after a lull of nearly 2 months, there was once again another fiery derailment of an oil train carrying Bakken crude this week, this time in North Dakota itself...on Wednesday morning, a 109-car Burlington Northern Santa Fe train saw 10 of its cars leave the tracks and 6 of those burst into flames, about two miles outside of the small town of Heimdal, North Dakota...recalling the explosive train wreck of oil tankers in nearby Casselton, where 400,000 gallons of crude were spilled on December 30 2013, authorities evacuated the entire population of Heimdal and nearby farms while first responders fought the blaze..fortunately, this load of Bakken crude had been treated to remove the most volatile compounds, and as a result was less volatile than the mandated limit, so firefighters were able to get control of the fire within a day, allowing residents to return home...BNSF managed to get the rails repaired and reopened for more oil trains by Friday afternoon, while the oil remaining in the derailed cars was being offloaded onto tanker trucks...
of course, the pipeline advocates think these exploding trains are just great, as it presents them with the opportunity to present legislation to expedite taking property for pipelines in energy producing states under the the guise of saving America from the bomb trains...Senators Shelley Moore Capito (R-W.Va.), Heidi Heitkamp (D-N.D.) and Bill Cassidy, M.D. (R-La.) introduced legislation this week, called the Oil and Gas Production and Distribution Reform Act, intended to bypass the normal approval process for interstate pipelines in light of local citizen interventions and protests in several states, including those against the Nexus pipeline in Northeast Ohio this week, where surveyors employed by the company are now trespassing on privately owned property without any owner's foreknowledge or consent...a strangely similar bill, H.R.161, the Natural Gas Pipeline Permitting Reform Act, is moving thru the House, with bills in both Houses submitted under the long title of "To provide for the timely consideration of all licenses, permits, and approvals required under Federal law with respect to oil and gas production and distribution"
however, North Dakota also saw a major pipeline break this week, which seems to show that no method of handling dangerous or toxic liquids devised by fallible humans can ever be considered safe and foolproof...a North Dakota Department of Health official informed the media on Wednesday (the same day as the train fire) that 63,000 gallons of oil well brine had leaked from an underground pipeline and flowed into Smishek Lake, about 75 miles northeast of the oil boomtown Williston. which has on occasion seen more than one pipeline break nearby in less than a week....considered by health officials a “significant” spill, this brine was many times saltier than sea water and could easily kill vegetation, and although the contaminated lake is not a source of drinking water, it is (or was) a popular fishing and camping destination listed with the North Dakota Tourism Division...
returning our focus back to oil field activity and our national oil supply, we appear to be transitioning from the unsustainable period we had witnessed earlier this year, where our oil output and supply continued to skyrocket while oil rigs shut down at a record pace, as this week saw our oil production slip, US oil imports drop by more than 10%, domestic crude oil inventories fall for the fist time four months, and the number of rigs operating in the US fall by the least over the past 22 weeks...the drop in our field production of crude oil, from 9,373,000 barrels per day last week to 9,369,000 barrels per day this week, was less than 0.05%, but it fits the pattern that has seen US oil production plateau since mid March at a level that has remained more than 12% higher than the same weeks a year earlier...our crude oil imports, meanwhile, fell from 7.446 million barrels per day during the week of April 24th to 6.541 million barrels per day last week, a drop 905,000 barrels per day, to the lowest weekly level of imports since the 3rd week in May last year...thus the weekly Petroleum Status Report (62 pp pdf) from the Energy Information Administration informs us that US crude oil imports averaged over 7.2 million barrels per day over the last four weeks, 5.0% below the same four-week period last year, while just two weeks ago, our monthly oil imports were running ahead of last year's totals...so, with production slipping and imports way down, we used more oil than was supplied for the first time since the week ending January 2nd, as U.S. commercial crude oil in storage dropped by 3.88 million barrels from last week's report, although at 487.03 million barrels, our crude oil inventories are still at the highest level for this time of year in at least the last 80 years...
the excitement of seeing our oil supply drop for the first time in four months briefly pushed the price of oil to above $60 a barrel for a day or two, and that in turn brought all the frackers who've been sitting on their disassembled rigs out of the woodwork...oil & gas producer EOG Resources announced that they planned to begin fracking hundreds of wells in North Dakota and Texas if they could get prices for their oil of around $65 per barrel, while earlier Whiting Petroleum announced it would begin to add rigs if crude prices rose to $70 a barrel...so while it appears that the frack boys are chomping at the bit to get back to work, we are still far from a normal environment that would allow for a sustained supply side increase in prices...this can easily be seen in the graphic below, which comes from "This Week in Petroleum", a weekly summary from the EIA...
oil inventories as of May 1st:
the shaded area in the graph above represents the range of US oil inventories as reported weekly by the EIA 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...the blue line then shows the recent track of US oil inventories over the period from mid 2013 to mid 2015....you can see that even though inventories are down a bit this week, at the current level of 487.03 million barrels they are still 22.5% above the seasonally high level of the same week last year, 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, which had never seen the 400 million barrel level breached before this year...also note in the shaded area that inventories of oil always decline over the summer period, from May through August, so a downturn of our oil stocks at this time of year is only to be expected...
meanwhile, as we noted, there were only 11 drilling rigs taken out of service this week, so the US rig count data has not changed much from last week...Baker Hughes reported that in the week ending May 8, the number of oil rigs operating in the US this week fell by 11 to 699, gas rigs fell by 1 to 221, and one miscellaneous rig was added, leaving 894 rigs still operating at week end...that's 961 fewer than the same week last year, when 1528 oil rigs 323 gas rigs and 4 miscellaneous rigs were operating...Canadians, meanwhile, shut down one oil rig and 3 gas rigs, leaving them with 16 oil rigs and 59 gas rigs for a total of 75....those taken out of service in the US this week included 7 horizontal rigs, leaving 692, 5 directional rigs, leaving 88 of those, while a vertical rig was added bring the vertical rig count up to 114....6 of the rigs stacked this week had been operating in Oklahoma, 3 were in Louisiana and 2 were in New Mexico, in addition, Arkansas, California, Kansas, Ohio, Texas, Utah and West Virginia each saw one rig idled, while Colorado drillers added two rigs and North Dakota drillers added one...the rig counts for all other states remained unchanged...
this week also saw the release of the international rig counts for the month of April, which are an average of the number of rigs running during the month for each area and hence differ from the weekly rig counts for North America...excluding the US and Canada, the international rig count for April was at 1,202, 49 lower that the rig count of 1,251 in March, and down 147 rigs from the 1,349 international rigs counted in April of last year...of those, offshore rigs were down 16 to 300, and down 29 from the 329 offshore drilling platforms running a year ago...most of the rigs taken out of service during April had been running in Latin America, where 26 rigs were shut down, leaving 325….of those idled, 7 had been operating in Venezuela, 6 were Colombian, and 5 rigs were shut down in Argentina...in addition, Europe saw a reduction of 16 rigs, Africa saw 5 fewer, as did the Asia-Pacific region...only the Middle East saw an increase in April, with an aggregate of 3 additional rigs, as Kuwait shut down 3, Oman added 4, Qatar added 3, Iraq and Egypt each dropped 1, and the Saudis added 1, bringing their total to 126, the most in the region...
OUR VIEW: Retreat on hike of fracking tax not in interest of Ohio citizens - Stow Sentry - An Ohio House vote that eliminates Gov. John Kasich's proposal to raise the state's tax on oil and gas generated by fracking is said to be a response to an industry lately depressed by the falling price of both. And yet, as the governor has often pointed out, Ohio's current 1 percent tax on oil and 3 cent tax per thousand cubit fee of natural gas is one of the lowest in the nation. Even with his proposed tax increases, it would remain one of the lowest. The governor has proposed raising the tax on oil and natural gas to 6.5 percent. This compares with a similar tax of 6.6 percent in Michigan, 7 percent to 11 percent in North Dakota, a 4 percent to 5 percent tax in Kentucky, and a 5 percent tax in West Virginia. The Ohio House has voted, in effect, to continue to tax its producers at the 1 percent rate and 3 cents per thousand cubic feet of natural gas. As both oil and gas are depletable natural resources that will not be replaced, Kasich argues that the people of Ohio have a right to expect more of a return from the oil and gas that is being produced by fracking and he is right. Once these resources are gone, Ohio will no longer have the opportunity to gain revenue in this method and yet fracking stresses Ohio's road system and the evidence is mounting that it is causing minor earthquakes in areas where it being conducted. We realize our politicians tend to vote in the interest of whoever is funding their re-election campaign coffers. Such thinking, however, is omitting the needs of the state and local governments and schools. Surely a modest increase in the fracking tax is warranted and we hope those in the Ohio Senate agree.
OUR VIEW: Retreat on hike of fracking tax not in interest of Ohio citizens - Twinsburg Bulletin - An Ohio House vote that eliminates Gov. John Kasich's proposal to raise the state's tax on oil and gas generated by fracking is said to be a response to an industry lately depressed by the falling price of both. (same editorial as above)
Fracking, wastewater-injection wells raise Ohio’s quake risk, feds say - Columbus Dispatch: “When I used to show (seismicity) maps in my intro class, I’d say, ‘Ohio is about as earthquake-free as you get,’ ” Klemetti said. “Now, it has a bull’s-eye on it, at least to some degree.” That bull’s-eye, according to a recent U.S. Geological Survey report, is directly linked to hydraulic fracturing for oil and gas and to injection wells for fracking wastewater. The report was the survey’s first large-scale examination of the connection between earthquakes and oil and gas extraction. Geologists identified 17 regions across the country, including the area around Youngstown in northeastern Ohio, that are at higher risk of earthquakes because of oil and gas activities. . This increased seismic activity, the report’s authors say, is directly linked to injection wells, where fracking wastewater is pumped underground at high pressure. Oil and gas activities have created hundreds of earthquakes in Oklahoma, Texas, Arkansas and Ohio, the report found. Connecting fracking and earthquakes is not new. A team of Miami University researchers published a study this year that linked nearly 80 quakes in Mahoning County to nearby oil and gas operations, and the Ohio Department of Natural Resources — the state agency that oversees oil and gas in Ohio — also has said that oil and gas operations can cause earthquakes. Another team of researchers published a report last year arguing that fracking triggered hundreds of small earthquakes on a previously unmapped fault in Harrison County in 2013. And although fracking-related earthquakes strong enough to be felt by people are more common in Oklahoma than Ohio, the survey warned that parts of Ohio are at risk of more-frequent temblors. Last year, nearly 25 million barrels — more than 1 billion gallons — of fracking wastewater were pumped into about 200 injection wells in Ohio, according to Department of Natural Resources records.
Deference to fracking demands shake-up - Joe Blundo: If you didn’t read the story about fracking and earthquakes by my colleague Laura Arenschield in the Monday edition of The Dispatch, I’ll take you right to the most amazing quote from a quake researcher: “Before they do the wastewater injection, they should study the geology a lot more. . . . But that’s tough because a lot of these (injection wells) are mom-and-pop operations.” Pardon me for shouting, but MOM-AND-POP OPERATIONS! We’re allowing Fred’s Bar, Grill & Wastewater Injection Well to do something that causes earthquakes? Can you imagine another industry being treated with the deference that the oil-and-gas industry is shown in Ohio? I mean, if we had evidence that, say, beauty salons were triggering mini-tornadoes with their hair dryers or that craft brewers were causing minor floods (beer sends people to the bathroom, you know), might not state officials be a bit quicker to intervene? But Leroy’s Deli & Fracking Disposal makes the ground shift beneath our feet, and we’re told not to become overly alarmed. Sheesh. So here’s the background: Oil and gas activity, according to a recent U.S. Geological Survey report, is directly linked to hundreds of earthquakes in Ohio (mostly around Youngstown) as well as Arkansas, Oklahoma and Texas. The quakes linked to fracking have been small and with no damage, the report said. The bigger quakes are thought to have been triggered by the injection of fracking wastewater deep into the ground, it said. How big? Here is what the USGS said: “It does appear that wastewater disposal induced the Raton Basin, Colo., earthquake in 2011 as well as the quake that struck Prague, Okla., in 2011, leading to a few injuries and damage to more than a dozen homes.”
Tensions rise over proposed pipeline in northeast Ohio - — Tensions surrounding a proposed underground pipeline are rising after property owners were told that surveyors for the project may enter their property without permission, homeowners said. A letter signed by project manager Walton Johnson said work on the Nexus gas transmission pipeline in northeast Ohio must be conducted without delay, The Medina Gazette reported. The letter indicated that if property owners hadn’t granted permission for property access by May 1 in order for surveyors to provide advanced notice, Nexus may enter properties without consent to perform necessary survey activities. The proposed pipeline would run through nine Ohio counties. The 200-mile corridor of 42-inch-diameter pipe would be capable of transporting as much as 2 billion cubic feet of natural gas per day, an amount that would meet the needs of around 20,000 homes per year. Gas from the pipeline would be made available to industry and to gas-fired power plants. While some have been fighting the pipeline since its introduction, some property owners say the letter has increased tensions. Paul Gierosky with the Coalition to Re-route Nexus, said people are questioning the demands of the letter and feeling threatened. Jon Strong, also with the Coalition to Re-route Nexus and a recipient of the letter, called the pipeline fight an “ugly process.” “My fear is that it’s going to escalate,” he said. “People just have a feeling no one’s listening to them.”
Belmont County residents worried about fracking near reservoir - From a press release today: Citizens Send Mayday Message to State Officials Regarding Fracking Threat to Water Supply – More than 2,300 citizens served by Slope Creek Reservoir in Belmont County and supporters signed their names to a petition to protect the water supply from risks associated with shale gas development (AKA fracking), and stop Gulfport Energy Corporation’s plans to place multiple well pads as close as 500 feet from the reservoir. Activists with the citizens’ group “Concerned Barnesville Area Residents” (CBAR) compiled the petition, which was delivered to the offices of Governor John Kasich, Ohio Department of Natural Resources (ODNR) Director James Zehringer, ODNR Division of Oil and Gas Chief Rick Simmers, and Ohio Environmental Protection Agency Director Craig Butler on May 1. The Slope Creek Reservoir, located outside the village of Barnesville, provides 82% of the drinking water for nearly 10,000 people in the Barnesville area, including nearby communities of Quaker City, Somerton, Malaga, Jerusalem, and Beallsville. To date, two-dozen horizontal fracking wells are producing in the township where the reservoir lies, and 69 wells are producing across the county, according to the ODNR website. On average, over 10.7 million gallons of fresh water were used while drilling each of the wells in the deep-seated Utica shale in Belmont County, as calculated from data provided by fracfocus.
