Sunday, May 31, 2015

US oil production hits modern record even as US drilling rigs fall for a record 25th week

it was looking like it was going to be a rather slow and uninteresting week in the oil patch until midday Thursday, when the EIA released their weekly Petroleum Status Report (62 pp pdf) and updated all the data sets therein...what we thought was an ongoing gradual decline in US oil production in the face of a 60% drop in oil rigs is no more, as the past week saw US oil production jump by 3.2% to 9,566,000 barrel per day, the largest weekly spike in our oil production in 19 months, 13.3% higher than the 8,472,000 barrels per day oil output we saw in the same week last year, and setting a new modern era high for US oil production as it was the greatest weekly output in records going back to 1983...

however, even with the big jump in production, our stocks of crude oil in storage fell again, from 482,165 million barrels last week to 479,363  million barrels this week, as US oil refineries were running at full capacity and US oil imports hit a 3 week low, falling 7%, from 7,199,000 barrels per day last week to 6,696,000 barrels per day in the current report...even so, our oil inventories were still 22.0% more than the 392,954 million barrels we had stored in the 4th week of May a year ago, while our oil imports averaged 6.8 million barrels a day over the past 4 weeks, just 3.4% below the imports of the same 4 weeks of 2014...

since we suddenly have a new production record, we'll include the historical graph of Weekly U.S. Field Production of Crude Oil below…here we can see the track of oil output in thousands of barrels per day since 1983, and note that US production had fallen to roughly 5 million barrels a day during the 2006 to 2008 period, and only gradually picked up slowly after that horizontal drilling began…then, spurred on by higher oil prices and easy credit courtesy of the Federal Reserve’s monetary policy, US oil production has increased steadily since 2011, and as we’ve seen this week, still shows no sign of letting up despite the reduction in new oilfield activity...

US oil production, week ending May 22nd:
May 22 2015 oil production

once again, the number of drilling rigs operating in the US and coastal waters fell for an unprecedented 25th week in a row, as the number of rotary rigs drilling for oil fell by 13 to 646, the number of working gas rigs rose by 3 to 225, while there were also 4 miscellaneous rigs in use, which was unchanged from last week...working oil rigs are now down by 890 from a year ago, and down by 963 from the recent peak of 1609 oil rigs that were operating during the week ending October 10th; active gas rigs are down by 101 from a year ago and down by 131 from the 2014 peak of 356 gas rigs that were operating during the week of November 11th...of the 875 rigs active at the end of last week, 844 were land based, 9 less than last week, 2 were drilling on inland waters, 1 less than last week, while the offshore rig count was unchanged at 29...of the total, 674 were horizontal drillers, down 9 from last week and down 577 from 1251 a year ago; 111 were vertical rigs, down 6 from 117 last week and down 292 from 403 a year ago, and 90 were directional rigs, an increase of 5 for the week but a decrease of 61 from a year ago...

despite an increase of 3 rigs working the Eagle Ford shale, the rig count in Texas was down by 4, with the shutdown of 1 rig in the Permian basin the only likely horizontal reduction there...there were also 3 rigs shut down in California, leaving them with just 10 at mid week...and despite the increase in gas rigs, the Marcellus shale saw a reduction of 3 rigs, with Pennsylvania rigs down by 2, apparently with the addition of one rig working in the Utica...Louisiana and Arkansas also saw their rig count reduced by 2, while one rig was shut down in North Dakota's Willston basin...meanwhile, two rigs were added in both Colorado and Oklahoma, bringing their active rig counts up to 41 and 106 respectively, while both Alaska and New Mexico saw one added, bringing their totals to 10 and 48 respectively...the rig count in Ohio was once again unchanged, as were the rig counts in the other states not herein mentioned...

this week's Canadian rig count was a surprise, in that their number of active rigs increased by over 36%, as they added 20 oil rigs this week to almost double their active oil rig total at 44, while they started up 6 more gas rigs to bring their gas rig total to 54...still, the 98 rigs they were running this week is down 100 from the year ago 198, with oil rigs down 61 from 105 and gas rigs down 39 from 93....however, as recently as January 16th of this year, Canadians were running 440 rotary rigs, of which 234 were drilling for oil and 206 were drilling for this week's increase of 26 is just a small fraction of the total that they've shut down so far this past year...

it's now been 6 months since the Thanksgiving Day OPEC meeting that changed the course of the global oil markets and set off the decline in drilling in the US that persists to this day, so it might be time to take a look back at where we've been...the graph below shows the past year's track of the contract price per barrel of the US benchmark oil, West Texas Intermediate (WTI), at or to be delivered to the oil depot in Cushing Oklahoma...we can see that oil was still near $100 a barrel last summer, in the same price range it had been since 2011, during the period when drillers were still adding rigs and expanding production....and we know that oil drilling continued into the fall, with the rig count peaking in October, even as oil prices slipped below $80 as the global surplus was developing...we can then see the precipitous collapse of prices beginning in the last week of November, when the price of oil fell from $78 to $65 in the days immediately following the OPEC decision to continue their level of production...oil prices then fell below $45 a barrel in intra-day trading in mid January, a level at which 97% of US shale wells became unprofitable, before climbing back up above $58 again in February...they touched the January lows again in March before starting their recent rally to near $60, a price that seems to have nearly as many drillers willing to restart their operations as there are those that are still shutting down...

oil prices, 5/30/15:
May 30 2015 oil prices

even though natural gas prices were not affected by the OPEC decision, their trajectory has been quite the oil graph above, the graph below shows the benchmark contract price for natural gas based on the price per mmBTU at Henry Hub, Louisiana....(gas is also sometimes quoted in mcf = thousand cubic feet = 1.028 x mmBTU = million BTU) ...again, note the price near the $4 range thought to be breakeven for most of the Haynesville and Marcellus gas wells prior to November, and then the collapse to under $3 per mmBTU since, which has led to the reduction of drilling activities in those fields...however, unlike oil, where the US benchmark has generally been within 10% of the global price, US natural gas prices are far below those on the international markets...for instance, Japan had been paying $15 to $17 per mmBTU for LNG imports since the shutdown of it's nuclear facilities, which has only recently fallen into the $14 mmBTU range...Europeans also want to import more LNG, too; LNG prices in Europe were over $11 mmBTU until recently, when they fell to the $9 range with the global collapse of oil if Obama gets his trade agreements passed, which will mandate exports of our gas to those markets, US prices will eventually move up to the global prices, and US natural gas exploitation will explode....

natural gas prices, 5/30/15:
May 30 2015 natural gas prices

where we go from here is anyone's guess...i had thought US oil output had started falling in March, and that the US oil glut would gradually subside...this week's data suggests there's no sign of that yet...and in the global markets, Saudi oil output continues to hit new records, Iraq expects to increase their output to a record 3.75 million barrels a day in June, and Iranian oil will soon be flowing again as sanctions are lifted, so it appears that the oil glut will persist for some time...this all flies in the face of what i thought i knew; if someone would have asked me a year ago, i would have told them it'd be damn near impossible for oil to be priced below $80 a barrel for any length of time, based on what i knew then of exploration and production costs...if someone had suggested to me then that we would be looking at an oversupply of oil this year, i would have dismissed them as an impossible dreamer...but now the idea of an oil shortage is nowhere in sight; and it's clear that any increase in prices will bring back the US rigs and worsen the global oversupply it looks like low oil prices are here to stay, and that forecasts that oil prices may yet trend lower are not unfounded...

Don't frack public land - Toledo Blade -- Ohio House members took up a bill this year that would have opened public parks to oil and gas drilling, effectively circumventing Gov. John Kasich’s moratorium on hydraulic fracturing on public land. Lawmakers amended the bill to exclude state parks and nature preserves from drilling, but did not exempt other public lands — state forests, Metropark systems, and other local parks. House lawmakers passed the measure, unanimously. If the Senate does not protect all public land from drilling, the governor must be ready to veto the bill.  The bill deals with Ohio’s “unitization” system — the process that allows landowners to aggregate their properties for resource extraction. Current law allows oil and natural-gas pools to be opened up for drilling if the owners of 65 percent of the land lying over them agree. Some property owners complain that the Ohio Department of Natural Resources often moves too slowly, or not at all, on unitization requests. The House-passed bill would require ODNR to hold a hearing on a request within 45 days, and to make a decision within 30 days of the hearing.Lawmakers’ failure to include exceptions in the bill for regional parks and other public lands appears to have been more a matter of neglect than deliberate sabotage. No one spoke up for local parks in committee hearings before the measure was passed, and some lawmakers say they weren’t aware of the b  ill’s deficiencies before they voted for it.These claims invite skepticism. Environmental groups had criticized the measure’s threats to public land, even after lawmakers added the language to protect state parks and nature preserves. In any case, the Senate can, and should, broaden the bill to protect all public land from drilling.

Southeast Ohio businesses still fighting oil and gas tax hike - In Marietta, Ohio, business owners still have hanging over their heads an oil and gas tax hike Gov. John Kasich has fought for since 2012.Marietta Area Chamber of Commerce president and CEO Charlotte Keim told Ohio Watchdog the energy production Kasich wants to penalize has benefited the region’s whole economy.  Lawmakers, Keim said in an email, should “encourage this industry to grow; not burden it in its infancy with increased taxes.”“Oil and gas activity in southeastern Ohio has brought an economic boom to our region, as evident in the increases in sales tax, employment, bed tax revenues, new construction projects, individual wealth increases and so on,” Keim said.   Today over 600 employers belong to the Marietta Area Chamber of Commerce.Many of the benefits Ohio has seen from horizontal hydraulic fracturing of underground shale, or “fracking,” have been localized to the shale-rich southeastern part of the state. Kasich wants to use an increased severance tax on crude oil and natural gas to pay for a statewide income tax cut.

