120, according to oilfield services company Baker Hughes, even as the price of crude has halved. In the US rig numbers have dropped by half since October to the lowest in four years. Meanwhile, Mr Al Falih embarked on a trip to Beijing to charm the Chinese into importing more Saudi crude and products as competition for the Asian market increased.
Saudi to borrow to finance soaring deficit: report (AFP) - Saudi budget deficit will be more than twice its own forecast, a leading research firm has said, forcing the kingdom into the debt market for the first time in more than a decade. Hit by plunging crude prices, the world s biggest oil exporter will post a deficit of $106 billion, compared with a government projection of $39 billion, Saudi firm Jadwa Research said in a report released late Tuesday. The kingdom that exports 7.0 million barrels per day on average will see oil revenues fall by 35 percent to $171.8 billion in 2015, the quarterly report said. Total revenues are forecast down 33.7 percent at $185 billion, while public spending is expected to remain almost unchanged at $290.9 billion. Jadwa said the government is highly expected to return to the debt market for the first time in around 15 years despite its massive reserves. "The government is now expected to issue debt as part of its deficit financing strategy," it said. Saudi Arabia has massive foreign reserves, which stood at $714 billion at end February, but Jadwa said borrowing would eliminate the need for the reserves to be the sole source of deficit financing.
Energy pressure is America’s weapon of choice - oil expert — War always happens for a reason. In the last decades, war has seen violence breaking out over resources, with control over oil being the most contested and cherished goal. Even terrorists join the hunt for black gold. But will that change? How much geopolitical power does oil have? We ask an expert these questions - author of numerous books on energy, Professor Michael Klare is on Sophie&Co today. (interview & transcript.)
Oil prices could be $5-$15 a barrel lower in 2016 if Iran sanctions lifted: EIA – World oil prices could be $5 to $15 a barrel lower than forecast next year if oil-related sanctions against Iran are lifted, the U.S. government’s energy agency said on Tuesday. In its monthly report, the Energy Information Administration said U.S. oil production growth was slowing even more quickly than it expected a month ago, while demand was higher than earlier forecast. But the agency left its price forecasts unchanged, putting Brent at $59 this year and $75 a barrel next year – with downside risks from Iran’s return. “A lifting of sanctions against Iran should a comprehensive nuclear agreement be concluded could significantly change the forecast for oil supply, demand, and prices,” EIA Administrator Adam Sieminski said in a statement. The agency said that Iran is believed to hold at least 30 million barrels of crude in storage, and that the nation could ramp up crude production by at least 700,000 barrels per day (bpd) by the end of 2016. Analysts have also said production would likely recover next year if sanctions are eased. The comments come on the heels of a framework accord last week to curb Iran’s nuclear program, giving negotiators until June 30 to hammer out a comprehensive agreement. Upon verifying compliance, Iran – once the world’s fifth-largest oil producer – could put supply back into the market. Meanwhile, the EIA cut its U.S. crude oil production growth forecast for 2015 to 550,000 bpd, versus 700,000 bpd in its March forecast, while the 2016 growth forecast was lowered to 80,000 bpd from 140,000 bpd a month ago. “U.S. crude oil production is expected to peak this year in the second quarter and then decline in the third quarter, before picking up again toward the end of this year as projected higher crude prices in the second half of 2015 make drilling more profitable,”
Mapping Iran's Nuclear Program And Oil Facilities - Iran Nuclear "Deal" Post-Mortem, with data courtesy of "The Geopolitics of Iran: Holding the Center of a Mountain Fortress"
OPEC's no-cut strategy is not working, Iran says - – OPEC’s strategy of holding output steady is not working and the group’s members should discuss production levels before its next meeting in June, Iran’s oil minister said, a sign of the pain lower prices are causing OPEC’s less wealthy producers. However, Bijan Zanganeh also told Reuters it was up to other members of the Organization of Petroleum Exporting Countries (OPEC) to make way for any extra Iranian crude that reaches world markets if Western sanctions on Tehran are lifted. Oil prices have halved from $115 a barrel in June last year, in a drop that deepened after OPEC refused to cut output and defend market share. Top exporter Saudi Arabia was the driving force behind the policy. “It seems [OPEC’s strategy of not cutting output] does not work well, because prices are coming down,” Zanganeh told Reuters on Thursday during a visit to Beijing. “We haven’t witnessed stable situations on the market.” Iran was among the OPEC members which wanted an output cut at OPEC’s last meeting, in November. But the Gulf OPEC members, who account for more than half of the group’s output, refused to cut without the participation of non-OPEC producers.