Dominion's SCO natural gas price drops to 34-year historic low - The price of natural gas has tumbled to a 34-year historic low for residential customers who buy their gas through a Dominion East Ohio supplier. Effective with bills on May 13, the monthly natural gas price for residential customers who have chosen Dominion’s Standard Choice Offer (SCO), or those who don’t choose their own supplier, will be $2.54 per thousand cubic feet (MCF). The identical SCO and Standard Service Offer (SSO) price will be 7 cents/MCF or 2.7 percent lower than April’s rate of $2.61/mcf. They are also $2.68/mcf or 51.3 percent lower than last May’s price of $5.22/mcf. But the new price is the lowest since May of 1981 when the Dominion price was $2.53/MCF for the price then called the Gas Cost Recovery (GCR) rate, said spokesman Neil Durbin. The highest price was $14.55/mcf in July of 2008. In. “You can see the market price impact of increasing domestic production from shale area in Ohio and neighboring states,” said Durbin. In addition, the formula to determine the monthly SCO price came in at a historic low of 2 cents/mcf above the closing price on the third to last day of the previous month on the New York Mercantile Exchange (NYMEX). That new formula began with April bills.
Chesapeake Energy to scale back Utica Shale drilling in eastern Ohio - Low prices for natural gas and related liquids are forcing Chesapeake Energy Corp. to cut into Ohio operations. The Oklahoma-based energy giant said Wednesday that its intends to scale back its drilling in the Utica Shale in the coming months, as profits drop and production continues to climb. Chesapeake will lower the number of drilling rigs in Ohio from five to two by the middle of the third quarter and will reduce the number of Ohio crews that hydraulically fracture, or frack, the rock from four to 2.5 for the rest of 2015, the company said in an earnings call with analysts and the media. Similar cuts are being made elsewhere, with some of the biggest reductions coming in the Eagle Ford Shale in Texas. The company needs to maintain two drilling rigs in order to hold onto its leased acreage in eastern Ohio. Chesapeake, the No. 1 player in the Utica Shale and No. 2 producer of natural gas in the United States, said it is has been very pleased with recent natural gas results in Columbiana County. Three wells recently completed there show significantly more potential than nine earlier-drilled wells, spokesman Chris Doyle said. The company is seeing a 50 percent improvement in production with the new wells, he said, and the company could expand its core area beyond neighboring Carroll County into Columbiana County. Chesapeake is continuing to expand its laterals in Ohio to produce better results, officials said. The company in 2012 averaged 4,900 feet per lateral. That grew to 5,150 feet in 2013 and to 6,200 feet in 2014. Laterals likely will average about 7,900 feet with 41 frack stages in 2015, about 27 percent longer than the previous year, officials said. Longer laterals with additional fracking pay out far more than shorter laterals, the company said. Extending Ohio laterals will cost Chesapeake more, however. It anticipates spending $8.2 million per well in 2015, up from $6.7 million in 2013 and $7.2 million in 2014. Chesapeake began production on 38 Utica wells in the first quarter. The average peak production of those wells was 1,272 barrels of oil equivalents per day.
Ohio infrastructure sees no slow down -- While oil and natural gas prices have affected the industry greatly, oil and gas companies in Ohio are still investing billions into new infrastructure. According to a report published by Bricker & Eckler LLP, a Columbus, Ohio-based law firm, investments in oil and gas infrastructure has increased by $6 billion since last fall. The increase is driven by the development going on in the Utica and Marcellus Shale Formations, which both happen to be extremely rich in natural gas. Bricker began keeping track of projects in October of 2013. Since then, over $28 billion in infrastructure projects have been announced. Even though exploration and production in Ohio is down when compared to last year, some areas of the industry are moving forward, such as pipelines. Although the projects won’t be online for a few more years, companies in the industry are hoping that by then oil and gas prices will have recovered. Matt Warnock, a Bricker attorney and co-chairman of its oil and gas group, commented on Ohio’s infrastructure: Even though there’s been kind of a pause button hit on the E&P side, the infrastructure is still going full-steam ahead.Warnock explained that the spending cutbacks and job layoffs that are occurring now have the potential to be beneficial in the future. He believes that the cutbacks will allow infrastructure projects to catch up with drilling operations.
Truck Driver Gets Fracked by Range Resources & Sues -- A West Virginia truck driver is suing Range Resources over claims that company employees ordered him to keep working in wet clothes for hours after he was splashed with flowback water at a Buffalo Township well site. Russell Evans of Triadelphia claimed he suffered chemical burns, blisters and rashes from the alleged incident May 21, 2013, at which time he was working for Equipment Transport LLC. During his second trip to the well site that morning, he backed his truck up to a “sloppy pond” used to store reused frack water and noticed that water was leaking from the back hatch of his tanker truck. He claimed he was doused with water when he attempted to stop the leak and was told by a Range employee the water would not harm him. He claimed he was ordered to stay on site until he was cleared to leave, which was about two hours later. He claimed an employee told him to “wash the water off at a nearby McDonald’s.” “Due to the fact that Mr. Evans was told the reused water was harmless, he remained in his wet clothes for several hours while he drove back to Equipment Transport LLC’s terminal in Dallas Pike, West Virginia,” the complaint alleged. “In total, Mr. Evans remained in these clothes for over four hours.” Evans said he went to MedExpress when he developed a rash and blisters and claimed that physicians told him he could not be treated without knowledge of the chemicals he may have been exposed to. The complaint alleges Range “kept the chemical makeup of the fracking fluid a secret.” He also was refused medical care at an emergency room in Wheeling a week after the alleged incident because of his inability to name the constituents of the water. In addition to skin ailments, he claimed he suffered nausea, shortness of breath, indigestion, vertigo and headaches, as well as potentially permanent skin discoloration and permanent sensitivity to sunlight.
Chevron sells more Marcellus land - While continuing the process of reorganizing its operations, Chevron Corp.’s Appalachia business group is putting 11,700 Marcellus Shale acres on the market. As reported by the Pittsburgh Business Times, “According to a listing on EnergyNet, Chevron is accepting sealed bids on the acreage in Clearfield and northern Cambria counties until May 21. The acreage, about 52 percent of which is held by production, includes six producing Marcellus wells.” Earlier this year, Chevron put 15,600 gross acres located in Cambria, Blair and Bedford counties on the market. Chevron’s spokesperson Brenda Cosola said that the company has decided to put the land up for sale because it is not part of the company’s main development area. Cosola added that even though the company is selling a large amount of its land in the Marcellus, it is still dedicated to the region: Chevron considers developing the Marcellus and Utica an important long-term opportunity and is committed to investing in its core development areas in the tri-state region. Chevron’s Marcellus and Utica Shale leases are mainly in southwestern Pennsylvania, eastern Ohio and the West Virginia panhandle, according to the company’s most recent 10-K filing. “Those areas, along with another shale play in Michigan, yielded an average net daily production of 269 million cubic feet in 2014.”
The 'monster' beneath the Marcellus -- Range Resources Corp. tested the shale well with the best ever initial flow rate in the Appalachian Basin and possibly the country in December in Washington County. But the “monster well,” as financial analysts called it, wasn’t hiding in the Marcellus. Production rates for wells, like Range’s, that have been drilled into Pennsylvania’s Utica Shale — the lesser known cousin of the Marcellus that can run a mile deeper than its kin — have been raising eyebrows in recent months. Activity in the Utica is generally focused in Ohio, where the shale produces oil and wet gas that contains valuable hydrocarbons like ethane and propane along with methane, the primary component of natural gas. Still, some companies have also been prospecting for wet Utica gas in Lawrence, Mercer and other Western Pennsylvania counties. But recently operators have reported remarkable production results for dry gas — mostly methane — from wells hundreds of miles east of the heart of Utica development in Ohio. In September, Royal Dutch Shell announced two Utica discovery wells in Tioga County in northeastern Pennsylvania, far from where the Utica was thought to be most productive, that were comparable to the best Utica wells in southeastern Ohio. One of the wells had a peak flow rate of 26.5 million cubic feet per day of natural gas (MMcf/d) . For context, the median initial flow rate for Pennsylvania Marcellus wells was 5 MMcf/d in mid-2013, according to a Morningstar report released last year. Though it’s not unusual for rates to exceed that median.
API study says a Marcellus severance tax would hinder shale development -- An advocacy group for the oil and gas industry released a study Thursday that found a shale gas tax proposed by Pennsylvania Gov. Tom Wolf would mean fewer new wells, less gas and lost jobs in the commonwealth over the next decade. The study for the Associated Petroleum Industries of Pennsylvania, the state division of the American Petroleum Institute, found that the severance tax proposed by Mr. Wolf would lead to 1,364 fewer wells, nearly 18,000 fewer jobs in fields supported by the industry and 2.86 trillion cubic feet less natural gas produced in the state by 2025 compared to projected levels without the tax. A spokesman for the governor said the study is misleading and its conclusions have no merit. Mr. Wolf has proposed a 5 percent tax on the value of gas and natural gas liquids produced from shale wells, plus 4.7 cents per thousand cubic feet (Mcf) on the volume of the natural gas. His proposal sets a $2.97 per Mcf minimum value for shale gas, regardless of the actual sale price.. Mr. Wolf wants to use the money from the tax to fund education and environmental protection programs, while maintaining funding for communities that host wells at roughly the same level they are expected to receive this year from the current impact fee that companies pay based on the number of wells they drill.
Three drillers post losses despite higher production -- While three major players — Chesapeake Energy, Gulfport Energy and Rex Energy — reported increases in production during the first quarter of 2015, they also all posted losses in revenue. All three cited lower commodity prices.The companies outlined their quarters, and discussed plans for the rest of 2015, in investor conference calls Wednesday. Chesapeake Energy saw a 14 percent increase in production in the first quarter of 2015, with an average production of approximately 686,000 barrells of oil equivalents per day. However, Chesapeake posted a net loss available to common stockholders of about $3.8 billion, compared to a net income of $374 million in the first quarter of last year. In the Utica Shale, Chesapeake production averaged approximately 110 million barrels of oil equivalent per day in the first quarter, up 10 percent. The company plans to scale down its operations in the region, going from five drilling rigs and four fracking crews currently to two rigs and two and a half crews by the end of the year. Gulfport Energy more than doubled production in the first quarter of 2015, compared to the same period last year to 424.4 million cubic feet equivalent per day. That’s a 161 percent increase from the first quarter of 2014 and an 11 percent increase from the final quarter of last year. Gulfport reported an adjusted net loss of $7.2 million in the first quarter, despite a profit of $25.5 million. In the Utica Shale, Gulfport began drilling operations at 16 wells and began producing at eight wells during the first quarter. Rex Energy, based in State College, Pa., produced an average of 196.2 million cubic feet equivalent per day during the first quarter ending March 31, up 61 percent from the same quarter last year. But Rex posted first quarter net losses attributable to shareholders of $20.2 million. Rex had losses of $71.7 million in the fourth quarter of 2014 and $49 million for the year.
Is This The Top For Oil Prices For Now? -- E&P earnings are coming in and the impression we’re left with is that natural gas investment in Marcellus is being reduced, while oil overall appears to be incrementally ramping up versus prior guidance. Also, production overall for 1Q15 has exceeded sell side expectations as well, as reported by many public companies. Noble (NBL) reported that it’s cutting investment in the Marcellus by some $200M in response to the Nat Gas price crash. This is on top of prior production reductions at Chesapeake (CHK) & Range Resources (RRC). However, the Ponzi game in shale oil, having to continuously drill to replace 80% 12 month decline rates in existing production and having to burn yet more cash in doing so, is continuing to push production higher. Devon Energy (DVN) raised production some 5% while Pioneer Resources (PXD) hinted that, if prices recover, they may add 2 rigs starting in July 2015 and, in their words, production in 2016 could return to double digits. If you are expecting oil to cover above $70, we caution you on such expectations at least in the shorter term. Firstly, although the weaker dollar is a reflection of a much weaker underlying economy than reported in headline economic and talking head media, it will still help some. However, weaker economic growth in the US as well as, in all likelihood, the failure of QE in Europe as well as China, will ultimately weigh on demand. Secondly, the private equity monies sloshing around (some $50B) will also allow these broken shale models to continue versus allowing the market to efficiently bankrupt the weaker producers while rewarding the strong ones while overall reducing output. In addition, lease operating expenses appear poised to fall 10% which, on top of reduced capital expenditure costs, will also reduce financial pressure on weaker players even more.
Study: Trace amount of drilling fluid found in water wells -- A new study says toxic fluids used in drilling and hydraulic fracturing likely escaped an unlined borehole and migrated thousands of feet into residential drinking-water wells in Pennsylvania. At least three wells were contaminated with dangerous levels of methane and other substances in 2010. The incident was one of several involving Chesapeake Energy that prompted state regulators to levy a record $1 million fine against the driller. Penn State University researchers say they detected minute amounts of a chemical compound often found in drilling and fracking fluids. Their study was published Monday in the Proceedings of the National Academy of Sciences. The study does not implicate the fracking technique itself. Researchers say the toxic fluid probably escaped the gas well while it was being drilled.
Fracking Chemicals Found in Drinking Water, New Study Says - Yesterday a new study was published in the Proceedings of the National Academy of Sciences, which analyzed drinking water taken from three homes in the heart of the shale fields in Pennsylvania. And they found what the industry’s critics will argue is damning evidence: traces of a compound commonly found in Marcellus Shale drilling fluids. The scientists believe they have answered one of the outstanding issues surrounding fracking and water pollution, by outlining a series of events by which the fracking chemicals could have contaminated the water. In 2012, the scientists collected drinking water samples from the households and subsequent analysis in one of the samples found 2-Butoxyethanol or 2BE, a common drilling chemical which is also a potential carcinogen. And they believe they know how this chemical has ended up in the drinking water. “This is the first case published with a complete story showing organic compounds attributed to shale gas development found in a homeowner’s well,” Susan Brantley, one of the study’s authors and a geoscientist from Pennsylvania State University told the New York Times. Brantley added that: “These findings are important because we show that chemicals traveled from shale gas wells more than 2 kilometers (1.25 miles) in the subsurface to drinking water wells.” The scientists believe that the pollution may come from a lack of integrity in the well which passes through the drinking aquifer and not the actual fracking process below.