Ohio company sentenced for dumping wastewater from drilling - A northeast Ohio company has pleaded guilty to a federal charge related to the illegal dumping of wastewater from gas and oil drilling into a storm sewer 33 times between October 2012 and January 2013. A judge on Thursday fined the company $75,000 and ordered it to pay $25,000 to be split between Friends of the Mahoning River and Midwest Environmental Enforcement Association. Company owner Ben Lupo of Poland, Ohio, pleaded guilty in March 2014 to a federal dumping charge and was sentenced to 28 months in prison in August. Lupo was accused of ordering workers to pour toxic sludge and brine containing diesel oil, benzene, toluene, barium and chlorides into a storm sewer that reached a Mahoning River tributary. A company attorney did not return telephone messages Thursday.

JobsOhio offered huge incentives for ethane cracker plant - According to PTT Global Chemical Public Company Ltd., Ohio offered the Thai company an incentive package that was too good to say “no” to when it came to deciding the location for its ethane cracker plant. The $5.7 billion plant will be located in Belmont County, Ohio, thanks to JobsOhio’s “aggressive incentive package.”  The state’s private job-creation entity offered job-creation tax credits, work-force training grants, local tax credits and infrastructure improvement grants.  PTT Global Chemical, along with its partner Marubeni Corp. of Japan, announced the location of the cracker plant last month.  The other options for a location included West Virginia and Pennsylvania.  As reported by the Columbus Business First, “JobsOhio is the private corporation created by Gov. John Kasich in charge of promoting Ohio economic development. In a presentation this month, PTT cited JobsOhio’s ability to “deliver the required work force” and what it says are 90,000 skilled workers as key advantages for Ohio.” For years Ohio has tried for a major ethane cracker to be built in the state, but always “lost” to its neighboring states. However, its hard work has finally paid off. According to JobsOhio’s spokesperson, the incentives for the plant will be disclosed after the final agreement is completed. If PTT Global Chemical goes through with the ethane cracker plant, it will take natural gas components from the Marcellus and Utica Shale formations and convert it into several chemical products. Lucky for Ohio and PTT Global Chemical, Belmont County is the center of state’s oil and gas operations in the Utica.

Fracking byproduct factories to bring Ohio risks, rewards – Columbus Dispatch - Ohio is poised to gain a new industry, one that will process a byproduct of oil and gas drilling and is raising new concerns about possible pollution and other safety hazards. It’s called condensate, and it’s about as flammable as gasoline. It also contains benzene, a chemical known to cause cancer, and toluene, which can affect the human nervous system. The Ohio Environmental Protection Agency has issued permits for three factories in eastern Ohio to process the byproduct of fracking for oil and gas. Some residents worry that it could be a safety hazard because it is trucked over Ohio roadways. And some worry that it could add to existing health, safety and environmental concerns connected with hydraulic fracturing, the process of using water, chemicals and sand at high pressure to release oil and gas from shale thousands of feet underground. Those concerns aren’t unfounded: An explosion at a condensate pump in Noble County, in eastern Ohio, in November killed an electrician. The man, 48-year-old Norman Butler of Virginia, was testing and calibrating electrical components on the pump when it ignited. In October, two weeks before Butler was killed, a pipeline carrying condensate from eastern Ohio to a natural-gas processing plant in West Virginia caught fire, burning several acres of woods and forcing families from nearby houses. The EPA issued the permits over the past year for facilities in Clarington, in Monroe County; in Cadiz, in Harrison County; and, most recently, in Belpre, in Washington County, along the Ohio River. Processing condensate, industry leaders say, allows oil and gas companies to make the most of what they extract from the ground.

Utica and Marcellus well activity in Ohio -- Activity in the Utica and Marcellus Shale formations in Ohio have seen some changes compared to last week’s well activity update, and so has one company’s plans in the Utica Shale formation. Magnum Hunter Resources Corp. has decide to sell 5,210 acres of undeveloped land in the Utica Shale formation.  The land, which is worth about $41 million, is located in Tyler County, West Virginia, and is part of the company’s plan to improve its liquidity.  CEO Gary Evans explained that the acreage is not part of the company’s long-term drilling plan and that several of the leases are close to their expiration dates.  Evans also said that because of these reasons it made sense for Magnum to sell the land to a competitor that already has adjacent leases. The following information is provided by the Ohio Department of Natural Resources and is through the week of May 23rd.  Activity in the Utica Shale formation in Ohio has had a few slight changes when compared to last week’s update.  According to this week’s report, 423 wells were permitted, 382 drilled, 897 producing, 13 inactive, 24 in final restoration and 3 abandoned.  This brings the total number of wells in the Utica to 1,917. The Marcellus Shale in Ohio has zero change reported when compared to last week’s well report.  The area is still sitting at 15 wells permitted, 13 drilled, 14 producing and one well inactive.  There are a total of 43 wells in the Ohio Marcellus Shale.

Magnum Hunter selling $41M of Utica shale land - -- Magnum Hunter Resources Corp. is selling almost $41 million in undeveloped Utica shale acreage.  The oil and gas company, which has 210,000 acres of land under lease in eastern Ohio and West Virginia, said Tuesday it’s selling its interests in 5,210 acres in Tyler County, West Virginia, which borders the Ohio River.    Houston-based Magnum Hunter (NYSE:MHR) said the land was not in its long-term drilling plans. Many of the leases in the acreage are set to expire soon, CEOGary Evans said in a statement.  “It made sense to sell these properties now to an industry competitor that already owns adjacent leases,” he said.  Magnum Hunter said earlier this month that it’s looking to sell $450 million worth of its Ohio acreage as part of efforts to improve its liquidity.

Aubrey McClendon: Fracking's Cowboy Rides Again - America’s wildest wildcatter, Aubrey McClendon, found new life — and new billions — after his spectacular plunge from the top of the oil game. Trouble has already come calling.  In early 2013, during his last days as CEO of Chesapeake Energy Chesapeake Energy, Aubrey McClendon was one busy guy. Chesapeake’s board gave him the boot following a litany of accusations about his rampant conflicts of interest, lavish perks, reckless bets and failure to disclose that he had personally borrowed around $1 billion, some from Chesapeake’s own lenders. But before leaving the building, McClendon allegedly gave himself a parting gift. According to a lawsuit filed by Chesapeake in February, he had his assistant print out highly sensitive maps of oil and gas prospects in Ohio’s natural-gas-rich Utica shale formations, and he e-mailed more proprietary and valuable information to his private account. McClendon set up a new operation–American Energy Partners–in offices up the street from Chesapeake’s Oklahoma City campus. He found a deep-pocketed partner in John Raymond, CEO of $15.5 billion Houston private equity outfit Energy & Minerals Group (and son of legendary Exxon CEO Lee Raymond). McClendon quickly got to work: By the time Chesapeake filed its lawsuit alleging theft of secrets, American Energy’s Utica affiliate had already bought up more than $1.5 billion of acreage. As for those allegations of theft? “I am entitled to possess and use the 20 terabytes of information I own,” McClendon said in a press release. “It is a sad day to see Chesapeake stoop so low as to sue its cofounder for having information that was earned, paid for and provided through my contracts with Chesapeake.” Through a spokesman, McClendon tells FORBES he expects to be vindicated in arbitration.

Is Fracking The New Religion? Natural Gas Industry Moves from the Absurd to the Profane -- God opposes farming, supports fracking, says gas industry executive at FERC meeting. Executive Director Corky DeMarco of the West Virginia Oil and Natural Gas Association (WVONGA) said here last evening that it is not God’s will that West Virginians be farmers. Instead, he said, it is God’s will that the natural gas industry extract all it can out of the Marcellus shale.  He said this at the last of several public scoping meetings being held by the Federal Energy Regulatory Commission (FERC) to consider the environmental impact of the proposed Atlantic Coast Pipeline (ACP). Those who find it hard to believe that he would make such a statement need only wait for the transcript of the meeting to be published by FERC. Or, you can ask any one of the number of audience members – many of them farmers.  The meeting was held at Bridgeport High School. Citizens have until April 28th to send FERC comments regarding the environmental impact of the proposed ACP.   With his remarks, DeMarco has managed to move the natural gas industry’s position on fracking and related pipeline development from the absurd to the profane. Indeed, Webster’s Universal College Dictionary defines profane as “showing irreverence towards God or sacred things.”