OilPrice Intelligence Report: Iranian Media Calls For Saudi Oil Boycott -- Despite the price gains, things are not looking good for the crude-by-rail industry. A series of oil train derailments and explosions struck the rail industry earlier this year. But now fresh data from the Association of American Railroads strikes another blow: the fall in oil prices is starting to cut into the volume of shipments on the railways. As drilling activity falls in places like North Dakota, which accounts for the lion’s share of oil train shipments, fewer and fewer trains are making their trips across the country. Rail shipments fell by 7% in March from a year earlier. Piling on the pressure, the National Transportation Safety Board published the results of an investigation into train derailments on April 6. The NTSB issued four recommendations to upgrade rail safety including a swift transition towards reinforced railcars. “We can’t wait a decade for safer rail cars,” NTSB Chairman Christopher A. Hart said in a statement. “Crude oil rail traffic is increasing exponentially.” He called on the industry to move quicker. Crucially he also singled out the CPC-1232 design as flawed, which was previously thought to be an upgrade over the flimsier DOT-111. The NTSB called for upgrades to take place over a five-year period, an “aggressive schedule,” as the agency put it.Meanwhile, although the U.S. and Iran are beginning to thaw relations, Iran’s relationship with Saudi Arabia is descending to a point of crisis. Already rivals in the Middle East, the conflict in Yemen is pushing the two sides into outright hostilities. Iran and Saudi Arabia are fighting a proxy war over control of Yemen, but now Iran is stepping up the pressure. The Iranian media is calling for an international boycott of Saudi oil due to the Arab kingdom’s attack on Houthi rebels in Yemen. As the world’s most important oil producer, there is little chance that any country other than Iran pursues such a course of action, but the call highlights how bad things have become between the two OPEC members.
China’s Already Preparing for a Post-Sanctions Iran - Negotiations over Iran’s nuclear program made a breakthrough last week, with the P5+1 powers (China, France, Germany, Russia, the U.K., and the U.S.) and Iran reaching a framework agreement on an eventual deal. The framework outlines the basic points of a deal – including limits on Iran’s ability to enrich uranium in return for the lifting of nuclear-related sanctions. Now negotiators will go to work on reaching a final, detailed agreement in advance of the June 30 deadline. Iran is eager to rid itself of international economic and financial sanctions that have crippled its economy in recent years. Two tweets from Iranian Foreign Minister Javad Zarif showed how much of an emphasis Tehran will place on getting the maximum number of sanctions removed as quickly as possible. Meanwhile, other negotiating powers, particularly the U.S., are keen to see Iran’s compliance with the deal verified before any sanctions are lifted.Iran, however, is not waiting for verification to seek expanded economic engagements – in fact, it’s not even waiting until the final deal is unveiled in late June. According to Reuters, Iran has already sent a group of Iranian oil officials to China seeking increased investments and oil exports. Iran’s oil minister, Bijan Zanganeh, is also expected to visit China in the near future. Iran hopes to double its oil exports in the first two months after sanctions are lifted; China will be a crucial part of making that dream a reality. Prior to 2012, when sanctions took hold, Iran was the third-largest oil exporter to China. By 2013, Iran had dropped to sixth place, falling behind Oman, Russia, and Iraq. Two Chinese state-owned oil companies, China National Petroleum Company (CNPC) and Sinopec, had already promised billions to Iranian oil projects before sanctions were laid down. Sinopec, for instance, has a $2 billion deal to develop an oil field in Khuzestan, while CNPC has a $2 billion contract for a field in North Azadegan.
PetroChina overtakes ExxonMobil to become world’s biggest energy company — The capitalization of China’s biggest oil producer PetroChina reached $352.8 billion during Thursday trading in Shanghai, surpassing ExxonMobil as the world’s most valuable energy company for the first time since 2010. The market cap of America’s Exxon reached $352.6 billion in Shanghai Thursday trading, Bloomberg reports. PetroChina’s market cap has gone up 13.81 percent in the last 12 months while Exxon’s market value has fallen by 14 percent, following the slump in oil prices. Moreover, the Chinese company’s Class-A shares have gained 61 percent since last April. The last time PetroChina was more valuable than Exxon was at the close of trading on June 25, 2010, according to Bloomberg. “PetroChina has multiple positives at the moment: it’s got a reform story, it’s also listed in Hong Kong, and China has more freedom for mainland fund managers in the works,” said Mark Matthews head of Asia research at Bank Julius Baer & Co. in Singapore. “China is also planning to transfer stakes in state-owned enterprises away from their regulator, which will on the whole be positive for SOEs,” he added.
China to build $2bn Iran-Pakistan pipeline - media — China will reportedly finance the so-called ‘Peace Pipeline’ natural gas pipeline from Iran, home to the world’s second largest reserves, to energy-deprived Pakistan. The project was delayed due to US dissent. The final deal is to be signed during the long-sought visit of Chinese President Xi Jinping to Islamabad in April, the Wall Street Journal reported on Thursday. “We’re building it. The process has started,” Pakistani Petroleum Minister Shahid Khaqan Abbasi told the WSJ. First proposed over 20 years ago, the 1045 mile (1682km) pipeline will transfer gas from Iran’s south to the Pakistani cities of Gwadar and Nawabshah. Karachi, the country’s biggest city of 27.3 million, will also be connected via local energy distribution systems already in place. Iran has said the 560-mile portion that runs to the Pakistan border is already complete, which only leaves $2 billion needed to build the Pakistani stretch. The project could cost up to $2 billion if a Liquefied Natural Gas port is constructed at Gwadar. Otherwise, the project to complete the Pakistani pipeline will cost between $1.5 billion to $1.8 billion, the WSJ said. Pakistan is in negotiations with China Petroleum Pipeline Bureau, a subsidiary of Chinese energy major China National Petroleum Corporation, to finance 85 percent of the project. Pakistan will pay the rest.
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