Fracking Chemicals Detected in Pennsylvania Drinking Water --An analysis of drinking water sampled from three homes in Bradford County, Pa., revealed traces of a compound commonly found in Marcellus Shale drilling fluids, according to a study published on Monday. The paper, published in the Proceedings of the National Academy of Sciences, addresses a longstanding question about potential risks to underground drinking water from the drilling technique known as hydraulic fracturing, or fracking. The authors suggested a chain of events by which the drilling chemical ended up in a homeowner’s water supply. “This is the first case published with a complete story showing organic compounds attributed to shale gas development found in a homeowner’s well,” said Susan Brantley, one of the study’s authors and a geoscientist from Pennsylvania State University. The industry criticized the new study, saying that it provided no proof that the chemical came from a nearby well. In 2012, a team of environmental scientists collected drinking water samples from the households’ outdoor spigots. An analysis showed that the water in one household contained 2-Butoxyethanol or 2BE, a common drilling chemical. The chemical, which is also commonly used in paint and cosmetics, is known to have caused tumors in rodents, though scientists have not determined if those carcinogenic properties translate to humans. The authors said the amount found, which was measured in parts per trillion, was within safety regulations and did not pose a health risk.Dr. Brantley said her team believed that the well contaminants came from either a documented surface tank leak in 2009 or, more likely, as a result of poor drilling well integrity.
Study links foam in water wells to shale well sites: White foam in northeastern Pennsylvania water wells likely was caused by Marcellus Shale gas well sites that have already been blamed for causing natural gas to infiltrate residential water supplies, a paper published by the journal Proceedings of the National Academy of Sciences reported on Monday. Environmental consultant Garth Llewellyn and biochemistry and geosciences researchers with Penn State University used a novel method to identify low levels of organic compounds that they said likely explain foaming from three water wells in Bradford County between 2010 and 2012. Test results from commercial laboratories during investigations at the sites had not picked up on what was causing the foaming — they reported no unsafe levels of compounds other than natural gas in the water, while other compounds, like glycols and surfactants, had appeared inconsistently or at barely detectable levels. The same or similar organic compounds that the researchers traced in the water, including 2-n-Butoxyethanol, or 2-BE, are known to be used in drilling and hydraulic fracturing additives or to appear in waste fluids from oil and gas operations. The researchers said it is impossible to “prove unambiguously” that the contaminants in the water came from shale gas-related activities because they were unable to secure samples of fluids that were used at or near the well site. But they said that multiple strands of evidence, including timing, well construction problems and the presence of matching compounds in both shale fluids and the water wells, make shale activity “the most probable source.”
In Pennsylvania, Fracking Is Most Likely To Occur In Poor Communities -- As campaign director for the Sierra Club’s natural gas reform campaign, Deb Nardone goes to the places where fracking is prolific, speaking to affected families. When she’s in Pennsylvania, she’s most often in poor, rural townships — like Dimock, in Susquehanna county. “There’s one family we met with where she turns her tap water on and it’s brown, spewing, smelling — she never had any water issues before they began fracking a well so close to her home,” Nardone told ThinkProgress. “The industry is saying they’re not responsible.” Whether the industry is responsible or not, new research makes it clear: If you see a fracking site in Pennsylvania, chances are it’s in a poor, rural community. In a study published in the June issue of Applied Geography, Clark University scientists showed that when it comes to potential pollution exposure from fracking, “the poor are the most affected population group.”“Our analysis shows that environmental injustice was observed only in Pennsylvania, particularly with respect to poverty,” the study reads. “In seven out of nine analyses, potentially exposed tracts had significantly higher percent of people below poverty level than non-exposed tracts.” The petroleum industry says this is a good thing — not the potential pollution exposure (which it disputes), but the fact that fracking operations are located in poorer, more rural communities.According to Massaro, fracking is able to provide income for these communities — not just with jobs, but with tax incentives and fees set by the state of Pennsylvania. Specifically, Massaro mentioned “impact fees,” a sort of tax imposed on the natural gas industry, where the money goes directly back to affected communities.
Fracking the Poor --Poor in Pennsylvania? You’re fracked. Fracking wells in Pennsylvania’s Marcellus Shale region are disproportionately located in poor rural communities, which bear the brunt of associated pollution, according to a new study. Penn State/flickr Nancy Adams from Penn State’s University Libraries touches residue leftover from drilling at the Marcellus Shale drilling site The study bolsters concerns that poor people are more likely to deal with hydraulic fracturing in their community and raises concerns that such vulnerable populations will suffer the potential health impacts of air and water pollution associated with pulling gas from the ground.“This trend is not one we’re surprised by, we see this in a lot of industries,” said Mike Ewall, founder and director of Energy Justice Network, a nonprofit organization that works with U.S. communities dealing with pollution from energy.However industry groups say hydraulic fracturing is in rural farming regions of Pennsylvania out of necessity and is providing some much needed economic stimulus. Researchers from Clark University mapped areas in Pennsylvania, West Virginia and Ohio to identify areas with a lot of Marcellus Shale hydraulic fracturing wells and then examined some local demographics: age, poverty and education levels, and race.The Marcellus Shale is a large rock formation — almost 95,000 square miles — that stretches across parts of New York, Pennsylvania, Ohio and West Virginia and holds trillions of cubic feet of natural gas. It’s experienced a surge of drilling as techniques have advanced. The most common method, hydraulic fracturing or “fracking”, works by drilling and injecting fluid at high pressure, which fractures rocks and releases the natural gas.One thing was clear from the Clark University study: poverty levels are strongly associated with active fracking wells in Pennsylvania.
Proposed rule on noise limits for oil, gas sites in Pa. pleases none - Gas industry leaders and fracking critics in Pennsylvania have found common ground in their views on one aspect of proposed environmental regulations for drilling: A rule aimed at limiting noise from sites is too vague to be effective. The state Department of Environmental Protection is proposing noise regulations for oil and gas sites as part of its rewrite of surface rules around wells. They would require companies to record noise levels and formulate a plan to keep them down for neighbors. But the proposal introduced last month does not specify a decibel limit or how to monitor levels. “Right now the regulation is unenforceable because there’s no objective standard,” said George Jugovic, general counsel for Penn Future, an environmental group that has lobbied for tougher regulations for the oil and gas industry in the state. “How do you determine that someone has minimized the noise?” The DEP did not include specific decibel limits or standards for how far noisy equipment must be from neighbors because they are too difficult to enforce, said Scott Perry, deputy secretary for the department’s Office of Oil and Gas Management. “All of the various situations that this issue could arise in make it a little too difficult to simply throw down a solid number, an objective standard,” he said. The regulation would require companies to follow standards that the department is writing for noise around well pads and compressor stations, and will make them available to companies when the rules become final next spring. Violating the standards can result in the state’s revoking a permit. Enforcement will be largely complaint-driven, Perry said.
Anti-frack activist is officially barred from gas sites - While causing trouble for Cabot Oil & Gas for years, the time has come where anti-frack activist Vera Scroggins’ time in the limelight may be over. After appearing in court for standing too close to one of Cabot’s sites, receiving a $1,000 fine and the possibility of jail if the fine is not paid, Scroggins has received a new court order barring her from the company for good. The court order makes her previous temporary injunction from 2013 permanent. The order required her to stay off of Cabot’s sites and follow the 25 to 100 foot buffer zone. In response to the new court order, Scroggins says she plans to bring it back into court and fight it. Last fall, Scroggins first agreed to the restrictions but then changed her mind and never signed the final document. However, Cabot argued the matter in court and stated that her signature was not required considering the judge sided with the company. The judge also found that Scroggins gave her attorneys permission to agree to the deal on her behalf, which did not help support her case. As reported by State Impact Pennsylvania, “The Houston, Texas-based company is the largest driller in Susquehanna County. It has aggressively pursued legal action against Scroggins, a 64-year-old retiree and self-described ‘gas tour guide.’ Cabot says she has routinely trespassed on its property and poses a safety risk. Scroggins often brings journalists, politicians, and onlookers to drilling sites. She videotapes her encounters and documents the company’s environmental violations.” Despite having so much evidence against Scroggins, the company has not once been able to prove that Scroggins has caused any harm to its oil and gas operations.
Fuzzy Fazzary won't stick to deal: Charges Won’t Be Dropped For 84 Crestwood Protesters The Schuyler County district attorney has decided not to dismiss trespass charges against 84 protestors arrested at the gates of Crestwood Midstream Partners, We Are Seneca Lake said Thursday.Those protesters were part of a civil disobedience campaign organized by We Are Seneca Lake in opposition to plans by Crestwood to expand natural gas storage and add liquefied petroleum gas storage on the lake’s western shore.District Attorney Joseph Fazzary rescinded his support for dismissing charges against the 84 protesters that was to take place Thursday, We Are Seneca Lake said. Earlier, Fazzary, along with local judges, dropped charges against 60 protesters “in the interests of justice,” the group said. A month ago, he agreed to dismiss charges against the 84 additional Seneca Lake protesters, the group said.“We understand that the district attorney says that he has withdrawn the promised offer because 19 new community members blocked the gates of Crestwood in a peaceful act of civil disobedience on Earth Day (April 22),” the group said in a news release. Those 19 protesters, ages 49 to 76, had not been arrested before and were not part of the dismissal agreement, the group said.
Energy Pipeline: In New York state, fracking ban fuels secession talk - From this village of dairy farms and friendly diners, Carolyn Price can see across the border into Pennsylvania, and it is a bittersweet view: towns brimming with money extracted from the gas-rich Marcellus Shale, where the high-pressure drilling method known as hydraulic fracturing, or fracking, has spurred an economic boom. It is a different story here on the New York side, where Gov. Andrew Cuomo in December declared a statewide ban on fracking — one of only two in the country — saying he was not convinced it is safe. The national debate over fracking, which critics say can pollute groundwater and endanger public health, heated up last week when the Obama administration announced the first-ever federal regulations on the practice. But nowhere is fracking as heated an issue as in the stretch of New York known as the southern tier, where Cuomo’s ban has spurred talk of secession. Political leaders like Price, Windsor’s town supervisor, say secession is not such a farfetched idea, and they are gathering feedback from constituents to see whether there is support for a breakaway movement. “The natural gas is the only thing that’s truly going to save this area,” Price said. Windsor is one of about 15 towns in New York’s southern tier where secession is being eyed, if not as an attainable goal than as a radical proposal aimed at grabbing state lawmakers’ attention and forcing them to take notice of the region’s desperation.
Judge Halts Work On Maryland Pipeline Due To Environmental Concerns - Construction on a natural gas pipeline set to run through Maryland has been halted after a judge found that the state hadn’t done enough to protect the environment and hadn’t given residents enough of a chance to weigh in on the project. Baltimore County Circuit Court Judge Judge Justin J. King ruled last week that the Maryland Department of the Environment (MDE) must go back and revise the permit it issued for the 21-mile pipeline, which is being constructed by Columbia Pipeline Group and is slated to run through Baltimore and Harford counties. According to the judge’s ruling, the permit’s water safety requirements were too general, “rendering it impossible for this court to determine whether the permit complies with state and federal water quality regulations.” In addition, King wrote, the permit didn’t allow enough time for public input, and there wasn’t enough evidence that Maryland took a close enough look at how the project would affect historic sites. Construction on the pipeline, which is about halfway complete, has been temporarily halted. It will only resume after the state revisits the permit or, in the case of an appeal, if the ruling is overturned. Environmentalists in Maryland, who have been warning of the danger the pipeline poses to the state’s waterways, applauded the judge’s move. The pipeline, as it’s permitted, would cross over 70 streams. Thirty-nine of those streams feed into the Loch Raven Reservoir, which provides water to most of Baltimore County, including the city of Baltimore.
Carolinas clear first proposals for offshore oil surveys — State regulators in both Carolinas have signed off on proposals by companies to conduct seismic testing for oil and natural gas off the Atlantic coast, subject to some conditions. The South Carolina Department of Health and Environmental Control last Friday certified a proposal by Spectrum GEO. Earlier the North Carolina Department of Environment and Natural Resources certified proposals for surveying by both Spectrum and GX Technology. The companies have applied to the federal Bureau of Ocean Energy Management for permits to use seismic air guns to survey for oil and natural gas off the Atlantic coast. While state waters extend only 3 miles from the shoreline and the testing will be done in federal waters much farther offshore, each state was allowed to certify whether the testing is consistent with state coastal zone programs. Conservation groups have said air guns that send sound waves through the water could harm right whales and sea turtles and is inconsistent with the state programs.
Injection well permitted but not built near Michigan earthquake epicenter, DEQ says -- A Denver-based company recently filed two permit applications to build wastewater injection wells at an oilfield near the epicenter of the May 2 earthquake in Kalamazoo County, but a well has yet not been built, according to state officials. Wastewater injection wells used in hydraulic fracturing, also known as fracking, have been associated with small earthquakes in other states, including Ohio, Oklahoma and Colorado. However, yet another scientist said Thursday that close examination of the earthquake data provides further evidence it was not induced by oil or gas drilling. "Quakes are so rare in Michigan, I was initially concerned" there might be such a link, said Michael Brudzinski, a geophysics professor at Miami University in Ohio who has extensively studied seismic activity related to fracking. But in examining the quake data, he said, it is clear "this looks like very normal plate tectonics. ... People in Michigan should not be worried." The 4.2-magnitude quake originated about 12 miles southeast of Kalamazoo in the rural community of Scotts. The epicenter is about three miles from Pease Farms, where Axia Energy of Denver recently installed three oil wells.