The mighty Marcellus is unstoppable or not? -  How easy it is to forget there are limits to growth, especially when what you observe is designed to make us forget. The great Marcellus is famous for having increased its production 12-fold in four years to become the US' largest producing natural gas field, but things have not looked that great lately. The average daily production estimate reported by EIA in January was 16319, in February was 16550 a gain of 1.4%, in March was 16600, a gain of 0.3% in April has been 16706, a gain of0.9% and is projected to be 16716 MMcf/d in May, a gain of 0.06%. Not a stellar performance.: a gain of 2.4% in 4 months, most of that at the beginning. Any bets that it will be going down by July? Where is the mighty Marcellus? There are recent projections of Marcellus growth that show production or slow fall-off in coming decades, such as that of David Hughes, "Drilling Deeper," and the EIA analysis discussed by Hughes, that predict that far more gas will be produced there in coming years and decades than the USGS says are technically available. Compare They make no attempt to reconcile their conclusions with those of USGS They are in effect making rosy projections based upon the ability of Marcellus to keep on growing and producing through technology that doesn't presently exist and of which they do not tell us the nature. Addtionally, what is ecoomically avilable is is generaly substantially less than what is technically available. You cannot produce gas you don't know how to produce, and you cannot produce gas you cannot afford to produce. Those who say Marcellus will go one being "mighty" ignore, as we shall see, these basics.

Marcellus permit activity in Pennsylvania -- Permit activity in the Marcellus Shale formation in Pennsylvania saw a lot of action over the last week, along with the shale’s healthy registry, which is seeing even more push from health advocates. The process of finding a way to better monitor health complaints related to natural gas development is still ongoing, but health advocates are starting to push the state’s Department of Health and Department of Environmental Protection (DEP) even harder for answers. When figuring out the state’s budget plan, Governor Tom Wolf proposed $100,000 to be allocated towards the health department specifically for the health registry. However, health advocates are claiming that $100,000 is not even close to enough money to fund a registry. The other drawback of Wolf’s proposal is that it is not a guarantee the Legislation will pass it, which is a major issue.  The following information is provided by the Pennsylvania Department of Environmental Protection and covers May 18th through May 24th. New: 48 Renewed: 13

Big U.S. shale field Marcellus faces output drop due to low gas prices - Natural gas production in the Marcellus shale, which has grown over the past decade from next to nothing to the source of about a fifth of U.S. output, may decline for the first time if prices in the basin remain low for much longer, according to federal government data. Such a reduction may be worrisome since the United States is counting on the Marcellus to continue producing vast amounts of cheap gas needed to meet growing demand from industrial customers and power generators, and to enable the country to transition into a net gas exporter by 2017. The U.S. Energy Information Administration says production in the fast-growing field in Pennsylvania and West Virginia is set to remain flat for the next few years before beginning a very slow decline primarily because of depressed gas prices. Recent data supports signs of a slowdown. The number of rigs in the area has dwindled in recent months to its lowest since 2011, and drillers including Chesapeake Energy Corp and Cabot Oil & Gas Corp have temporarily shut in some production due to weak regional prices. Those low prices are threatening the basin with its first annual decline in output since producers started using hydraulic fracturing and horizontal drilling to develop the formation. But many private analysts say output from the Marcellus will continue to grow over the next several years as demand for gas increases and pipeline companies complete more projects to transport the fuel out of the region, boosting local prices that have fallen to their lowest in at least 14 years. “We see some slow growth in the Marcellus each year out to 2020″ because of new pipelines

Shale gas industry brings gas tax debate to TV screens - The great debate between the shale gas industry and Governor Tom Wolf regarding Wolf’s proposed gas tax is still going strong, but the industry has taken things to a new level and is reaching people through their television screens. As reported by State Impact Pennsylvania, “The Pennsylvania Chamber of Business and Industry, which leads a coalition of groups opposing the shale gas tax, has begun running an ad against Governor Wolf’s proposal in the Pittsburgh, Harrisburg and Wilkes Barre/Scranton media markets.  The TV spot, launched Monday, is part of the Chamber’s ‘Stop New Energy Taxes’ campaign, an effort to beat back Wolf’s plan to tax Marcellus Shale production at five percent, with an additional 4.7 cents per thousand cubic feet.”According to Wolf, the gas tax would bring in $1 billion, and most of it will be put towards education, but that’s not even close to what the TV ad focuses on.  The ad emphasizes how the tax will cost “tens of thousands of jobs,” how it will be the highest tax throughout the U.S.  The money brought in from it, will go to Harrisburg rather than urgent local projects.  The final point the ad places focus on is the states’ current impact fee.  The money brought it by the fee is directed back towards local towns that are located in areas that have gas drilling operations.  During 2013, the impact fee yielded $224 million for rural communities, and according to Wolf the money will not disappear because the severance tax would replace the impact fee. The following is the industry’s TV ad, and to read State Impact Pennsylvania’s full story on the great severance tax debate, click here.

Organic Farmer Turned Fracking Protester: 'I Never Figured to be Engaged in Protest Activities’  Maggie Henry, an elderly organic farmer from Western Pennsylvania, never expected to become a protester. Her 100-acre farm in Bessemer, near the Ohio border, produced eggs, meat and vegetables for top restaurants in Pittsburgh, “I had a thriving business going! It was all I could handle,” she said.  But after a shale gas operation began drilling in a neighboring farm more than a year ago, she says, her life changed.  Her farm, which has been in her family for almost a century, is located above an historic oil field. Plugged wells can serve as pathways for methane and other pollutants, allowing them to seep to the surface and into aquifers.“The toxicity of the air and the contamination of the water is absolutely unbelievable,” she said. “People are covered with rashes and blisters. They experienced all sorts of neurotoxic symptoms. Their children suffer nose bleeds and asthmatic reactions.” She blames drilling for a series of earthquakes in March 2014 that she says cracked her basement foundation, drywall and chimney pipe. In February, two pigs and a cow died unexpectedly.A year ago, her story was recounted in a documentary. And on May 14, she traveled to D.C. to attend the Federal Energy Regulatory Commission’s open meeting, becoming one of three protesters to evade a security dragnet and enter the meeting. She stood up at the end of the session, shouting “In the shale plays of Pennsylvania, you are killing people!”She mentioned Terry Greenwood, a farmer who she said “made a chilling prediction years ago. He said, ‘First it is the animals, then it will be the people.’ We buried him in June of last year, the victim of a rare form of brain cancer,” she said.

Universities Study Effects of Fracking - - Penn State University professors and other researchers analyzed water wells in northeastern Pennsylvania allegedly contaminated with methane and chemicals associated with fracking. Among the materials identified in the water wells was 2-n-Butoxyethanol, which can be used as part of the fracking process.  Researchers also reportedly found methane - the most common substance in natural gas streams that is often known simply as "natural gas" when burned for energy - in some rural Pennsylvania drinking water wells.  "Part of the problem may have been wastewaters from a pit leak reported at the nearest gas well pad-the only nearby pad where wells were hydraulically fractured before the contamination incident," the study's abstract states. However, Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association, said fracking near the water wells does not mean the procedure caused the contamination. He said some Mountain State water wells have historically had methane in them. "There are formations that have methane in them that are close to the surface that can communicate with a water well," he said. "Gas doesn't stay still - gas migrates." "The fact is that it is a historical phenomenon." As these researchers studied water quality, engineers at Drexel University evaluated air pollution from fracking sites and processing infrastructure in the same region of Pennsylvania. They compared levels of carbon monoxide, methane, ethane, nitrogen oxides and other volatile organic compounds to those found in other shale formations across the country from which natural gas is drawn."In looking at a cross-section of sites, we identified compressor stations as one of the larger long-term emission sources,"

Oil’s secret transit –- When crude oil arrives at a refinery in South Philadelphia or Marcus Hook or Paulsboro, the refinery must have a public plan outlining the hazards, a detailed response to possible accidents, and worst-case scenarios for disasters that could endanger hundreds of thousands of people. Not so the trains carrying oil to the refineries. As they travel past the Children's Hospital of Philadelphia, the Philadelphia Museum of Art, Philadelphia International Airport, along the Schuylkill Expressway, and past thousands of homes, schools and businesses, the oil trains need no public accounting of what they are carrying, or when or where, or what could happen if something goes wrong. As Philadelphia becomes a major hub in the nation's new oil boom, with about 150 million gallons of highly flammable crude arriving by train each week, a shroud of secrecy covers the trains, their cargoes and the safety of their infrastructure. Because of explosive oil-train derailments such as the 2013 accident in Lac-Mégantic, Quebec, that killed 47 people, neighbors of railroads want to know more about the hazards that may be rolling through their communities.“In Philadelphia, the tracks go right up against neighborhoods, homes, schools … those who would be most affected are kept in the dark,” More than 700,000 people in the region - including 400,000 in Philadelphia - live within a half-mile of rail lines that carry crude oil, according to an Inquirer analysis. Federal emergency-response guidelines recommend a half-mile evacuation zone if an oil tank car catches fire. The hazards were brought into sharp focus by the deadly derailment of an Amtrak train on May 12 in Port Richmond. The derailed Amtrak cars came to rest a short distance from tank cars of the type used to carry crude oil, ethanol, and other explosive liquids.

Editorial: No secrets in rail safety - Philadelphia Inquirer - With Philadelphia trying to become a major energy hub, the wall of secrecy surrounding the condition of tracks and bridges used by trains carrying highly flammable crude oil through neighborhoods, behind schools, and past commerce centers, must come down. Every week, about 150 million gallons of crude move through the region, but the people who would be most affected by an accident have no way of knowing whether the tracks or bridges used by oil freight cars are safe. More than 700,000 people in the region live within a half-mile of rail lines, The Inquirer’s Paul Nussbaum reported Sunday. Federal emergency guidelines call for nearby residents to be evacuated if a train catches fire, so clearly they have a vested interest in knowing the condition of tracks and bridges. However, the railroads aren’t subject to the Emergency Planning and Community Right to Know Act, which means what the railroads find after inspecting bridges and tracks isn’t open to public scrutiny. The Federal Railroad Administration doesn’t even keep a list of how many rail bridges there are.  New rules have voided a federal requirement that railroads share information about large oil shipments with state emergency response commissions. And in those cases where railroads and emergency responders collaborate, the information they share is exempt from public disclosure laws. That’s just wrong. The public must know the condition of tracks and bridges to urge government intervention when necessary. Otherwise, railroads more concerned with their bottom lines may put profits ahead of public safety.