Michigan earthquake not caused by fracking, scientists say - -- The state official who oversees regulation of oil and gas wells says he is certain that Saturday's earthquake in Kalamazoo County is unrelated to fracking or other drilling in the area. "I am extremely confident there is no connection," said Hal Fitch, a geologist who is director of the Michigan Department of Environmental Quality's Office of Oil, Gas, and Minerals.That opinion is echoed by David Barnes, professor of geosciences at Western Michigan University."I'm as certain as a scientist can be" that there is no connection, Barnes said.Hydraulic fracturing -- also known as fracking -- is a process that involves pumping water at high pressure to create fractures in Class II wells are those associated with oil and gas development. Scientists, including those at that the U.S. Geological Survey, recently have connected an increase in seismic activity to high-pressure injection wells used to dispose of wastewater that is the byproduct of fracking. The link has been seen in Colorado, Texas, Arkansas, Oklahoma and Ohio. However, Fitch and Barnes said the earthquake here appears to be a natural phenomena versus one induced by human activity. "The nearest hydraulic fracturing activity is more than 50 miles away and took place several years ago," Fitch said.
California Farmers Are Watering Their Crops With Oil Wastewater, And No One Knows What’s In It -- As California farmers face a fourth year of the state’s historic drought, they’re finding water in unexpected places — like Chevron’s Kern River oil field, which has been selling recycled wastewater from oil production to farmers in California’s Kern County. Each day, Chevron recycles and sells 21 million gallons of wastewater to farmers, which is then applied on about 10 percent of Kern County’s farmland. And while some praise the program as a model for dealing with water shortages, environmental groups are raising concerns about the water’s safety, according to a recent story in the Los Angeles Times. Tests conducted by Water Defense, an environmental group founded by actor Mark Ruffalo in 2010, have found high levels of acetone and methylene chloride — compounds that can be toxic to humans — in wastewater from Chevron used for irrigation purposes. The tests also found the presence of oil, which is supposed to be removed from the wastewater during recycling. “All these chemicals of concern are flowing in the irrigation canal,” Scott Smith, chief scientist for Water Defense, told ThinkProgress. “If you were a gas station and were spilling these kinds of chemicals into the water, you would be shut down and fined.” Chevron, which produces around 70,000 barrels of oil and 760,000 barrels of water each day at the Kern River oil field, has been selling water to farmers in the surrounding area for two decades. But government authorities have never required that water to be tested for chemicals used in oil production — only naturally occurring toxins like salts and arsenic. And even those standards are “decades-old,” according to the Los Angeles Times.
Oil Companies Are Injecting Industrial Waste Into California’s Water Supply. Now It’s Being Sued. -- Against the backdrop of California’s historic drought, two environmental groups filed a lawsuit Thursday demanding that the state stop allowing oil industry wastewater to be injected into protected, clean aquifers. In response to an investigation showing the California Department of Conservation has been allowing oil companies to inject waste into clean water sources for years, the department, named in the suit, only issued a “emergency rulemaking action” that allows the wastewater injections to continue until 2017. The lawsuit by the Sierra Club and the Center for Biological Diversity asks that the action be invalidated and that the Division of Oil, Gas, and Geothermal Resources be forced to immediately stop the continued wastewater injections. “Everyone agrees they are illegally operating injection wells,” Center for Biological Diversity attorney Hollin Kretzmann told ThinkProgress. “The Safe Drinking Water Act is clear and prohibits this type of activity.” Wastewater from oil and gas drilling can contain heavy metals, radioactive material, and chemicals like arsenic and benzene. Injection wells, where toxic substances are pumped deep underground, have been used for hazardous material disposal for decades, but an investigation by ProPublica in 2012 found that “structural failures inside injection wells are routine” and pose a tremendous health risk. The state division responsible for regulating injection wells denies that the approximately 2,500 improperly-permitted wells pose a risk.
EOG Resources to resume fracking if oil hits $65/barrel – Oil and natural gas producer EOG Resources Inc plans to begin fracking hundreds of wells in North Dakota and Texas later this year if oil prices stabilize around $65 per barrel, executives said on Monday after reporting a better-than-expected adjusted profit. EOG was the latest major U.S. shale oil producer to peg increased operations to a specific dollar amount, a positive sign for an industry worried that last year’s price drop would permanently cripple growth. Whiting Petroleum Corp said last week it would add drilling rigs to its portfolio if crude prices rise to $70 per barrel, and Pioneer Natural Resources Co told Reuters last month it was considering adding new rigs this year as West Texas Intermediate (WTI) prices rebound. EOG, considered a leader in the U.S. shale oil industry, has for months drilled new wells only to keep them idle by delaying fracking, part of a strategy to hold back pumping some crude after a roughly 40 percent drop in prices since last summer. Crude prices have inched up in the past month. EOG executives said Wall Street should expect the company’s 2015 production to resemble the letter “U” – falling in the first half of the year, then rebounding in the second half and hitting double-digits by next year.
How America's biggest swamp could become fracking wasteland - — In the heart of Louisiana’s Cajun country, plans for a new facility have sparked fears among Belle River residents that they too will have to deal with increased traffic, pollution and a discovery that there might be little anyone can do to stop it. It is a situation that has set off a fierce dispute, as well as highlighted a national issue of how big business can sidestep rejections of their plans. One hundred miles west of New Orleans, Belle River is considered the gateway to the Atchafalaya Basin, the largest wetland in the U.S. The area is famous for its plentiful seafood and cypress-tupelo swamps. "This is no place to dispose of toxic chemicals," said Dean Wilson, the head of the Atchafalaya Basinkeeper grassroots environmental group. But that is precisely what FAS Environmental Services has done since the mid-1980s. The company receives industrial waste from processes ranging from conventional oil drilling to hydraulic fracturing, also known as fracking. The waste can often contain high concentrations of methanol, chloride, sulfates and other substances. “Produced water,” the industry’s name for waste from fracking sites, can also contain toxins like benzene and xylene. The waste comes on truck and barge to an existing FAS transfer station close to the Hines residence, inside the flood protection side of the levee. It is then transferred onto a shuttle barge for a 2-mile trip on the Intracoastal Waterway to the company's injection well, where it is pumped at high pressure deep below the surface into rock formations where it is meant to permanently remain. Now FAS wants to build a new facility directly across the waterway from the injection well. Its plan requires a pipeline to be built under the Intracoastal Waterway, connecting the new facility to the injection well, allowing waste to be moved under the waterway and eliminating the need for the current shuttle barge system.
North Texas derailment leaves 4 BNSF Railway workers hurt - (AP) — A freight train has derailed in North Texas during stormy weather leaving 17 cars off the tracks and four crewmembers slightly hurt. BNSF Railway spokesman Joe Faust says the derailment happened early Friday near Valley View, 50 miles northwest of Dallas. Four engines and 13 cars derailed. Faust says the southbound train was hauling a variety of freight to the Fort Worth area, but no hazardous materials. Nothing spilled. He says four crewmembers were transported to a Denton hospital for observation with injuries not believed to be life-threatening. Faust says strong winds were reported in the area. He says authorities are trying to determine whether the gusts and high water contributed to the derailment. Standing water was seen near the tracks.
Denton Gas Well Burns After Lightning Strike -- A gas well exploded and burned late Thursday night after an apparent lightning strike during severe weather which moved through North Texas. It happened at about 10:00 p.m. at a Vantage Energy site in Denton. The site had been used for gas drilling, but was shut down due to low production. Vantage Energy spokeswoman Nancy Farrar said that it was “not a producing well,” and confirmed that lightning was believed to be the cause of the fire. A second gas well at an adjacent site was producing, but Vantage Energy workers and Denton Fire Department officials were able to close it off so that the fire did not spread. Emergency crews decided to let the fire burn itself out, a process that lasted until about 2:30 a.m. on Friday morning. The site is located north of Highway 380 in Denton, and flames from the fire could be seen from Interstate-35. Officials shut down the interstate’s service road in an effort to ensure the safety of drivers. There were no injuries reported throughout this incident. Vantage Energy workers on Friday, with help from state and local agencies, will begin cleaning up the mess that was left from the lightning strike and fire.
No injuries in natural gas well fire in Denton, blaze out — A natural gas well fire in North Texas has been put out as authorities try to determine whether lightning sparked the blaze. Denton city spokeswoman Lindsey Baker says firefighters extinguished the blaze early Friday. Nobody was hurt. Baker says authorities received word of the well fire shortly before 10 p.m. CDT Thursday. Storms were in the area at the time. She says eyewitness reports indicate a lightning strike may have started the fire, which burned more than four hours before being put out. Fire department officials monitored air quality at the site.
Denton fracking bill sails through Texas Senate - With little discussion, the Texas Senate approved a bill Monday limiting municipal control over oil and gas drilling and prohibiting any city from banning fracking. The Senate voted 24-7 for House Bill 40 — also known as the Denton fracking bill. It reasserts state control over drilling while spelling out some limited powers that cities have in regulating surface operations. The bill will now go to Gov. Greg Abbott’s desk for his signature. The push for the bill came after Denton residents approved a ban on hydraulic fracturing in November. Sen. Troy Fraser, chairman of the Senate Natural Resources and Economic Development Committee, avoided attempts to amend the bill in committee and on the Senate floor. The bill underwent a careful and sometimes contentious rewrite in the House before being adopted 122-18. Lawmakers have said that the bill is necessary to clarify state and local regulations and prevent a statewide patchwork of unreasonable ordinances that would threaten oil and gas production. The fight over who controls urban drilling began after Denton residents approved a ban, not on all drilling but simply on hydraulic fracturing. A grassroots group felt that the city and the Texas Railroad Commission, which regulates the industry, were not doing enough to protect them.
Texas Passes Ban on Fracking Bans (Yes, You Read that Right) -- The Texas state legislature voted yesterday to ban fracking bans. Ever since the people of Denton, Texas voted to ban fracking last November, state lawmakers in cahoots with the oil and gas industry and the American Legislative Exchange Council, or ALEC, have attempted to strip municipalities like Denton of home rule authority to override the city’s ban. In response, citizens banded together to form Frack Free Denton to fight for home rule. The group has put together a powerful film, which premieres on Friday, documenting their fight to ban fracking within city limits in the heart of oil and gas country. The vote comes despite recent findings by a team of researchers from Southern Methodist University that linked the earthquakes in one area of Texas, which did not have earthquakes prior to the fracking boom.. Marketplace′s Kai Ryssdal and Scott Trang discuss Texas’s ban and other states considering similar bills. “The bill would provide what’s called state preemption and that is state law here would trump anything that local jurisdictions, cities and towns pass,” says Trang. A similar bill, in Oklahoma, passed one chamber. “The sponsor of that bill said he wants to ‘get ahead of what we’re seeing in other states,'” reports Trang. Ryssdal asks if there is a group connecting all these state lawmakers. Trang’s response? You guessed it: ALEC. Listen to the full story here:
Energy rich states move to quash local limits on drilling - Lawmakers in Texas and energy producing states across the nation are rushing to stop local communities from imposing limits on oil and gas drilling despite growing public concern about the health and environmental toll of such activities in urban areas. The slump in oil prices that has led to job losses in the oil patch has only added to the urgency of squelching local drilling bans and other restrictions the industry views as onerous. The number of jobs nationwide in the sector that includes energy production has fallen 3.5 percent since December, and Texas alone lost about 25,000 jobs in March, according to federal data. A half dozen states — Texas, Oklahoma, Ohio, Pennsylvania, Colorado and New Mexico — have imposed or grappled with the issue of putting limits on local municipalities' ability to regulate drilling or hydraulic fracturing, a practice of blasting huge volumes of water and chemicals underground to release tight deposits of oil and gas. And two of the biggest energy producers in the nation, Texas and Oklahoma, are poised to ban cities and towns enacting any ordinances considered unreasonable to energy exploration, including limits on fracking, water disposal, well maintenance and other activities. The backlash against local bans represents the third phase of the U.S. shale boom. In the last decade, fracking spawned a massive expansion in drilling that pushed the United States to the number one oil and gas producer in the world. Cities responded to environmental and health concerns by passing restrictions. Now, state lawmakers are stepping in to shut down the groundswell of local activism in order to keep the energy expansion rolling.
Details of the debate in US states on oil drilling, fracking - Following is a summary of state debates. In Texas, which leads the nation in oil and natural gas production, a measure to limit local regulations to those deemed "commercially reasonable" has passed the Legislature and is expected to be signed into law by Republican Gov. Greg Abbott. The Oklahoma House approved a wide-reaching bill last month that prohibits cities and towns from banning oil and natural gas drilling, or implementing restrictions that are not "reasonable." On the other side of the issue, New York state banned fracking statewide in December. In Pennsylvania, after fracking in the Marcellus Shale deposit began booming in 2008, the Legislature imposed a 2012 law restricting the ability of municipalities to dictate the location of drilling activity. The law was struck down by the state Supreme Court last year. After some Ohio cities passed municipal bans, that state's Supreme Court recently ruled the opposite, finding that the state had exclusive authority over all aspects of oil and natural gas drilling, including fracking. Colorado state law prohibits local ordinances that ban energy exploration such as fracking, but some towns have imposed them anyway, sparking lawsuits. Fracking opponents last year attempted to put a measure on the election ballot stating that cities and counties could impose limits. The state's Democratic governor got the opponents to drop the measures with the promise of a task force to look at the question. When New Mexico's Mora County imposed a ban on oil and gas development that was eventually struck down in federal court, state lawmakers responded with four bills designed to prevent future bans — though none passed.
Magnitude-4.0 quake between Mansfield, Venus is biggest yet -- A magnitude-4.0 earthquake shook Johnson and southern Tarrant counties Thursday evening, the biggest quake ever recorded in North Texas, the federal earthquake monitoring agency reported. There were no reports of serious damage or injury by 9 p.m. The earthquake’s epicenter was 3 miles north-northwest of Venus and 6 miles south of Mansfield, the U.S. Geological Survey reported. The time was 5:58 p.m. More than 50 earthquakes have rattled North Texas region since November 2013, most of them in western parts of Dallas but also in the Azle area. In 2009, Johnson County had five small quakes, and in 2012 there were 10 within 30 days in June and July. On Thursday, people in Arlington, Alvarado, Burleson, Cleburne, Mansfield and Dallas reported feeling the ground move. In Johnson County, the first report of damage — cracked blocks under an Alvarado mobile home — was received at 6:30 p.m.. As a precaution, Moore said, the Texas Railroad Commission started sending inspectors to check all the oil and gas infrastructure within a 10-mile radius of the earthquake’s epicenter for cracks or leaks.
The tremors from the US tight-oil boom - FT.com: At least once an hour, a sudden burst of spikes signals a tremor that someone will have felt — each one representing an unexpected new threat to the US’s oil and gas revolution. (video) The energy market has been transformed by surging production of “tight” oil and gas, which horizontal drilling and hydraulic fracturing (or fracking) are freeing from shale and other rock formations. With US oil output close to 10m barrels a day — the all-time high it hit in 1970 — America has cut its dependence on Middle Eastern imports, created thousands of jobs and produced an oil glut that has helped to lower the global crude price. But Mr Crismon — and scientists who have studied the issue — say it is not all good news. They blame the shale boom for triggering a spate of earthquakes that are shredding nerves and damaging homes. “It just tears everything. I got cracks everywhere,” says Mr Crismon, who compares the state to a war zone. “Instead of having bombs you got earthquakes.” Quakes were rare in Oklahoma until 2009. But last year the state had a record 584 with a magnitude of 3.0 or over — more than in the previous 30 years combined, according to the Oklahoma Geological Survey. This has pushed the state past California to become the most rattled part of the continental US. No-one has been killed, but the largest recent quake, a magnitude 5.6 jolt in the tiny town of Prague in 2011, injured two people and destroyed 14 homes. The shale boom has been helped by a drill-first-ask-questions-later approach permitted by some US states. But the quakes could mark a turning point. Bob Jackman, a petroleum geologist and former oil and gas operator, says they are a “warning flag” that carelessness will catch up with oil companies. “It’s a caution to the fossil fuel industry that you must weigh other considerations.”
Eminent domain legislation advances in Iowa Senate — Legislation that would make it harder for two energy projects to win eminent domain rights passed another legislative hurdle in the Iowa Senate on Tuesday. The Senate Government Oversight Committee approved the bill. Under the proposal, a project seeking eminent domain to build through private properties could get permission only after negotiating voluntary deals for at least 75 percent of the affected land. Sen. Rob Hogg, D-Cedar Rapids, said the bill was an effort to address eminent domain for non-public entities. He said he did not expect a vote by the full Senate before next week. A similar bill is moving through the state House, said Rep. Bobby Kaufmann, R-Wilton. The proposed change could affect two current proposals that are before the Iowa Utilities Board. One would build an oil pipeline that would ship 450,000 barrels daily from production sites in North Dakota to an oil hub in Illinois. The other would build an electrical line across 16 Iowa counties that would transmit wind-generated energy from Iowa to customers in the Midwest and East Coast. Both projects are trying to negotiate settlements with landowners, though eminent domain might be sought. The Iowa Utilities Board is reviewing both proposals and no hearing dates have been set.
Outcry over Nebraska wastewater well prods lawmakers to act - Opposition to a planned wastewater well in northwest Nebraska has prompted lawmakers to introduce legislation. Lawmakers took the rare step Thursday of suspending their rules so they could consider new regulations for wastewater wells. A bill by Sen. Ernie Chambers of Omaha would require companies to disclose the chemicals in wastewater generated from oil and natural gas well production. The Nebraska Oil and Gas Conservation Commission approved a well last month that would allow a Colorado company to discard such wastewater underground on a ranch in northwest Nebraska. The project drew opposition from landowners, environmental groups and others. Ken Winston of the Nebraska Sierra Club says he understands the bill won’t pass this year, but it sends a message that lawmakers take the issue seriously.
Workers hurt in oil facility explosion in stable condition - — Two workers are in stable condition after sustaining injuries in an explosion and fire at an oil facility in Converse County. The Casper Star-Tribune reports that the two Susquehanna Services employees were in stable condition Monday after sustaining burns on 29 percent and 20 percent of their bodies, respectively. The names of the two men were not disclosed. The blast happened just before noon Friday at the Chesapeake Energy facility about 4 miles north of Douglas. Rob Black with the state Department of Workforce Services says the two contractors were pumping an unknown fluid out of containers when the blast occurred. The site remains closed while the explosion is under investigation.
Can LNG save the Western Slope? - Low oil prices dealt a heavy blow to Colorado’s energy economy over the past year, but the Western Slope’s struggle with cheap natural gas began nearly six years ago. According to a report from the Denver Post, the Slope’s considerable production of “dry gas” and deficient output of oil and petroleum products lands the region in a particularly difficult financial quandary. But Andrew Ware, director of strategic projects for Cheniere Energy, believes liquefying and exporting the gas may help to pry the region out of its economic slump: Exports can help stabilize the market. If you’ve been in a dry gas play, like western Colorado, you’ve been through some tough times. Oregon’s Canadian-owned Jordan Cove LNG plant may be the link to exports the state needs. Its developer, Veresen Inc. of Calgary, dropped $1.4 billion on half of the capacity of the Ruby Express Pipeline, which streamlines gas from Wyoming and Colorado to Oregon. “This is a rare opportunity to acquire a large interest in a core U.S. pipeline asset,” said Veresen CEO Don Althoff. The U.S. Department of Energy reported 54 current LNG plant applications, but only Jordan Cove and 12 others are set for development. Between 2012 and 2014, natural gas production in western Colorado dropped about 14 percent, driving spot prices down to about $2.80 per cubic feet compared to $8.90 in 2008. “I don’t know what price we need to reanimate Western Slope operations, but it is a lot more than what we are seeing,”
Editorial: Fractivists threaten the poor - Anti-fracking crusaders claim they fight for minorities and the poor. If these protesters cared about “low income communities of color,” they would defend a fracking revolution that has done more than any government program to help them. There is nothing like a $500-a-day job — entry-level fracking work — to dramatically improve the status of a low-income household. All over Colorado and other energy states, fracking has put low-skilled workers into wage brackets traditionally reserved for college graduates. In North Dakota, where the fracking frenzy began, per-capita incomes jumped by 31 percent to $57,367 between 2008 and 2012. The energy boom has directly added a half million high-wage jobs to the country’s economy since 2003. It is indirectly responsible for an additional 2 million careers in transportation, construction, information services and other sectors that benefit from the success of oil and gas companies. Fracking generates windfalls for school districts and other governing entities. Cities that were low income a decade ago — such as Greeley — enjoy unprecedented wealth. If energy independence prevents wars, the economic and social value will be incalculable.
Colorado earthquakes: we've seen this before - A recent study from U.S. the Geological Survey deemed Colorado and 16 other states to be 100 times more prone to earthquakes than other states. That same study affirmed years’ worth of speculation that the quakes resulted from oil and gas wastewater injection after a 3.2 magnitude earthquake shook the area surrounding Greeley last year. But Colorado’s man-made quakes didn’t start with the fracking boom, nor oilfield with wastewater injection, Colorado Public Radio reports. Commerce City, just outside of Denver, was home to the Army’s Rocky Mountain Arsenal in the 60s. More than 1,300 earthquakes were recorded in the area between 1962 and 1967, which scientists later linked to the arsenal’s injection of wastewater into the ground. The site of the arsenal has concerned the U.S. Geological Survey since its 1992 closure. To curb an area’s quake potential, the Colorado Oil and Gas Conservation Commission established a “traffic light” system for determining whether or not to operations are able to continue: quakes with a magnitude of 4.5 prompt a “red light,” which halts production. In nearby Paradox Valley, a series of quakes prompted an event worthy of a“red light.” COGCC engineering manager Stuart Ellsworth said the Bureau of Reclamation may have triggered the events by injecting their swill into the ground. Universities in the state, including University of Colorado Boulder, Colorado State University and Colorado School of Mines continue to research seismicity with COGCC.
Fracking and Earthquakes - Food and Water Watch -Although fracking itself can cause earthquakes, they are smaller and less frequently felt than earthquakes produced from underground injection control wells. A study in Seismological Research Letters found that fracking was the likely culprit of hundreds of small tremors in Ohio during 2013; another Ohio-based study that came out in 2015 pinpointed fracking as the cause of a 3.0 magnitude earthquake near Poland Township. In 2011, fracking was associated with a 3.8 magnitude earthquake in British Columbia, Canada; and that same year, in Blackpool, England, two earthquakes were directly linked to fracking operations. Fracking has also been linked to an earthquake that was felt in Garvin County, Oklahoma in 2011.More typically when talking about fracking-related earthquakes, the conversation is referring the seismic events triggered by injection wells, a common method of disposal for fracking waste. In the eastern and central United States, earthquake activity has increased about fivefold, from an annual average of 21 earthquakes above a 3.0 magnitude between 1967 and 2000, to more than 300 earthquakes over three years from 2010 to 2012. According to scientists with the U.S. Geological Survey (USGS), this increased seismic activity is associated with wastewater disposal wells in states such as Oklahoma, Colorado, Arkansas, Ohio and Texas. It’s important to note that induced seismic events may not always strike soon after the injection activity begins; it may take a long time for an earthquake to trigger, and sometimes not until after the injection activity has ended. Fluid pressure from high-rate disposal wells can migrate, so even if an injection well is not very close to a fault line or to one that is susceptible to earthquakes, the fluid pressure can migrate long distances to reach a fault that is more susceptible. Read our full, annotated Fracking and Earthquakes issue brief to learn more about this subject.
Greens pounce on research linking drilling to quakes - The Hill Green groups and lawmakers are seizing on new government research linking earthquakes to oil and gas drilling as evidence of the need for tougher federal regulations. States are currently responsible for oversight of most drilling and hydraulic fracturing in the United States, though environmentalists have long pushed Congress and federal agencies to impose stronger restrictions. Their concerns about fracking have generally focused on the chemicals used in the process. But a government report released in April raised a new issue: wells meant for disposing wastewater in oil and gas production are causing small earthquakes in drilling fields across the country. “We feel there is pretty much a preponderance of evident now that these earthquakes in Kansas and Oklahoma and Texas, Colorado, are being triggered by this wastewater injection,” said Bill Leith, the senior science adviser for earthquake hazards at the United States Geological Survey. The new research is tied to traditional oil and gas drilling, but it raised a red flag for those opposed to fracking, a process by which liquids are injected at high-pressure into the ground to release oil and gas. Food and Water Watch is releasing a report of its own on fracking-induced earthquakes next week and Emily Wurth, the group’s water program director, said the new research “has kind of really become conclusive and it does call for some kind of larger action at the federal level.”
Oil Train Derails, Catches Fire, And Causes Evacuation Of North Dakota Town - A town in North Dakota was evacuated Wednesday after an oil train derailed and caught fire. The BNSF Railway train went off the tracks Wednesday morning about two miles from the town of Heimdal, North Dakota. The derailment forced approximately 35 people to leave the town, but officials say there’s been no injuries. Ten out of the 109 cars on the train caught fire, but officials did not yet know as of Wednesday afternoon if the cars had exploded or were simply burning. Fire crews had been called in to try to contain the blaze. It’s was also unclear on Wednesday whether oil had been spilled as a result the derailment. Tammy Roehrich, emergency manager for Wells County, where Heimdal is located, said the scene looked similar to a 2013 derailment in Casselton, North Dakota.
Heimdal, North Dakota, Evacuated After Fiery Oil Train Crash -- A tiny North Dakota town was evacuated Wednesday after a train carrying crude oil derailed and 10 cars burst into flames, local authorities said. It is the latest in a string of explosive oil train derailments that have raised concerns about the large volume of crude moving across America's tracks. No injuries have been reported from the derailment of a BNSF train near Heimdal, North Dakota. The town, which in 2010 had a population of 27, has been evacuated, as have farms near the crash site. "I was in the house at 7:15 a.m. when we thought we heard thunder," witness Jennifer Willis told NBC News. She went out to the scene, about an eighth of a mile away, and found the area covered in black smoke. "It was kinda awesome. It's kinda scary to hear it. It was like fireworks going off. You could hear little explosions going off. I sat there for 15 minutes and you could hear it going off," she said. Fire crews from three nearby towns were called in, and BNSF said it was aware of the incident and cooperating with first responders. The National Transportation Safety Board was sending a five-person team to the site, and the Federal Railroad Administration dispatched 10 investigators.
North Dakota town evacuated after oil train derails: A tiny central North Dakota town has been evacuated after the derailment of an oil train. The incident displaced residents of Heimdal, sheriff's officials told local media. The accident involved a BNSF Railway train with 109 cars, five of which were burning. Six to seven cars derailed and the cause of the event is unknown, according to officials. Read More Crude oil's growing rail transport problem No injuries were reported. Five local fire crews were called to the scene. An acting administrator at the Federal Railroad Administration tweeted this around 10 a.m. EDT on Wednesday:We are aware of crude derailment and resulting fire near Heimdal, ND. We have investigators on their way. Will update when we know more. Berkshire Hathaway-owned BNSF said in a statement: "At approximately 7:30 am CDT today, a train operating approximately 50 miles east of Minot, ND derailed carrying crude oil. Initial reports from the crew indicate there are no injuries but a fire has been reported at the scene. The tank cars involved in the incident are the unjacketed CPC-1232 models. BNSF will work with the nearest first responders."
Massive Fire Rages After Another Buffett-Owned Oiltrain Derails In North Dakota, Town Evacuated -- Exactly two months after the latest Warren Buffett-owned BNSF train derailed near the spot where the Galena river meets the Mississippi, resulting in a huge fire and the evacuation of all homes in a one mile radius, moments ago another of Buffett's BNSF oil trains derailed, this time near the town of Heimdal, North Dakota, resulting in the same outcome. According to the Bismark Tribune, the town in Wells County was evacuated Tuesday morning after a train full of oil tanker cars derailed and burned about a mile and half east of here. Wells County Emergency Manager Tammy Roehrich said the BNSF Railway oil tanker train derailed around 7:30 a.m., setting six oil tanker cars on fire. Roehrich said she couldn’t get close enough to the train to see whether it was exploding or just burning. No injuries were reported, she said. “It looks a lot like Casselton,” she said, referring to the fiery train wreck of oil tankers near Casselton in late 2013. As a reminder, in 2013 another oil train, also owned by Buffett's Burlington Northern, derailed and led to the evacuation of the town of Casselton, and people living in a 5 mile radius. The 30 or so residents of Heimdal were evacuated in response to the derailment. All were staying with family or friends, Roehrich said.Firefighters remained on the scene battling the blaze as of 9 a.m. KFYR TV adds fire crews from Harvey, Fessenden and Maddock have all been called in to fight the fire. An official with Harvey Fire says at least 5 oil tanker cars are burning. A viewer who called reported seeing black smoke in the area.