U.S. Military Concerned As Oil "Bomb Trains" Roll Dangerously Close to Nuclear Bomb Silos -- The latest oil train derailment and explosion in Heimdal, North Dakota is another frightening reminder of the danger this industry poses to communities across the country. Thankfully evacuating Heimdal wasn’t that big an operation because there are only 27 residents in the town. Which is a significantly smaller number than the 150 nuclear missiles buried in the ground under North Dakota. A recent report by Rachel Maddow reveals that the U.S. military is concerned about the proximity of the oil train tracks to those missile silos. Images like this one are why they are concerned.  So while in the U.S. we mostly hear examples about oil and nukes mixing in a bad way in the Middle East — like the Saudis recently saying they may join the nuclear arms race — it appears we have an oil and nuclear issue of our own right here in the United States. Not that we are dealing with it. In North Dakota, state politicians recently voted to strip funding out of the state budget for safety programs and rail inspectors.  The influence of the oil industry over North Dakota politics has been well documented by The Center for Public Integrity and others. A quote from one resident opposed to the sprawling oil development in North Dakota summed it up well for the New York Times stating, we’re outgunned, outnumbered and out-suited.” And, of course it isn’t just the North Dakota politicians. If it has to do with oil, the American Petroleum Institute is involved. So, despite the new oil-by-rail regulations which are widely considered a gift to the oil and rail industries, the American Petroleum Institute has filed a lawsuit challenging the regulations.

Task force to plot ways of alleviating gas glut in Pennsylvania via pipelines  -- Gov. Tom Wolf has formed a task force to help gas drillers navigate the challenges they experience building thousands of miles of pipelines to carry shale gas to markets and alleviate a glut that has contributed to depressed prices. The task force, which will be led by Department of Environmental Protection acting Secretary John Quigley, will recommend best practices for planning and routing pipelines through Pennsylvania, the governor's office said Wednesday. The goal is to promote collaboration among the stakeholders — drillers, regulators, environmentalists and the public — and find ways to minimize environmental impact while addressing the industry's infrastructure needs . “We need to work with the industry to make sure that the positive economic benefits of Pennsylvania's rich natural resources can more quickly be realized in a responsible way,” Wolf said in a statement. “This task force is part of our commitment to seeing the natural gas industry succeed.” The task force will have about 32 members, Quigley said. Industry and government officials along with environmental and conservation groups will be eligible for membership. Quigley first mentioned the formation of the group during legislative budget hearings this year. “This is not a regulatory conversation,” he said. “This is a collaborative conversation among all stakeholders to try to find the win-win opportunities.”

Columbia Pipeline Group plans expansion, upgrades in Marcellus and Utica natural gas shale plays: Columbia Pipeline Group plans to spend billions in building and upgrading infrastructure in the Marcellus and Utica shale plays to connect natural gas supply to demand. The company, a spinoff from its Indiana parent company NiSource (NI), which is one of the largest utility companies in the country, will handle natural gas infrastructure for soaring production from the Northeast. The separation, announced last September, will create two companies: NiSource, a fully regulated natural gas and electric utilities company with 3.4 million customers under the Columbia Gas and NIPSCO brands, and Columbia Pipeline Group Inc. (CPG), a stand-alone, publicly traded natural gas pipeline, midstream and storage company. The separation is on track to be completed July 1, executives said in a recent conference call. CPG expects net investment in pipeline, storage and midstream assets to grow from about $4.6 billion in 2015 to about $13.5 billion by 2020. It has about 15 projects in various stages of development expected to go into service over the next five years. CPG will include several subsidiaries, including Columbia Transmission, which sits atop the Marcellus and Utica plays, and another dubbed Columbia Gulf, which links those shale plays to the Gulf Coast and future exports of liquefied natural gas from that area.

Is New Jersey Becoming the Pipeline Capital of the Northeast? - New Jersey is awash in plans to build new natural gas pipelines, many of them going through areas set aside with taxpayer funds to preserve open space or farmland.  At least a dozen proposals have been either put on the table or approved -- most of which are aimed at taking advantage of cheap natural gas supplies discovered in neighboring Pennsylvania’s Marcellus Shale formations. Two of the pipelines bring crude oil to refineries in the state.  Inexpensive natural gas from Pennsylvania has been a boon to both customers who heat their homes with the fuel and to businesses that rely on it as a basic building block of their manufacturing processes. It has lowered bills since 2009 significantly for residents -- up to 44 percent for customers of Public Service Electric & Gas, the state’s largest utility. But critics say the pipelines, which cross environmentally sensitive areas and waterways such as the Delaware River, could pose risks to the public and drinking water. The latter concern mostly involves the controversial practice of extracting natural gas from the shale formations with a process called hydraulic fracturing or “fracking.” The technology involves pumping huge volumes of water and a smaller amount of chemicals into the formation to capture the natural gas. Environmentalists say it can lead to contamination of groundwater and the nearby Delaware River, the source of drinking water for 15 million people in the region. “The environmental impacts are very wide-ranging,’’ said Maya von Rossum, Delaware Riverkeeper, who has been one of the biggest critics of fracking and expansion of the pipelines. Among them are leaks from the pipeline of methane, a potent gas that contributes to global climate change, she said.

NY fracking ban poised to take effect, critics say state giving up thousands of jobs --   New York state's controversial fracking ban is poised to take effect in the coming days, amid criticism from pro-drilling advocates that the state is giving up tens of thousands of jobs. The push to ban fracking – the process of injecting a combination of water, sand and chemicals into rock deposits underground to release natural gas -- is the culmination of nearly seven years of advocacy spanning two governors and three environmental conservation commissioners. Though New York has had a fracking moratorium for years, current Gov. Andrew Cuomo rejected efforts to lift it and, instead, changed it to an all-out ban in December.   But critics charge Cuomo’s decision risks up to 54,000 fracking-related New York jobs -- jobs that don't exist now since fracking is not allowed, but could have been generated with the approval of various projects in the future. "Right now I'm watching an amazing contradiction between what New York state has done in regards to banning natural gas development in New York state and the state's own admission that it will lose 54,000 jobs in relation to the ban,” Rep. Tom Reed, R-N.Y., told The Evening Tribune. “When you have a federal policy that says you can do it safely and responsibly, I think we should be able to do it at the state level at the same time.”  He appeared to be referring to a state report released earlier this month citing estimates that drilling in the Marcellus and Utica Shales could generate between roughly 14,000 and 54,000 "direct and indirect jobs."

State to require full environmental review of crude-heating facility —After 18 months of pressure from environmental and community groups, state officials have reversed an earlier position, and will now require a full environmental review of a crude-heating facility that would allow tar sands oil to be shipped down the Hudson River. On Thursday, the state Department of Environmental Conservation announced that it will conduct a full review of a proposal by Global Partners to install a crude-heating facility at the Port of Albany. “Our review of Global’s application has focused on protecting the health of people living around the facility and the environment,” D.E.C. commissioner Joe Martens said in a statement. “This community has voiced its concerns and raised some serious issues. Through the environmental review process, DEC will continue to evaluate the project’s impacts.” State officials had previously determined that the facility would not need an extensive environmental review, before declaring that the state would conduct an “interim” review that led to today’s decision for a more comprehensive study.The project has drawn the attention of environmental groups around the country. The decision is a major blow to the energy industry as its looks for new routes to ship heavy crude from Western Canada.

Victory for Groups Fighting Proposed Tar Sands Facility as Full Environmental Review Now Required  In what came as a welcome surprise to activists in Albany, New York, the New York State Department of Environmental Conservation (DEC) reversed an earlier decision and now will require a full environmental review for a proposed tar sands oil heating facility at the Port of Albany. “It is good for New York State that the DEC came to a proper decision in one of the most important environmental matters facing the state,” saidRiverkeeper president Paul Gallay. “We look forward to participating with the state on a full public safety and environmental review that is robust and protective of our communities and our waterways.”Riverkeeper is one of many groups fighting the plan by Global Partners to add tar sands oil to the Bakken oil it is already moving down and along the Hudson River in large amounts, efforts highlighted in this recent New York Times Op-Doc.  Albany has become the largest distribution hub for crude oil on the East Coast due to its rail access and its port on the Hudson River and this transformation happened with so little fanfare that the local community was initially unaware of what the DEC had permitted.  And then the first oil tanker that was filled with 12 million gallons of Bakken oil loaded from rail cars and sent off down the Hudson promptly ran around. Luckily no oil was spilled and, as a result, local people began to ask questions just as Bakken trains began to derail and explode with alarming frequency, as noted in this short documentary about the risks posed by oil trains to Albany and the Hudson.