Yet Another Oil Bomb Train Explosion Proves New Regulations Fail to Protect Us -- The town of Heimdal, North Dakota was evacuated this morning after yet another train carrying crude oil derailed and exploded. A BNSF Railway oil train derailed around 7:30 a.m., setting at least 10 oil tanker cars on fire. No injuries or fatalities have been reported. “The tank cars involved in the incident are the unjacketed CPC-1232 models,” BNSF spokesperson Amy McBeth told Valley News Live. These newer tank cars are suppose to be safer than older models, but the four oil train accidents in the first three months of 2015 all involved the newer cars, according to Common Dreams.“Again another derailment and explosion of a train carrying crude. Again another community evacuated and its people counting their blessings this didn’t happen half a mile down the track in the middle of town,” said Earthjustice attorney Kristen Boyles. “Under the U.S. Department of Transportation’s (DOT) new rules, the type of oil tank cars that are burning in Heimdal will stay on the rails for five to eight years. DOT’s new industry-pleasing rule is too weak and too slow. We need to get these exploding death trains off the tracks now.” Last week, the DOT released new oil-by-train safety standards, but many environmental groups believe the standards are not strong enough and “leave communities at risk of catastrophe.” The Center for Biological Diversity is one of the groups calling for a moratorium on these so-called “bomb trains.”
Evacuated residents allowed home after oil train derailment — An oil train that burst into flames after derailing in North Dakota was extinguished early Thursday, and nearby residents who were evacuated from their homes were allowed to return. Crews were removing the remaining oil from the tank cars that burned. The 20 people who live in Heimdal went home Wednesday night after the fire died down, Wells County Commission Chairman Mark Schmitz said. “It had pretty much quieted down by 8, 9 o’clock,” he said of the fire scene. “Firemen said it was just a matter of watching it, making sure it didn’t flare up again.” Residents were ordered from their homes shortly after the BNSF Railway train derailed about 7:30 a.m. Wednesday outside the town, about 115 miles northeast of Bismarck. No injuries were reported. The National Transportation Safety Board is investigating the cause of the wreck. The six cars that caught fire on the 109-car train were carrying approximately 180,000 gallons of oil, according to BNSF vice president Mike Trevino. He did not immediately know early Thursday how much burned and how much was left in the cars once the fire was extinguished but he expected the operation to transfer the oil to trucks to wrap up by midday. Once the NTSB has cleared the site, the derailed cars can be removed, and this should happen by Thursday evening.
Hess-owned oil railcars involved in North Dakota derailment – A BNSF train that derailed in central North Dakota on Wednesday was carrying railcars owned by Hess Corp, 10 of which caught fire and forced the evacuation of a nearby town, the oil producer told Reuters late Wednesday. Emergency crews worked into the night to extinguish the fire. No one was injured. Hess, the third-largest North Dakota oil producer, said BNSF is leading cleanup efforts but added it stands ready to assist. The New York-based company said it is “fully compliant” with new North Dakota crude-treatment standards that went into effect last month. The standards, designed to mitigate the incendiary effect of crude-by-rail disasters, require combustible elements be filtered out of crude oil. It remains unclear whether the new standards helped reduce the fire caused by the derailment, but politicians, first responders and other witnesses described a subdued scene. “The scene is very anticlimactic and rather nondramatic, which is all very good,”
Oil on fiery North Dakota train less volatile than limit – Crude oil aboard a BNSF train that derailed in North Dakota on Wednesday caught fire even though it was less flammable than required by a state law that took effect last month. Test results sent to federal investigators and seen by Reuters show the state’s new rule may not be stringent enough to significantly reduce the risks of fireballs after derailments of trains carrying crude. In this crash, the crude on board contained about 20 percent fewer volatile gases than regulations mandate. The oil, transported in tank cars owned by Hess Corp , had a vapor pressure of 10.83 psi, according to test results. This pressure is less than the new threshold of 13.7 psi. State regulators have used vapor pressure as a proxy for measuring the amount of flammable gases known as light-ends that are present in crude. Samples of the crude oil involved in this latest derailment were taken on May 5 at the Tioga rail complex owned by Hess. They were tested on May 6, the day of the accident, by Intertek, a diagnostics firm, according to the document, which was supplied to the Federal Railroad Administration. No one was injured on Wednesday morning when six of the 109 cars derailed, four of which burned. Forty residents were evacuated from the nearby town of Heimdal and allowed to return home by late evening. Critics of the new safety rules have said they do little to stop so-called “Bakken Bombs,” a pejorative for crude-by-rail transport in the state’s Bakken oil patch, and should be far tougher. State officials said they said they were pleased that the aftermath of the Heimdal derailment was far less devastating than previous crashes.
Baldwin, other senators urge stronger disclosure on Bakken trains - Wisconsin’s Tammy Baldwin joined a cadre of other Democratic senators Thursday in calling on the federal Department of Transportation to enact stronger disclosure requirements on railroads shipping volatile Bakken crude oil. “The unsafe movement of crude-by-rail is a threat to communities across the country,” the senators wrote in a letter DOT Secretary Anthony Foxx. The letter was released as members of the small North Dakota community of Heimdal were permitted to return to their homes. They were evacuated Wednesday when a 109-car BNSF Railway train derailed around 7:30 a.m. Six cars containing 180,000 gallons of Bakken crude oil caught on fire. It was the fifth major oil train derailment in the United States and Canada so far this year and occurred just days after the DOT issued long-awaited regulations to improve oil train safety. The regulations require beefier tankers, upgraded braking systems and speed limits. Baldwin has criticized the rules, saying they do go far enough. The Journal Sentinel has reported that seven to 11 oil trains pass through the heart of Milwaukee each week. Aldermen have introduced a resolution that seeks a thorough inspections of all railroad tracks and bridges. The senators’ letter to Foxx urges the DOT to strengthen its disclosure rules. “We call on upon you to issue an Emergency Order that improves the process for providing detailed information on crude-by-rail movements and volumes to first-responders, shifts the onus for information sharing onto the railroads and not communities, and allows for the continued public availability of broader crude-by-rail data on movements and routes,” it says.
With bomb trains on the horizon, pipeline legislation hopes to save America -- Three members of congress from energy producing or oil refining states have come together in a bipartisan effort to promote the Oil and Gas Production and Distribution Reform Act. The pending legislation is hailed as a great importance to energy infrastructure by its supporters and key to America becoming the new energy super power. Senators Shelley Moore Capito (R-W.Va.), Heidi Heitkamp (D-N.D.) and Bill Cassidy, M.D. (R-La.) run the leadership on the issue. Senator Capito, a member of the Senate Energy and Natural Resources Committee, introduced the legislation Wednesday. The legislation is intended to be a step towards modernizing and improving the timeframe for the approval of new pipelines. “West Virginia’s Marcellus Region has the largest shale gas reserves in the United States. This rapid rise in production in the Marcellus Region has been great for our economy but has outpaced our pipeline’s capacity,” said Sen. Capito in a press release. “This bill increases pipeline capacity, allowing the U.S. to fully take advantage of its vast natural gas reserves and limit any overload on existing pipelines.” Sen. Heitkamp stated that to implement a multifaceted energy strategy for America’s future, energy policy needs to include building energy infrastructure and energy transportation.
Official: 'Significant' 63K-gallon brine spill reaches lake — A state Department of Health official says about 63,000 gallons of saltwater have leaked from a pipeline in northwest North Dakota and that some has reached a lake via a tributary. Water Quality Director Karl Rockeman said Wednesday that it’s unclear how much of the saltwater has entered Smishek Lake near the town of Powers Lake, which is about 75 miles northeast of Williston. He says the lake does not supply area drinking water. Saltwater, or brine, is an unwanted byproduct of oil production and is considered an environmental hazard by the state. It is many times saltier than sea water and can easily kill vegetation. Rockeman says he considers the 1,500-barrel leak “significant.” Oasis Petroleum owns and operates the pipeline. The state learned of the spill on Monday.
Another Day – Another Pipeline Spill -- A 63,000-gallon saltwater spill that leaked from an underground pipeline entered a lake via a tributary in northwest North Dakota, a state Department of Health official said Wednesday. He said the spill will not affect any drinking water in the area. Water Quality Director Karl Rockeman said it’s unclear how much of the saltwater has entered Smishek Lake near the town of Powers Lake, which is about 75 miles northeast of the oil boomtown Williston. Saltwater, or brine, is an unwanted byproduct of oil production and is considered an environmental hazard by North Dakota. It is many times saltier than sea water and can easily kill vegetation. The most recent spill is “significant,” Rockeman said, but it still pales next to a massive pipeline spill in January that leaked nearly 3 million gallons of brine, some of which reached two creeks and the Missouri River. Officials have said cleanup of that spill from Summit Midstream Partners could take from several months to years..Oasis Petroleum, which owns and operates the pipeline, is responsible for cleaning up the spill and has been at the site along with crews from the state Department of Health and the North Dakota Oil and Gas Division. The company estimates that about 1,500 barrels of saltwater were released from the underground pipeline, which is almost 2 miles from Smishek Lake. It said preliminary field test do not indicate any adverse effects to the lake itself or its aquatic life. About 4,000 barrels of liquid have been recovered from the area, but that amount includes fresh water and salt water, Rockeman said. It’s unclear how much saltwater has been recovered.
Oil And Gas Wells Are Leaking Huge Amounts Of Methane, And It’s Costing Taxpayers Millions - In March, Secretary of the Interior Sally Jewell cited a methane gas plume the size of Delaware hovering over the Four Corners area in Northwest New Mexico as evidence that the Interior Department needs to cut “wasted gas that results from venting and flaring during oil and gas operations.” This methane hot spot, which is located above an area that contains more than 40,000 wells, arises primarily from leaks in natural gas production and processing equipment spanning a large area of federal lands. While it may be the most visible instance of this issue, it is far from the only instance of methane — a powerful greenhouse gas that traps up to 34 times as much heat as carbon dioxide over the course of a century — being emitted into the atmosphere above public lands. A new report from the Government Accountability Office notes another unfortunate side effect of this inefficiency: the loss of tens of millions of taxpayer dollars each year. The GAO has been urging the Bureau of Land Management (BLM), an Interior Department agency, to cut methane emissions via flared or vented gas since at least 2010, when the government office found that 40 percent of this methane could be economically captured and sold. According to the 2010 report, “such reductions could increase federal royalty payments by about $23 million annually and reduce greenhouse gas emissions by an amount equivalent to about 16.5 million metric tons of CO2 — the annual emissions equivalent of 3.1 million cars.” In the intervening half decade, the situation has only been exacerbated by the proliferation of new extraction techniques such as hydraulic fracturing. Last May, an Associated Press review of government records found that the BLM, which manages oil and gas development on federal and Native Americans lands, had been “overwhelmed” by the boom in fracking.
The Demolition of Workers’ Compensation - It was getting late that September afternoon in 2012. Whedbee, a 50-year-old derrickhand, was helping another worker remove a pipe fitting on top of the well when it suddenly blew. Oil and sludge pressurized at more than 700 pounds per square inch tore into Whedbee’s body, ripping his left arm off just below the elbow. Coworkers jerry-rigged a tourniquet from a sweatshirt and a ratchet strap to stanch his bleeding and got his wife on the phone. “Babe,’’ he said, “tell everyone I love them.” It was exactly the sort of accident that workers’ compensation was designed for. Until recently, America’s workers could rely on a compact struck at the dawn of the Industrial Age: They would give up their right to sue. In exchange, if they were injured on the job, their employers would pay their medical bills and enough of their wages to help them get by while they recovered. No longer. Over the past decade, state after state has been dismantling America’s workers’ comp system with disastrous consequences for many of the hundreds of thousands of people who suffer serious injuries at work each year, a ProPublica and NPR investigation has found. The cutbacks have been so drastic in some places that they virtually guarantee injured workers will plummet into poverty. Workers often battle insurance companies for years to get the surgeries, prescriptions and basic help their doctors recommend. Two-and-a-half years after he lost his arm, Whedbee is still fighting with North Dakota’s insurance agency for the prosthesis that his doctor says would give him a semblance of his former life.
Oil Prices and Layoffs in the Oil Patch - How much of a correlation is there between falling oil prices and the number of layoffs, as measured by seasonally adjusted new jobless claims, in the eight states whose oil industries employ high cost production methods for extracting crude oil? To us, that's an interesting question because there are competing forces at work in these states. Just as in the rest of the U.S., falling oil prices are producing benefits for consumers and other kinds of businesses in these states, sparking higher demand for other goods, most notably food and accommodation services and the automotive industry, which should reduce the number of new jobless benefits filed each week. But unlike the rest of the U.S., falling oil prices means reductions in the economic activity that supports oil and gas production in these states, which means a higher number of layoffs that would then mute the benefit of falling oil prices elsewhere in the economies of these states. So we did the analysis using the data weekly data from 4 January 2014 through the most recent data available for these states (18 April 2015). Our results are charted below, where we've also sketched in a polynomial regression curve for reference: Starting with 4 January 2014, we see the effect of the economic contraction that was recorded nationally in that first quarter of 2014. We see the number of new jobless claims generally fall as crude oil prices increased in the second quarter of 2014, as the oil industries in these states benefited from those higher oil prices. But then, we see that the number of new jobless claims was minimized as oil prices began to fall rapidly in the third quarter of 2014 and into the fourth quarter, but only until the spot price for West Texas Intermediate Crude Oil dropped below $82 per barrel. The period where new jobless claims were recorded at their minimum level in these eight states coincides with the time of when the benefits of falling oil prices were being realized across the nation, while at the same time, the oil and gas extraction industries in these states continued business as usual, waiting to see where the bottom might be before acting to cut back on their operations.