Maryland’s Republican Governor Will Allow Fracking Ban To Become Law --At the end of the day on Friday, Maryland Gov. Larry Hogan will become the first-ever Republican governor to allow a statewide moratorium on fracking. A two-year ban on the natural gas extraction technique passed overwhelmingly in both houses of the state General Assembly earlier this year, and last weekend, Hogan announced that that he would not veto the bill. However, Hogan also said he wouldn’t sign the bill, instead simply allowing it to automatically become law under time restrictions for signing or vetoing. That time restriction expires at the end of the day on Friday.  Environmentalists have long been concerned about the risks fracking poses to drinking water via the vast amount of waste that it produces, and the potential for methane and other chemical migration into aquifers. Air pollution risks have also been a concern, as well as methane leaks that contribute to climate change. The bill that will become law is in response to concerns about fracking’s potential impact on the environment and public health. The two-year period allots time for what environmentalists hope will be a comprehensive public health and scientific study of the industry, similar to the study undertaken by New York before it decided to permanently ban fracking last year. In addition, the bill will require Maryland’s Department of the Environment to finalize regulations on the process by October 2016. After those regulations are formed, no company will be allowed to frack in the state until October 2017.

Fracking off to slow start in NC as wildcatters stumble - Wildcatters are having a hard time making a go of energy exploration in North Carolina.  Since the state began accepting permit applications for fracking in mid-March, none have been filed, and there is little visible sign of any hydraulic fracturing activity in the state. A judge’s decision this month to temporarily halt all drilling permits for fracking in North Carolina adds another setback for energy exploration. Legislators pushed through an energy bill last year expecting the state to see its first shale gas wells in 2015 and join Pennsylvania and Ohio in attracting the jobs that come with fracking. Instead, depressed energy prices worldwide and uncertainty over the amount of shale gas here have made the state unappealing to all but small, independent operators.  So far, of the two groups that have expressed interest in drilling here, one ceased operations last year before conducting any testing. And the second unraveled this year, leaving unpaid fees and estranged business associates, according to draft business plans and private emails provided by one of those involved in the effort, Mark Rabin, a Fayetteville energy broker and the son of state Sen. Ronald Rabin. The Republican senator represents part of Johnston and all of Harnett and Lee counties; Lee is considered to be the epicenter of future fracking activity.  The emails chronicle an initial wave of giddy excitement, ending in mutual recriminations. They also highlight the problems in raising funding for such risky ventures and underscore the concern of fracking opponents who worry about the lack of technical proficiency and safety records of smaller operators.

Haw River Assembly Wins Injunction on Fracking Permits by North Carolina Mining and Energy Commission - Wake County Superior Court today stayed a constitutional challenge to the state’s Mining and Energy Commission by the Haw River Assembly and a Lee County landowner pending a decision in the appeal of McCrory v. Berger or until further order of the court. During the stay, the MEC is enjoined from accepting or processing permit applications for drilling units and from creating any drilling units. This effectively reinstates the moratorium on fracking in North Carolina.  Read the full PRESS RELEASE about the injunction. Read the full Haw River v. MEC court order. The lawsuit against the MEC charges that the commission violates the separation of powers provision of the North Carolina Constitution because a majority of the commission’s members are political appointees by the legislature, and that the fracking rules, created by an unconstitutional commission, are therefore null and void. (Read the  press releaseconcerning the lawsuit and the full  legal complaint)  “Today’s decision stopped any immediate harm to North Carolina residents from a commission formed by the state legislature in violation of the separation of powers firmly established in our state constitution pending further court deliberations,” said John Suttles, the senior attorney at the Southern Environmental Law Center who represented the Haw River Assembly and Lee County property owner Keely Wood Puricz before the court.

Mary Landrieu has a new job in Washington DC - After tireless focus on energy and environmental issues during her time as Louisiana senator, Mary Landrieu has taken up the flag once again, this time as a senior policy advisor at Van Ness Feldman LLP in Washington, DC.According to the firm’s website, Van Ness Feldman “is a leading, highly responsive law and policy firm providing legal counsel, thought leadership and policy strategy to help clients navigate the complex intersection between business and government.” Landrieu will be bringing her knowledge of public policy, strategic and regulatory issues to the table, particularly in reference to energy, natural resources and infrastructure matters, according to a press release from the firm.  “I am proud to join Van Ness Feldman. I have always respected the firm and worked closely with them during my 18 years in the Senate,” Landrieu said in the press release. “Their substantive and sophisticated approach to important public policy issues in the areas of energy, the environment and natural resources was a major factor in my decision making process.”

Ex-Senator Joins Firm That Lobbies For The Industries Destroying Her State - Just a few months after losing her seat in the U.S. Senate, Louisiana Democrat Mary Landrieu announced she’s joining the powerhouse lobbying firm Van Ness Feldman as a “senior policy adviser,” focusing specifically on energy policy issues. That title will allow Landrieu to get around the law that bars former members of Congress from lobbying their old colleagues for two years.  Landrieu, the former chair of the Senate’s powerful Energy and Natural Resources Committee, will now be advising for a firm that represents powerful oil, gas, coal and other energy corporations, including some of the same ones that her state is currently trying to hold accountable for destroying the wetlands that used to protect the coastline from storms. As The Intercept notes, one of Van Ness Feldman’s clients is TransCanada, the company that has been fighting for the Obama Administration’s approval of the controversial Keystone XL pipeline. Landrieu has long been a supporter of the pipeline, and even tried, unsuccessfully, to force congressional approval of the project before the State Department completed its review. While in the Senate, she also aided fossil fuel companies by repeatedly fighting federal attempts to address air pollution and climate change.  In her new position, Landrieu may also have an opportunity to for building more ports for the US to export fracked natural gas to other countries. Van Ness Feldman represents several corporations who would benefit from this policy shift, including Maryland’s Dominion Cove — a planned export facility that has drawn strong opposition from the local community. Another client, Kinder Morgan, is attempting to build a network of pipelines across the northeast U.S. against the wishes of landowners who would be impacted.

Another Domino Falls for Anti-Fossil Fuel Crusaders - - Throughout the United States, especially in communities with existing or potential oil-and-gas development, outside groups have moved in with a vengeance and agitated the population—resulting in bans against all exploration for hydrocarbons and/or the use of hydraulic fracturing. Expensive lawsuits have been filed and courts have repeatedly declared such bans as “unconstitutional.” The newest domino to fall is in Texas where Governor Greg Abbott, on May 18, signed House Bill 40 (HB40)—also known as the Denton Fracking Bill—which clarifies that an “oil and gas operation is subject to the exclusive jurisdiction of the state. Breitbart Texas reported on the bill’s passage. As was the case in Mora County, New Mexico, the Pennsylvania-based Community Environmental Legal Defense Fund participated in pushing Denton, Texas’ fracking ban—passed in November by 59 percent of the voters. In Mora County, a federal judge declared its drilling ban “unconstitutional.” Courts have handed down similar decisions against attempts to ban fracking in Colorado and Ohio. But the Texas legislature didn’t wait for the courts to decide in the challenges to the Denton ban. Lawmakers introduced a total of 11 bills aimed at confirming that regulating oil-and-gas activity is the province of the Texas Commission of Environmental Quality and the Texas Railroad Commission. HB40 emerged as the final word—making Texas the first state to pass specific legislation limiting, not eliminating, local control. The Oklahoma legislature has passed a similar bill and Governor Mary Fallin is expected to sign it. In New Mexico, the House passed a pre-emption bill, but it was never brought up for a vote in the Senate.

Meet The Man Behind Oklahoma's Earthquake Epidemic -- When it comes to Oklahoma's "induced seismicity" there is nobody more responsible for either Oklahoma's "shale miracle" or the resultant earthquake epidemic than David Chernicky, CEO of Tulsa-based New Dominion. This is his story, as recounted by Bloomberg:  By the late 1960s the Oklahoma City oil field was largely spent. The pockets of oil and gas that remained in the reservoir were trapped deep inside rocks. The only way to get at them was to “dewater” the field—which meant pumping out hundreds of millions of barrels of salty, often toxic wastewater, then disposing of it.  David Chernicky saw an opportunity. A trained geologist turned wildcatter, he’s devoted most of his 35 years in the oilpatch to perfecting the business of reviving oil fields instead of exploring for new ones.  ... In 2003 New Dominion, began work on a new breed of injection well, a type that could take down tens of millions of barrels a year and bury it deep underground. Chernicky, who has a bawdy streak, named the first one Deep Throat.  Behold: Deep Throat.  According to Bloomberg, few companies have more at stake than New Dominion. "A July 2014 study published in Science found that four high-volume disposal wells owned by New Dominion on the outskirts of Oklahoma City may have accounted for 20 percent of all seismic activity in the central U.S. from 2008 to 2013. Two victims of the 5.7 quake from 2011 have sued New Dominion for damages; the state Supreme Court has agreed to hear the case of Sandra Ladra, a 64-year-old resident of Prague, who sued after her stone chimney crumbled during the quake, sending rocks crashing down on her legs. Should the court establish a precedent where New Dominion and companies like it can be held liable for earthquake damage, the fallout could be severe.