SCT&E hopes for powerful LNG deals with China - Executives from Southern California Telephone & Electric LNG (SCT&E LNG) returned home this week after 45 days abroad in Latin America and Asia. The businessmen and women spent the month-and-a-half campaign working to recruit investors and seek out off-takers for its pending Monkey Island natural gas liquefaction and export terminal set for Cameron Parish, Louisiana. And from the sounds of it, the trip was a great success. SCT&E is already in the process of negotiating deals with investors and future buyers for its liquefied natural gas (LNG) in both Latin America and Asia, according to a press release. However, the travelling executives focused much of their energy on potential business partners in Asia. “Countries like Japan and South Korea have been attractive to U.S. LNG developers. However, global demand for LNG continues to grow, particularly in Southeast Asia and Latin America,” said SCT&E LNG Chairman and CEO Greg Michaels in the press release. “Countries like China and others globally have a tremendous increasing demand for LNG.” Given China’s latest efforts to cut down on coal usage, LNG will likely become a source of alternative energy for the gargantuan energy consumer. China’s energy development plan would make it the second largest importer of LNG in the world within the next decade, which would put its suppliers in a stable position in a market flooded by future project proposals.
Why Cheap Oil is Bad News for US Gas Export Hopes - For the past year, many in the United States have been rubbing their hands at the prospect of a huge natural-gas export boom, raising hopes of a flood of cheap and clean fuel being shipped to friends in Europe and Asia. But the long-awaited gas boom has yet to materialize — and with oil prices well below last year’s highs, it might never. At the peak of enthusiasm over U.S. gas exports, more than 30 proposed projects jumped on the bandwagon, with grandiose visions of dispatching tankers full of liquefied natural gas (LNG) from the East Coast, the Gulf Coast, and the Pacific Coast to thirsty markets all around the world. Leading U.S. politicians, from President Barack Obama to House Speaker John Boehner, R-Ohio, all have touted the prospects of Washington turning its energy wealth into geopolitical coin, especially now that Europe is redoubling efforts to reduce its energy dependence on Russia. Energy Secretary Ernest Moniz still speaks of the United States surpassing Qatar as the No. 1 LNG exporter this decade. Today, though, only five U.S. LNG export projects have gotten government approval and are under construction. Only one, Cheniere Energy’s first-out-of-the-gate facility at Sabine Pass, Louisiana, is on track to export any gas this year. In a sign of how cloudy the horizon has suddenly gotten, Cheniere has yet to make a final investment decision on an expansion of Sabine Pass — a tricky, multibillion dollar decision against oil prices that are still almost 50 percent lower than they were last summer. Moody’s Investors Service, a ratings agency, warned last month that cheap oil could well kneecap U.S. and Canadian LNG export projects still in the queue.
Fracking – let’s not -- We’ve known for years that fracking is a terrible idea – a dirty, water-thirsty, inappropriate, climate-changing mistake that will only make an elite few rich and have the rest of us left with a mess for decades to come. Having guzzled down the fossil fuel industry’s Kool-Aid with gusto, however, the South African government remains enamoured with the controversial natural gas extraction technique, believing it to be a ‘game changer’. Alas, fracking hasn’t magically transformed into a good idea as even a cursory glance at recent research shows: Exactly what chemicals are present in the cocktail of fracking liquids that are injected into the ground in large quantities to extract natural gas remains somewhat of a mystery. Partly because of industry secrecy, partly because of lack of sufficient monitoring and partly because scientists don’t really know what they are looking for. In two papers published last month, researchers found that fracking fluid, some of which remains underground and some of which returns to the surface as so-called ‘produced water’, contains an array of organic compounds, including solvents, surfactants, gels, friction reducers, acetic acid and biocides added to prevent bacterial growth. While many of these substances are present at small concentrations, they are still potentially dangerous if they leak into groundwater sources, a process that has been shown to happen. You might think that the question of what to do with all of this contaminated wastewater was a major headache for the industry. Not so. In the US they’ve simply been pumping large quantities of the stuff into underground wells drilled specifically for the purpose. Out of sight out of mind? Not quite. New research indicates that a massive increase in the occurrence of earthquakes in the country’s interior (not naturally a seismically active region) is most likely the result of brine extraction from natural gas wells and the practice of disposing fracking wastewater by injecting it back into wells.These conclusions have recently been confirmed by a report from the US Geological Survey.
The Shale Boom Has Already Gone Bust - At Least for Now -- The meteoric rise in U.S. oil production has ended, easing a global glut and driving a rebound in crude prices from below $50 a barrel, according to crude trader and hedge fund manager Andrew J. Hall. “We have now reached a turning point,” Hall said in a letter Friday to investors in Astenbeck Capital Management LLC, his commodities hedge fund. Growing demand and supply pullbacks “rendered all the doomsday forecasts self-defeating.” Oil production from Texas to North Dakota peaked at almost 10 million barrels a day in February and has been falling since then, Hall wrote. A drastic reduction in drilling rigs is starting to shrink U.S. oil output, according to government data cited by Hall. That’s helped drive a 36 percent rally in the past six weeks, and prices will continue to rise because it will be harder for producers to ramp up than it was to cut back, Hall said in his letter. Lower crude prices have also boosted demand, while the risk of supply disruptions across the Middle East is growing amid sectarian tensions. West Texas Intermediate, the U.S. benchmark crude, settled at $59.15 a barrel Friday, marking a 3.5 percent rise for the week. It fell 22 cents on Monday to $58.93 a barrel.
Trader Andy Hall says oil prices reached turning point -- Famed oil trader Andy Hall said the meteoric rise in U.S. oil production has ended, easing a global glut and driving a rebound in crude prices, Bloomberg reported. Oil production from Texas to North Dakota peaked at about 10 million barrels a day in February and has been falling since then, Bloomberg reported, citing Hall’s letter to investors of his commodities hedge fund, Astenbeck Capital Management LLC. “We have now reached a turning point,” Bloomberg quoted Hall as saying in the letter on Friday. A drastic reduction in drilling rigs is starting to shrink U.S. oil output, the Bloomberg report said, citing U.S. government data quoted by Hall.
Einhorn targets US ‘frack addicts’ - FT.com -- David Einhorn, the short seller who bet against Lehman Brothers, has turned his attention to US oil exploration companies, labelling them “frack addicts” who are wasting money on uneconomic wells. Mr Einhorn picked out five oil companies he said were making capital investments that would never pay off, making the biggest splash on a day of presentations from hedge fund managers at the Ira Sohn investment conference in New York. Shares in several of the oil companies — led by Pioneer Natural Resources, which Mr Einhorn labelled “the motherfracker” — tumbled in the minutes after the presentation. When someone doesn’t want you to look at traditional metrics, it is a good time to look at traditional metrics - David Einhorn Tweet this quoteEquity investors had been sold on a dream of expansion under the US shale oil revolution, Mr Einhorn said, but companies are looking at a negative return on their capital expenditure in the current environment. For many, that was true even when oil was at $100 per barrel. “Depletion gets ignored because it is not a cash item, and capex gets ignored because it is funding future growth,” he argued. “When someone doesn’t want you to look at traditional metrics, it is a good time to look at traditional metrics.” As well as Pioneer, the companies singled out in the presentation on Monday were EOG Resources, Whiting Petroleum, Continental Resources and Concho Resources.
Diamond Offshore scraps rigs as demand weakens - Diamond Offshore Drilling Inc, one of the world’s top five offshore rig contractors, said it was scrapping three rigs in the face of weak demand due to a steep fall in global crude prices. The company said on Monday it recorded an impairment charge of $319 million for eight rigs, including the rigs being retired, in its first-quarter results. The charge caused the company to report a quarterly loss for the first time since June 2004. Diamond Offshore, which has 33 rigs, said last year it would idle or sell eight rigs. Excluding the write-down and a $4 million charge for restructuring and severance costs, the company posted an adjusted profit of 50 cents per share, according to Thomson Reuters I/B/E/S. Analysts on average had expected 43 cents. A number of oilfield companies are cutting jobs and retiring rigs in response to weakened demand from oil producers, who are scaling back spending to cope with a 43 percent decline in global crude prices since June. Utilization rates for Diamond Offshore’s ultra-deepwater rigs, its biggest business, fell to 51 percent in the quarter ended March 31, from 66 percent, a year earlier. Net loss was $255.7 million, or $1.86 per share, in the first quarter, compared with a profit of $145.8 million, or $1.05 per share, a year earlier.
Oil at $60, get ready for 'frack counterattack': U.S. oil prices are heading into a sweet spot that could spur the fracking industry to crank up some of the drilling it shut down when crude prices collapsed. West Texas Intermediate oil futures for June rose above $60 per barrel Tuesday for the first time since December. That sparked expectations the price could go even higher, if U.S. oil inventory data Wednesday show an expected draw down in oil stored at the Nymex physical hub in Cushing, Oklahoma. "If oil prices stabilize above $60, I believe we are going to resume production growth in the second half of the year. More companies will drill more wells," said Fadel Gheit, senior energy analyst at Oppenheimer. WTI and Brent crude, the international benchmark, rose as protests stopped oil flows to Libya's eastern port and Saudi Arabia raised the official selling price for Arab Light grade crude to the U.S. and Northwest Europe. Brent was above $68 a barrel for the first time since December. But price gains should be capped by any increase in output so oil prices may not go much higher for now. "Any increases in oil prices will bring more oil production, and it will dampen any price increases. Every time more production comes on, it is self-fulfilling. ... It will douse it and cool it off," said Gheit.
Here’s How The U.S. Plans To Prevent Oil Train Explosions - A resurgence in domestic crude oil production due to technological advances in drilling has led to a transportation bottleneck between landlocked oil fields and coastal refineries and ports, and that bottleneck has opened up the door for more oil shipment via rail. But increased shipment by rail has also led to an increase in accidents, and on Friday, the U.S. Department of Transportation released long-awaited safety standards for train cars carrying oil and other flammable materials following a series of dangerous derailments. The standards, which were criticized by the oil industry over costs and time frames as well as by environmental groups and lawmakers, who demanded even stricter reforms, aim to improve overall safety and prevent catastrophic accidents and explosions. They do so through a number of measures, including updated braking systems for trains, a new maximum speed of 50 miles per hour, new operational protocols such as routing procedures and information sharing, and better classification of materials. The 50 mph speed limit comes in addition to a recently introduced 40 mph limit for trains travelling through certain urban areas. The final rule comes as pressure mounted to address the issue due to a series of deadly crashes over the last few years, including a July 2013 derailment and explosion that killed 47 people in Lac-Mégantic, Quebec. So far in 2015 there have been five oil train explosions and spills in North America — four in the U.S. and one in Canada. While this represents only a minuscule fraction of the nearly 500,000 rail-car loads of flammable material last year — a figure up from 9,500 seven years ago — it just takes one incident to incite a disaster.
Canadian oil trains shift to carry less-volatile crude – A growing share of Canadian oil-by-rail traffic is made up of tough-to-ignite undiluted heavy crude and raw bitumen, say industry executives, as companies scramble to cut expenditures with the price of crude down more than 40 percent since June. By eliminating the cost of diluting with ultra-light condensate, heavy oil offers rail shippers an opportunity to claw back a few dollars per barrel in transportation costs. Official data does not break down the different Canadian crudes shipped by rail but interviews with industry executives suggest undiluted heavy and raw bitumen shipments now make up roughly a quarter of the estimated 200,000 barrel per day (bpd) oil-by-rail market. An added bonus is that heavy crude and bitumen are far less combustible than the Bakken and Canadian synthetic crudes involved in fiery crashes that spurred the Canadian and U.S. governments on Friday to tighten safety rules for trains carrying oil. With very high boiling and flashpoints they fall outside Packing Groups 1 and 2, used to classify the more volatile types of crude oil for transport, and are already shipped in double-hulled cars, meaning they should be unaffected by last week’s tank car phase-out rules.
Canada’s Land Of Tar Sands Just Elected A Left-Wing Government -- Something pretty crazy happened in Alberta, Canada, last night. The province, known for its prolific oil reserves and strong conservative leanings, elected a left-wing government. Not only that, it elected a left-wing government by a landslide. If you don’t know much about Canadian politics and want to understand how unprecedented this is, it’s useful to think of it as a comparison to Texas. As Bloomberg’s Dave Weigel put it on Twitter, abbreviations extended: “Imagine if Democrats took not only Texas Governor, but supermajority control of [the] Legislature and all state offices. That’s what [Alberta’s election] is like in Canada.” As it happens, Alberta is “often thought as being the Texas of Canada” — that’s at least according to Ed Whittingham, the executive director of the Pembina Institute, a leading environmental and energy think tank in Canada. And just like oil-rich Texas, oil-rich Alberta is has grown accustomed to having strong conservative governance (the Progressive Conservative party has been in the leadership there for more than four decades). Now with the votes in and counted for, Whittingham told ThinkProgress that Tuesday’s elections results would likely mean changes for Alberta’s oil country. He put an emphasis on “likely” — based on the left-wing New Democratic Party’s (NDP) policy platform, he said it’s “too early to tell” what they’ll do exactly — but there is hope for change particularly when it comes to mitigating human-caused global warming.
What Alberta’s shocking election results could mean for the oil sands - Alberta is the conservative heart of Canada, with an economy dominated by the oil industry. Canada is the world's fifth-largest oil producer, with about 78 percent of that produced in Alberta. Four-fifths that comes from the province's vast oil sands — the root of the endless controversy over the Keystone XL pipeline in the United States. The recent increase in Alberta's oil-sands production has also been a big factor pushing down global oil prices. It's an important place. And now comes an election that could, potentially, roil this entire set-up. . So what will this election mean for those famous oil sands? It's too soon to say precisely — in part because the NDP's proposals on energy policy are actually quite light on details. First, the new provincial premier, Rachel Notley, has vowed to work with Canada's federal government on some sort of national climate change policy. That, in itself, is notable: Canada has become a climate pariah in recent years, bowing out of the Kyoto Protocol and missing its targets for cutting greenhouse-gas emissions. And oil-rich Alberta, the power base for Conservative Prime Minister Stephen Harper, has long been seen as a key obstacle to more ambitious climate-change policies.Perhaps more significant for the future of the oil sands is the fact that the NDP has pledged to review the royalties that oil companies pay to Alberta's government. These royalties have long been kept fairly low to encourage growth and development: Alberta's royalties run about 25 to 40 percent of oil company profits; in Norway, by contrast, royalties run to 80 percent of profits.
TransCanada Keystone 1 Pipeline Suffered Major Corrosion Only Two Years in Operation - Documents obtained by DeSmogBlog reveal an alarming rate of corrosion to parts of TransCanada's Keystone 1 pipeline. A mandatory inspection test revealed a section of the pipeline's wall had corroded 95%, leaving it paper-thin in one area (one-third the thickness of a dime) and dangerously thin in three other places, leading TransCanada to immediately shut it down. The cause of the corrosion is being kept from the public by federal regulators and TransCanada. “It is highly unusual for a pipeline not yet two years old to experience such deep corrosion issues,” Evan Vokes, a former TransCanada pipeline engineer-turned-whistleblower, told DeSmogBlog. “Something very severe happened that the public needs to know about.” When TransCanada shut the line down, the company and the Pipeline and Hazardous Materials Safety Administration (PHMSA) told the press that the shutdown was due to “possible safety Issues.” And although an engineer from PHMSA was sent to the site where TransCanada was digging up the pipeline in Missouri, no further information has been made available publicly.Only after DeSmogBlog made a Freedom of Information Act (FOIA) request to PHMSA in August 2013 — which the agency partially responded to this April — was the information revealing the pipeline had deeply corroded in multiple spots exposed. The documents also disclosed a plan to check for a possible spill where the corrosion was detected. However, documents explaining what caused the corrosion and findings concerning a possible spill were not included in response to DeSmogBlog's request. According to PHMSA spokesman Damon Hill, documents that might impact an ongoing compliance review the agency is conducting of TransCanada were withheld.
5th Circuit: 3 Mexican states cannot sue over 2010 spill — A federal appeals court has upheld a lower court’s ruling that three Mexican states cannot sue BP and other companies over damages from the 2010 Gulf of Mexico oil spill. The ruling by the 5th U.S. Circuit Court of Appeal upholds a 2013 district court ruling. The court held that the Mexican federal government is the owner of the damaged property and that the three states — Veracruz, Tamaulipas and Quintana Roo — don’t have standing to file the suit. The 5th Circuit opinion, dated May 1, notes that that the Mexican federal government filed a similar lawsuit, which is progressing through the court system.
U.S. Banks Expect Rise in Energy-Sector Loan Defaults - WSJ: Banks in the U.S. are cutting credit lines to energy companies and forcing firms to cough up more collateral to guard against fallout from the past year’s plunge in oil prices, a Federal Reserve survey found. Banks expect more delinquencies and charge-offs from the sector over the course of this year, “but they indicated that their exposures were small, and that they were undertaking a number of actions to mitigate the risk of loan losses,” senior loan officers at commercial banks told the Fed in a survey tracking changes in loan terms and standards in the first quarter of the year. U.S. oil and gas companies went deep into debt during the energy boom as they looked to cash in on new technologies that allowed sizable increases in domestic energy production. Those loans looked like a good bet while U.S. oil prices were around $100 a barrel. But after peaking in June, oil prices tumbled, dropping below $50 earlier this year. Prices have rebounded in recent weeks, but remain below $60. The sharp reversal on prices has rattled the energy sector, forcing firms to cut spending, shed workers and conserve cash. Of banks making loans to such firms, most said they accounted for less than 10% of outstanding commercial and industrial loans.
Oil Rises After API Reports First Inventory Draw In 16 Weeks -- For the first time since the first week of January, API reports a 1.5 million barrel inventory draw (against last week's 4.2mm build). This also comes with a 336k draw from Cushing following on from last week's 162k draw. Oil prices have responded by pushing higher, though it appears most of this was priced in.
Oil eases after hitting 2015 highs on US crude stock draw - Oil hit new highs for 2015 on Wednesday, bolstered by the first U.S. crude stockpile drop since January, before paring gains as investors and traders moved to take profits on a multi-week rally. The dollar's recent tumble also fed the run-up in oil and other commodities, as those raw materials became more affordable for holders of the euro and other currencies. U.S. crude futures settled up 53 cents, or 0.88 percent, at $60.93 a barrel. It rallied more than $2 to the year's high of $62.58 a barrel earlier. Wednesday's rise came after the U.S. Energy Information Administration said crude stockpiles fell by 3.88 million barrels last week, the first drop in four months. The draw was more than double that projected by industry group American Petroleum Institute. A Reuters poll of analysts had estimated U.S. crude stocks to rise last week for a record 17th week in a row. The EIA data lent conviction to oil bulls' bets that the global oversupply in crude could finally be easing. But skeptics said more work was needed to balance supply-demand in the market, which they said was overpriced after Brent's 21 percent rally in April and U.S. crude's 25 percent gain. Crude prices had tumbled earlier, by more than 50 percent since June on worries of an oil glut.
Crude Pumps (And Dumps) After DOE Show Biggest Inventory Draw In 8 Months -- Confirming last night's API inventory data, DOE just reported a 3.882 million barrel drawdown in total crude inventories (considerably more than the 1.5mm bbbl draw expected). This is the biggest draw since early September. The initial spike took WTI Crude prices above $62.50 but that is fading now...
US refineries run hard to absorb crude glut – U.S. refineries are running at near-record levels to turn the glut of crude into gasoline and other refined fuels ahead of the summer driving season. U.S. refineries processed an average of 16.347 million barrels per day (bpd) last week, an increase of almost 250,000 bpd compared with the previous week. Crude processing was almost 1.2 million bpd higher than the ten-year average for this point in the year and is just 280,000 bpd beneath its all-time record. Refineries would not normally process so much crude this early in the year before the summer driving season gets underway after Memorial Day at the end of May. But cheap crude oil from North Dakota and other U.S. locations, coupled with strong prices and demand for refined fuels, has incentivised them to maximize production. Crude oil stockpiles are more than 121 million barrels above the average level for this time of year, but they fell by almost 3.9 million barrels last week, the first drawdown after 16 consecutive weeks of inventory rises. Stockpiles of refined products are more modest though both gasoline and especially propane stocks are high for the time of year.
The U.S. Production Decline Has Begun -- It is not because of decreased rig count. It is because cash flow at current oil prices is too low to complete most wells being drilled. The implications are profound. Production will decline by several hundred thousand of barrels per day before the effect of reduced rig count is fully seen. Unless oil prices rebound above $75 or $85 per barrel, the rig count won’t matter because there will not be enough money to complete more wells than are being completed today. Tight oil production in the Eagle Ford, Bakken and Permian basin plays declined approximately 111,000 barrels of oil per day in January. These declines are part of a systematic decrease in the number of new producing wells added since oil prices fell below $90 per barrel in October 2014 (Figure 1). Deferred completions (drilled uncompleted wells) are not discretionary for most companies. Producers entered into long-term rig contracts assuming at least $90 oil prices. Lower prices result in substantially reduced cash flows. Capital is only available to fulfill contractual drilling commitments, basic costs of doing business, and to complete the best wells that come closest to breaking even at present oil prices. Much of the new capital from junk bonds and share offerings is being used to pay overhead and interest expense, and to pay down debt to avoid triggering loan covenant thresholds.Hedges help soften the blow of low oil prices for some companies but not enough to carry on business as usual when it comes to well completions. The decrease in well completions provides additional evidence that the true break-even price for tight oil plays is between $75 and $85 per barrel. The Eagle Ford Shale is the most attractive play with a break-even price of about $75 per barrel. Well completions averaged 312 per month from January through September 2014 when WTI averaged $100 per barrel (Figure 2). When oil prices dropped below $90 per barrel in October, November well completions fell to 214. As prices fell further, 169 new producing wells were added in December and only 118 in January.
Oil prices: "It's up to Allah" - As the world sits by stacked and idled rigs in anticipation of how long Saudi Arabia will wait to react to the persistent oil price slump, Oil Minister Ali Al-Naimi told CNBC that “no one can set the price of oil – it’s up to Allah.” Following last year’s rapid oil price decline, the global market has been hoping that the Organization of Petroleum Exporting Countries (OPEC) would cut production, providing a buoy to the sinking market. However, the 12-country organization, following Saudi Arabia’s lead, has persistently maintained production levels of 30 million barrels per day in an attempt to preserve its share of the market. Despite numerous pleas for OPEC nations to decrease production, the cartel has maintained its no-cut policy. Last month OPEC oil output climbed to the highest levels since 2012. Even though the influence and support a production cut could have on the global market and demand, Al-Naimi maintains that there is no specific price that would prompt Saudi Arabia to cut production. In March, at an energy conference in Riyadh, Naimi told reporters, “The production of OPEC is 30 percent of the market, 70 percent from non-OPEC … everybody is supposed to participate if we want to improve prices.” As reported by Reuters, he also commented, “Today the situation is hard. We tried, we held meetings and we did not succeed because countries [outside OPEC] were insisting that OPEC carry the burden and we refuse that OPEC bears the responsibility.” Last June the price per barrel of benchmark Brent crude fell from a peak of $114 to lows unseen in over six years. Coupled with the global supply glut and decreased demand, prices hovered around the $50 per barrel mark worldwide, placing strain on domestic producers and pushing them into the core regions where production is sustainable at lower prices.
WTI Crude Tops $60 (5 Month Highs) After Saudi's "Leave It To Allah" Comments -- WTI Crude is now up 43% from its mid-March lows (at $42), topping $60 for the first time since early December. This is a 25% retracement of the June to March drop. Despite near-record US production (rose last week WoW), record Saudi production, slowing global economies, and expectations that higher prices will bring a flood of new supply as cash-starved frackers start pumping again; it appears the squeeze combined with Middle East tensions is driving the resurgence (for now). Perhaps everyone should listen to Influential Saudi Oil Minister, Ali Al-Naimi, who said Tuesday that "no one can set the price of oil - it's up to Allah." It seems Allah wants higher gas prices.
Oil Price Recovery May Be Too Much Too Soon -- Oil prices have hit their highest levels in 2015, with WTI surging above $60 per barrel. Crude oil inventories in the U.S. declined for the first time since December 2014, perhaps indicating that the glut could be easing. The EIA reported that oil stockpiles fell by 3.9 million barrels for the week ending on May 1, a larger drop than expected. With rig counts falling by more than half since last year, this could be the beginning of a longer contraction. Both weekly production figures and the stock build appeared to have peaked, suggesting that supplies are adjusting lower and demand is rising. That has oil prices surging from their March lows, with WTI jumping over $15 per barrel, and Brent about $20 per barrel. But have the markets overreacted? The rise in oil prices over the last few weeks has been so rapid that few predicted it. Speculators have raised their bullish bets to the highest level in years. The optimism may not be justified. In the past, bets to such a degree have often been followed by a fallback in prices, the head of commodity strategy at Saxo Bank told Reuters in an interview. Similarly, the top commodities official at Commerzbank told CNBC that the price rise was “premature,” and oil prices could dip back below $50 per barrel once the markets come to their senses. In other words, the markets may have overshot, rising beyond levels warranted by the underlying fundamentals. Oil inventories are still at 80 year highs. The 487 million barrels of oil sitting in storage will take quite a while to drawdown. Crucially, oil production is still exceeding demand, leaving oil markets well-supplied.
Oil dives 3 percent on surging dollar, renewed supply worries (Reuters) - Oil prices tumbled 3 percent on Thursday as a resurgent dollar erased gains from the past two sessions, setting the market up for its first weekly loss in five. Traders and investors also returned their focus to the oversupply in crude and gasoline after Wednesday's euphoria over the first U.S. crude drawdown in months. The dollar, on a downtrend since the start of May, jumped on optimism that Friday's U.S. employment report for April would show strength after upbeat weekly jobless claims. A stronger greenback makes dollar-denominated commodities less affordable for holders of the euro and other currencies. "The dollar is definitely the driver in today's tumble, though people are also taking stock of the market's fundamentals and taking some profit after the incredible month of gains we've had," said Phil Flynn, analyst at the Price Futures Group in Chicago. North Sea Brent crude settled down $2.23, or 3.3 percent, at $65.54 a barrel. For the week, Brent was headed 1.6 percent lower, its weekly loss since April 30. U.S. crude settled down $1.99, or 3.3 percent, at $58.94 a barrel. Gasoline fell 2.3 percent, its biggest loss in a month, to settle at just over $1.99 a gallon. Stronger-than-expected demand growth and a slowdown in U.S. crude supply have boosted oil prices by 50 percent from a six-year low hit in January.
US oil and natural gas rig count drops by 11 to 894 - Oilfield services company Baker Hughes Inc. says the number of rigs exploring for oil and natural gas in the U.S. declined by 11 this week to 894. Houston-based Baker Hughes said Friday that 668 rigs were seeking oil and 221 explored for natural gas. Five were listed as miscellaneous. A year ago, with oil prices nearly double the current price, 1,855 rigs were active. Among major oil- and gas-producing states, Oklahoma lost six rigs, Louisiana was down three, New Mexico declined by two and Arkansas, California, Kansas, Ohio, Texas, Utah and West Virginia were off one each. Colorado gained two rigs and North Dakota increased by one. Alaska, Pennsylvania and Wyoming were unchanged.
Oil rig count falls to lowest since late 2010 - Producers eased back on the number of rigs laid down this week, idling 11 oil-chasers at a time when crude prices have started to rise again. The number of oil rigs fell to a total of 668, according to weekly data from oil services firm Baker Hughes. That’s the lowest level since September 2010. The rig count has been plummeting for five months as drillers pulled back from shale plays after an oil slump began in late 2014. About 941 oil-drilling rigs have been idled since the peak in October, according to Baker Hughes. The total rig count, including oil, gas and other drilling units, fell by 11 to 894 this week. The U.S. lost one gas-chasing rig but gained a miscellaneous rig. Texas lost a single rig this week, cutting the state’s count to 379, down from 906 in November. The rig count, historically used to gauge the strength of U.S. production, has at times caused wild shifts in oil prices as traders use the information to place bets on future oil output. Oil prices collapsed in recent months as a flood of oil hit the market amid flat demand. Prices have started to tick up again, and oil this week surged above $60 barrel, amid signs that the U.S. has slowed production while global demand has begun to increase again.