Oil, gas spill report for May 25 - The following spills were reported to the Colorado Oil and Gas Conservation Commission in the past two weeks. Foundation Energy Management LLC., reported on May 19 that a stuffing box developed a leak, releasing approximately 4-5 barrels of oil and produced water outside of Keenesburg. A vacuum truck was dispatched to the location to pick-up free standing liquid and return it to the tank. The well was shut-in so the stuffing box could be repaired. Noble Energy Inc., reported on May 18 that a flowline leak was detected outside of Kersey. It has been determined that the cause of the leak is equipment failure. It is approximated that less than 5 barrels of condensate and less than 5 barrels of produced water spilled. The well has been shut-in. After the site assessment is completed, remediation procedures will be evaluated. Noble Energy Inc., reported on May 15 that impacted soil was discovered, during a water vault removal, outside of LaSalle. It is approximated that less than 5 barrels of produced water spilled. An assessment of the site has been scheduled and the facility has been shut in. Noble Energy Inc., reported on May 15 that impacts to the soil and groundwater were discovered beneath the produced water vault outside of Gill. The impacts were discovered during plugging and abandonment procedures. It is approximated that less than 5 barrels of produced water spilled. Site assessment activities and an excavation have been scheduled.

Environmental groups monitor new Wyoming fracking rules - As Wyoming challenges new federal fracking rules on public lands, state regulators are quietly implementing a state requirement that petroleum companies justify keeping secret the ingredients in the chemical products they pump underground during hydraulic fracturing. The state has approved six applications from companies seeking to keep their ingredients confidential under the terms of a settlement with environmental groups announced in January. The state’s top oil and gas regulator says he has rejected three to four applications due to a lack of information. The environmental groups that challenged Wyoming’s disclosure policies say it is too early to tell if the state is effectively implementing the agreement, but note the groups are monitoring its progress closely. “We are collecting a critical mass of implementations to evaluate how the settlement is working in a more comprehensive way,” Katherine O’Brien, an attorney for Earthjustice, told the Casper Star-Tribune. The settlement prescribes a review process for any company seeking trade secret protections from the state. A trade secret is a legal designation that bars public disclosure of the ingredients or parts used to make a product.

Federal data: As oil production soars, so do pipeline leaks - The oil pipeline leak that fouled a stretch of California coastline this week reflects a troubling trend in the nation’s infrastructure: As U.S. oil production has soared, so has the number of pipeline accidents. Since 2009, the annual number of significant accidents on oil and petroleum pipelines has shot up by almost 60 percent, roughly matching the rise in U.S. crude oil production, according to an analysis of federal data by The Associated Press. Nearly two-thirds of the leaks during that time have been linked to corrosion or material, welding and equipment failures, problems often associated with older pipelines, although they also can occur in newer ones, too. Other leaks were blamed on natural disasters or human error, such as a backhoe striking a pipeline. Industry officials and federal regulators say they have adequate means of gauging the safety of pipelines, but the aging infrastructure is a source of lingering concern for outside experts.  “Things get older. They don’t get stronger.” Since 1995, there have been more than 2,000 significant accidents involving pipelines carrying crude oil and refined petroleum products that have caused about $3 billion in property damage, according to data from the federal office that oversees pipeline safety, the Pipeline and Hazardous Materials Safety Administration. That’s an average of a little over 100 per year. But after dipping to 77 in 2009, that figure has spiked to at least 121 in each of the past two years.

The Constant Cost of Carbon — Another California Oil Spill --Gaius Publius - As reported by the LA Times and the Santa Barbara Independent, there’s a pretty serious oil spill off the Santa Barbara coast in an area called Refugio State Beach. The source of the spill is a shoreline pipeline whose leak detection mechanism apparently failed to work. The leak poured what was first reported as 21,000 gallons of oil into the ocean … During the several-hours-long leak, about 21,000 gallons of oil escaped the pipeline, Coast Guard officials estimated. Coast Guard crews stopped the leak by 3 p.m., said Petty Officer Andrea Anderson. … but those estimates were apparently provided by the pipeline company itself, Plains All American Pipeline, to the Coast Guard (my emphasis throughout):The accident has been classified by federal responders as a “medium-sized” spill and was traced to an underground pipeline a few hundred yards inland above Highway 101. The 24-inch pipe is owned and operated by Houston-based Plains All American Pipeline, which stopped the leak at approximately 3 p.m. It’s unclear how long the pipe was leaking, what caused it to break, or exactly how much crude escaped. Plains initially reported that 21,000 gallons of oil made its way into the ocean, but that number is expected to rise after county, Coast Guard, and state Fish and Wildlife personnel tally the true damage.Nice of the Coast Guard to take the company’s word and make it their own. An update at the Independent offered this correction:Lt. Jonathan McCormick with the U.S. Coast Guard said an estimated 21,000 gallons of oil spilled into the ocean. That estimate comes from Plains All American Pipeline. An independent assessment has not yet been completed, he said, and it’s unknown how many gallons of crude remain on land and along the shoreline.The latest news from the AP puts the number of gallons much higher: Up to 105,000 gallons of oil might have spilled from California line.

Déjà Goo All Over Again - The world lusts for oil, and Santa Barbara has to take the consequences ​— ​again.  Ironically, the new spill probably wouldn’t have been anywhere near as serious if the oil company that built it, All American Pipeline, had installed an automatic shutoff system.  But All American fought county oversight in court and won a settlement in its favor. It never installed the automatic shutoff. Nor did the company that bought the line and now operates it, Plains All American Pipeline. It is the only oil pipeline in Santa Barbara County without such a safety measure.I helped cover the 1969 Santa Barbara Channel oil blowout, and after all the promises and pledges I heard then, I never thought I’d ever have to see more greasy gunk covering and smothering our beaches.  Governor Reagan and president Nixon came, stood on our polluted sand, clucked their tongues in dismay, and went away. Nixon was pictured in the Santa Barbara News-Press walking on gunky Leadbetter Beach with mayor Gerald Firestone and representative Robert Lagomarsino. The headline: “Nixon Promises to Consider Permanent Ban on Drilling.” Never happened.Say what you want about Richard Nixon and his promises; to his credit, he proposed the Environmental Protection Agency ​— ​so hated by oil-state politicians ​— ​and it went into effect the year after the 1969 spill.A long line of politicians share a measure of the blame for lax enforcement of oil regulations, but as Walt Kelly’s Pogo famously put it, “We have met the enemy, and he is us.”  Us being, well, you and me and the world.

Mysterious Globs Of Oil Close Beaches In Southern California -- Nearly seven miles of popular Los Angeles coastline remain closed Friday after mysterious balls of oil — some as large as footballs — began washing ashore Wednesday. The substance was first spotted around 10 a.m. on Wednesday by lifeguards at Manhattan Beach, though officials are unsure exactly when the balls began washing ashore. Cleanup crews were dispatched, and worked into Thursday night to clean the beaches. They hope that the cleaning will be complete in time to reopen the beaches for the weekend. As of Friday, officials reported no new balls had been seen on the shore. The origin of the substance — thought to be oil or tar balls — remains unknown. Officials aren’t ruling anything out — the balls could be coming from a nearby refinery, offshore oil tanker or the Santa Barbara oil spill last week, a disaster that sent up to 101,000 gallons of oil into the ocean and surrounding environment. Coast Guard and state officials collected samples of the tar and water, hoping to run tests in order to figure out where it came from, but they note that the results of those tests could take days.  The Coast Guard did not find evidence of a potential spill from the nearby oil tanker. Tar balls can happen naturally, and some locals told NBC News that they had seen a substance like this on the beaches before, though never in this amount. According to the National Oceanic and Atmospheric Administration (NOAA), tar balls can also happen after oil spills, when wind causes the oil slick to break up and mix with water, forming a sticky, pudding-like substance. For years after the BP oil spill, locals reported finding tar balls along Gulf Coast beaches.

Tar Balls Wash Ashore Popular LA Beaches: Officials Consider Link to Santa Barbara Oil Spill  -- Mysterious clumps of tar washed ashore in California’s South Bay Wednesday, forcing the area’s beaches to close for swimming. The U.S. Coast Guard as well as state officials are now trying to pinpoint where the substance originated, and have not ruled out the devastating oil spill in Santa Barbara last week.  Seven miles of Southern California’s most popular beaches, from El Segundo to the Torrance-Redondo Beach, were left sticky with the globs of oil that ranged from the size of baseballs to footballs, according to the Los Angeles Times.   Investigators told the publication that the tar has moderate hazardous characteristics and is slightly flammable, and has tested positive for low amounts of volatile organic compounds. Workers have since cleaned the area and officials said Thursday that clean-up efforts were successful. “There appears to be no new tar balls or anything additional to the amount that we have recovered thus far,” U.S. Coast Guard Capt. Charlene Downey said.

Robert F. Kennedy, Jr. Joins Farmers and Ranchers to Call on Gov. Brown to Reject LNG Exports - At Noon at the capitol steps in Salem, Oregon, a coalition of groups will rally to oppose LNG exports. The rally will include speeches from tribal leaders, impacted landowners and a keynote speech from Robert F. Kennedy Jr., president of Waterkeeper Alliance. “Oregon is viewed as a leader in combating climate change, yet the fossil fuel industry is pushing to make Oregon a trafficker of fracked gas to the entire world through these LNG export proposals,” said Kennedy. “Oregon should stand firm in protecting iconic salmon-bearing rivers like the Rogue and Columbia and in the process reaffirm its goal of reducing climate pollution by rejecting LNG export terminals and pipelines.” Oregon faces two LNG export proposals—one in Coos Bay and the other on the Columbia River—coupled with associated proposals to construct hundreds of miles of new natural gas pipelines throughout Oregon and Washington. Opposition to the LNG projects has created unusual alliances, inspiring rural landowners near proposed pipelines to join forces with conservationists and climate activists. “As a proud conservative Oregonian, I oppose the pipelines for LNG exports because it would destroy valuable farmland and forestland,” said rancher Bill Gow of Douglas County, Oregon. “There’s no way these companies are going to put a big scar through the middle of my ranch.” Like Gow, hundreds of Oregon and Washington families may have their land condemned to install a pipeline to export gas to overseas markets.

600 Rally in Opposition to LNG Exports  - On Tuesday at the capitol steps in Salem, Oregon, more than 600 people rallied to oppose LNG exports. The rally included speeches from Umatilla Tribal Leader Cathy Sampson Kruse, State Rep. Peter Buckley (D-Ashland), impacted landowners and Waterkeeper Alliance President Robert F. Kennedy Jr. There are currently two proposed LNG export terminals, one in Coos Bay and the other at the mouth of the Columbia River in Warrenton. Participants at the rally urged Oregon Gov. Brown to deny both proposed projects. According to the Coalition Against LNG Exports, exporting gas would cause families and businesses to compete on a world market for natural gas. Studies have shown this would raise natural gas prices by up to 54 percent threatening U.S. jobs where factories depend on natural gas. The coalition also says that nearly 700 private property owners face impacts by the proposed Jordan Cove Pacific Connector Gas Export Project and 85 percent of affected landowners object to having the federal government seize their land for multi-national corporate interests.

Revealed: Energy Transfer Partners’ 'Pipeline-for-Prostitute' Landman -- A DeSmog investigation has uncovered the identity of a land agent and the contract company he works with that allegedly offered to buy an Iowa farmer the services of two teenage sex workers in exchange for access to his land tobuild the controversial proposed Dakota Access pipeline, owned by Energy Transfer Partners. The land agent who allegedly made the offer is Stephen Titus, a Senior Right-of-Way Agent who works for the Texas company Contract Land Staff, which was contracted by Energy Transfer Partners. No news outlet has, until now, established the identity of the land agent on the tape, or the contracting company he works for. DeSmog is naming the land agent and the company after an investigation into the available evidence and publicly accessible information, as well as evidence from the farmer who first made the allegation and a second source who has heard an audio recording of the conversation when the sex offer was made. The Iowa Department of Criminal Investigation also has a copy of the conversation Tweedy recorded with Titus, and has opened an investigation, according to the Des Moines Register. Hughie Tweedy, the Iowa landowner who secretly recorded the exchange, told DeSmogBlog on May 19: “Steve Titus. I think the name of the company is Contract Land Staff.”

Not Prostitutes: Energy industry provides jobs and opportunity for women — Judging by its critics, the energy industry – and specifically the oil and gas industry in North Dakota – isn’t female-friendly. Yet women who live and work in the oil patch say the energy industry isn’t just a safe place for women, but that there are plenty of opportunities for everybody. In popular media North Dakota’s oil patch is often depicted as a rowdy place full of roughnecks and prostitutes. A new weekly drama from ABC called “Oil!” which is supposedly set in North Dakota – though that’s hard to tell with the snowcapped peaks of Utah, the actual setting, in the background of nearly every scene – looks to portray oil-patch communities as a sort of nouveau wild west. Stories about strippers striking it rich at oil-town topless bars and struggles with human trafficking dot national headlines.Even some of North Dakota’s political leaders have branded the state unsafe for women. In their 2013 party platform, North Dakota Democrats accused Republican majorities in the state of ignoring “the emergent danger women face by simply being women in this state.” Nationally, activists have declared hydraulic fracking a feminist issue. “Fracking as an industry serves men; 95 percent of the people employed in the gas fields are men,” ecologist and anti-fracking activist Sandra Steingraber said during a lecture at the University of Pittsburgh on April 6. “When we talk about jobs, we’re talking about jobs for men, and we need to say that. And the jobs for women are hotel maids and prostitutes.”Are women unsafe in the energy industry? Are jobs as sex workers and hotel maids really all they can find? Watchdog interviewed a cross section of women working in and around the energy industry. They say women are safe, even in the oil fields, and you don’t have to be a hooker to find opportunity.

Cleanup of oil spill at ND farm to take 2 more years — The state Health Department says cleanup of a pipeline rupture that caused more than 20,000 barrels of crude to ooze across a northwestern North Dakota wheat field will take twice as long as the company had expected. The massive spill from a Tesoro Corp. pipeline that was discovered by a Tioga farmer in September 2013. The spill has been called the worst in state history. Tesoro had said the spill would take two years to clean up. State environmental scientist Bill Suess says it’s now estimated to take at least four years. Tesoro says more than 6,000 barrels of oil have been recovered. Suess says the rest is being baked out of the soil. Tesoro blames a lightning strike for causing the rupture in the steel pipeline.

Small town's residents see remainder of oil train derailment  - Residents of a small North Dakota community are seeing what’s left over from the derailment of an oil train carrying about 180,000 gallons of crude. The train derailed and caught fire May 6, with the mainline running through the 22 person town of Heimdal. Residents were evacuated from their homes for about a day. “You know I was born and raised here and I came back to this town because nobody knew where Heimdal, North Dakota was. Half of the people that live in North Dakota don’t know where Heimdal was and all of a sudden we’re all known at least nationwide,” said Heimdal resident Curt Benson. After the incident, Benson said there were far more people working on accident cleanup than people living in the town. But KXMB-TV reports the town has quieted down, with the mass of emergency crews and reporters gone. Construction workers and remains from the accident are what’s left. “You can hear the birds singing, you know. It’s almost like… It’s almost like things are already back to normal,” says Benson. The TV station says the National Transportation Safety Board is continuing to investigate the accident. Investigators say it can take 12-18 months to determine what caused a derailment.

US officials revive oil train safety order after complaints — U.S. transportation officials are extending an order for railroads to notify states about shipments of hazardous crude oil shipments. Emergency responders had raised worries over a new rule that did away with the requirement. Trains hauling crude from the Bakken region of North Dakota and Montana have been involved in multiple fiery derailments in recent years, including a 2013 derailment that killed 47 people in Lac-Megantic, Quebec. Thursday’s action revives a 2014 order for railroads to give emergency officials oil train routing and volume information to better prepare for accidents. The Transportation Department had moved this month to replace the mandate with a rule that would require states to request the information. Agency spokeswoman Artealia Gilliard says federal regulators “heard loud and clear” the concerns raised by emergency responders.

North Dakota holdout landowner refusing to sell rights for Sandpiper oil pipeline - The calls often came around dinner time. James and Krista Botsford were typically sitting down to eat in their Wausau, Wis., home when someone representing the proposed Sandpiper oil pipeline would ring with offers to buy rights to a swath of the Botsfords’ farmland west of Grand Forks, N.D. The calls were usually followed by a written offer delivered to their door. North Dakota Pipeline Co., a joint venture between Enbridge Energy and a subsidiary of Marathon Petroleum Corp., wants to run the proposed $2.6 billion line through the Botsfords’ land to deliver oil from the Bakken to Superior, Wis., where it will be shipped to points east. With each phone call, the amount of money offered escalated, from about $25,000 to about $50,000, James Botsford said. But the Botsfords decided long ago that society should move away from oil dependency and toward renewable resources. It didn’t matter how much the company would offer; in their minds, no money was enough to compromise those values. “I said, ‘Look, we’re just not going to sign, so why don’t you just go around us?’ ” James Botsford recalled. Instead, the company sued, citing its rights to the land under North Dakota’s eminent domain law, giving them power to condemn land for a right of way. Of 799 landowners in the state, the Botsfords’ case is the only one the company expects to go to court, Enbridge spokeswoman Lorraine Little said. “Using eminent domain is always a last resort,” Little said. “We strive to reach amicable agreements with all of the landowners along our pipelines.”

Would you believe me if I said oil leasing volume is unchanged? --Don’t take my word for it. Project Manager Silas Martin from Drilling Info recently published an article in Forbes Magazine where he stated that the leaders in permit and completion mapping actually found a bearable leasing reality. In the crazy downward trend of the past 6 months, Drilling Info examined an array of market information, including things such as rig counts, permits and leasing. According to Martin, in the past six months, rigs have seen a 52.2 percent reduction. In the previous five months, monthly permits decreased by 40.7 percent. All of this would point to the logical assumption that leasing agreements have followed suit.. However, analysts from Drilling Info found that volume compared to this time last year is relatively unchanged and has even surpassed levels in some spots. According to the database company, the little to unchanged volume indicates that companies are looking to gain leaseholds while the market is still sluggish and unleased minerals are valued at today’s commodity prices. The sagacious tactic belief here is that by the time these new leases mature to producing wells, the market will have recovered to a profitable means. Drilling Info tested this hypothesis by focusing on leases taken in the most prominent American plays. The company used data from Q4 2014 to Q1 2015 for the Bakken, Eagle Ford, Permian and  Niobrara plays.
• 18.6% Increase in Primary Term (43 mo. to 51 mo.)
• 21.1% Decrease in Royalty Interest (19% to 15%)
• 86.5% Increase in Primary Term (37 mo. to 69 mo.)
• 16% Decrease in Royalty Interest (25% to 21%)
• 17.9% Increase in Primary Term (39 mo. to 46 mo.)
• 13.1% Decrease in Royalty Interest (23% to 20%)
• 47.1% Increase in Primary Term (51 mo. to 75 mo.)
• 6.3% Decrease in Royalty Interest (17% to 15%)

‘Shale-ionaires' Suffering from Wave of Bankrupt Oil Drillers - At the height of the U.S. energy boom, Texas landowner John Baen received about $100,000 a month in royalty payments from companies producing oil and natural gas on his property. Now the checks are much smaller, and when he opens his mailbox each day, he’s afraid he’ll find yet another bankruptcy notice. So far, four of the producers sending him checks have caved in to rising debts as oil prices slumped, seeking court protection from their creditors. “I feel like crying because I know I’m going to get another 10 notices,” said Baen, 67, who owns 10,000 acres of land and mineral rights on other property. A rebound in oil prices that bottomed near $44 a barrel in March has provided some relief to stronger companies that have been able to compensate with cost cuts and more efficient operations. For many smaller, cash-strapped producers, current prices of almost $60 still aren’t enough to make ends meet compared to the $100-plus prices seen during the boom days. There have been at least a dozen bankruptcy filings in recent months, and more than a dozen have defaulted on bond payments or warned investors of challenging times ahead, according to data compiled by Bloomberg. That’s sending shock waves through the world of private land and mineral rights owners — sometimes called “shale-ionaires” — who were enriched by the explosion in U.S. shale drilling. Those resource owners basically rent out their oil and gas rights to producers in return for a share of the revenues. When the industry does well, the mineral rights owners do well. When business tanks, they share the pain with producers.

Scott Walker in Oklahoma: End US ban on crude oil exports  — In one of the top oil-producing states in the country, Gov. Scott Walker on Thursday called to end the U.S. ban on crude oil exports. While addressing the Southern Republican Leadership Conference, Walker said the U.S. economy would improve if a 40-year-old ban on exporting crude oil were lifted. “We’ve got an abundance of supply,” he told the crowd. “Think about the impact we could have, not just economically, but from a security standpoint, if we lifted that crude oil ban that has been in place and allow to export in places like our allies in Europe, where instead of being dependent on (Vladimir) Putin and the Russians, they could be dependent on Americans.” Walker also spoke at a Thursday morning breakfast to kick off the event, Oklahoma Republican Party chairman Randy Brogdon said, and spoke to members of the Oklahoma Independent Petroleum Association at a private event. At that event, Walker said securing the U.S. border is crucial to keep out those who have motives other than finding jobs, according to video of the event posted online by the liberal political research group American Bridge. But the central issue at the conference titled “Energizing America” was fossil fuels. Domestic energy is a key issue for Oklahoma, which is one of the top five oil producing states. Walker’s comments fell in line with what conservative Oklahomans wanted to hear, according to Brogdon.

Alberta wildfires burn for 6th day, 10 pct of oil sands crude offline - Firefighters battled wildfires in northern Alberta, Canada’s biggest crude-producing region, for a sixth day on Thursday, with two blazes near oil sands facilities still out of control. The wildfires have forced producers in the Western Canadian province, the largest source of U.S. crude imports, to shut in 233,000 barrels per day of crude production, around 10 percent of total oil sands output. The biggest fire, on the Canadian military’s Cold Lake Air Weapons Range, had grown in size to 20,000 hectares (49,000 acres) from 17,000 hectares on Wednesday. That blaze has forced Cenovus Energy Inc and Canadian Natural Resources Ltd to shut down production and evacuate staff from their Foster Creek and Primrose oil sands projects. Janelle Lane, a wildfire information officer at the Alberta government, said the fire had advanced to roughly 15 kilometers (9.3 miles) away from Cenovus’s Foster Creek site. Although the two oil sands facilities are not threatened directly by the wildfire, it has closed the only access road to the projects. Both Cenovus and Canadian Natural said the status of their operations was unchanged on Thursday. Rich Kruger, chief executive of Imperial Oil Ltd, told reporters on Thursday the blaze was just six kilometers away from one of the company’s wells but there was as yet little risk to Imperial’s extensive operations in the region.

Shell Assures Nation Most Arctic Wildlife To Go Extinct Well Before Next Spill -- Stating that any damage would be limited to just a handful of species that somehow managed to survive that long, officials from the Shell Oil Company assured the public Wednesday that most of the Arctic wildlife living near their proposed drilling site will be extinct well before their next oil spill. “After conducting several environmental impact studies, we can confidently say that our offshore drilling operations pose absolutely no threat to the Arctic’s hundreds of native species, which will have already been completely wiped out by the time any drilling mishap or crude oil spill takes place,” said Shell spokesman Curtis Smith, adding that the region’s polar bears, walruses, and bowhead whales will most likely be eliminated by some combination of overfishing, ocean acidification, and melting ice shelves long before the first drops of unrefined petroleum begin gushing into the Chuchki Sea. “We can assure you that there will be no repeat of the BP oil spill, in which a complex, thriving ecosystem was destroyed. At most, only some algae and maybe a few mackerel will still be around when our rig explodes and spews millions of gallons of oil into their habitat, and we believe those species will pretty much be on their last legs by then anyway.”

Exxon shareholders to vote on climate change, fracking - Shareholders are considering whether Exxon Mobil should put a climate-change expert on its board. That is one of several environmental and company-governance resolutions on the agenda at the oil giant’s annual meeting Wednesday in Dallas. CEO Rex Tillerson is expected to discuss the outlook of the company, which has seen profits decline recently with lower prices for crude oil. Still, the company earned $32 billion last year. An organization of Catholic priests in Milwaukee proposes to put a climate-change expert on the board, saying it would address a poor environmental image. The Exxon board opposes the resolution, saying several board members have engineering and scientific backgrounds and can handle climate issues.

Exxon Shareholders Vote on Climate Change, Fracking -   The votes at meetings of Exxon Mobil Corp. and Chevron Corp. shareholders on Wednesday were expected. Some of the ideas had lost badly at previous annual meetings. Lower prices for crude have cut into the oil giants' profits. At the Exxon Mobil meeting in Dallas, CEO Rex Tillerson said the company is positioned to withstand ups and down in oil prices and give shareholders a good return on their money. Tillerson has said that said that oil prices will remain low over the next two years because of large global supplies and weak economic growth. The company is adjusting by cutting costs. Exxon has completed more than a dozen major projects in the past three years and expects an equal number to begin production through 2017. Exxon plans to cut capital spending as those projects are completed — from $38.5 billion last year to $34 billion this year and less in 2016 and 2017. Shareholders rejected a proposal by an organization of Catholic priests in Milwaukee to put a climate-change expert on the board. The Exxon board opposed the resolution, saying several board members have engineering and scientific backgrounds and can handle climate issues, and it gained only 21 percent support. The outcome was the same at the Chevron meeting. Michael Crosby, sponsor of the resolution at the Exxon meeting, said the company is fixated on oil and gas and isn't paying enough attention to renewable energy and climate change. "This company has to be making plans for the future," he said. "Let's get an expert on the board to deal with a critical question."

Oil down about 3 percent again on dollar, awaits supply data - Oil prices fell by up to 3 percent for a second straight day on Wednesday as a resurgent dollar weighed on the market amid concerns that U.S. crude supplies may have started rising again after three weeks of draws. Industry group American Petroleum Institute (API) said after the market's settlement that U.S. crude inventories rose by 1.3 million barrels last week. A Reuters poll of nine analysts estimated a crude stock drawdown of 900,000 barrels on average, which would mark a fourth consecutive week in inventory declines. Data from the U.S. Energy Information Administration (EIA) on Friday will show how accurate those estimates are. Gasoline RBc1 and heating oil HOc1 prices fell more than 2 percent, extending the slide across the fuels complex, on bets that U.S. refineries will be operating at full swing with the end of maintenance season. The dollar soared against major currencies on speculation about the first U.S. interest rate hike in years. A stronger greenback makes dollar-denominated commodities, including oil, less affordable in other currencies.

Oil Prices Drop To 7-Week Lows - Here's Why --WTI Crude hit new 7-week lows, dropping below $57 (front-month) for the first time since April 15th's 'inventory draw' rip. In addition to reports from Reuters of leaked details aboutOPEC not expectated to cut production (did anyone really expect that), a combination of renewed inventory builds (as reported by API last night) and reports that Iraq is increasing its supply to new record highs is forcing futures prices to catch down to physical markets. Weakness driven by...Iraq supply concerns...(as RT reports) Iraq is ready to increase its crude exports to a record 3.75 million barrels per day in June, continuing OPEC’s strategy of ousting US shale producers from the market. The extra oil from Iraq comes to about 800,000 barrels per day, more than from another OPEC member, Qatar, said Bloomberg, referring to Iraq's oil shipments schedule. Iraq is increasing oil exports in two directions. The first is in the Shiite south, where companies such as BP and Royal Dutch Shell work. The second is Nothern Iraqi Kurdistan, whose government last year received Baghdad's consent to independent oil deliveries. And Iran remains a worry... Forget #OPEC as a whole, the two countries to watch are #Iraq and #Iran as #oiloutput rises  And inventory builds reappear...

Crude Prices Bounce On Inventory Draw Despite Biggest Production Spike In 19 Months --Following last night's surprise inventory build (as reported by API), as one trader noted, "inventory declines are expected this time of yr and more or less expected, we need to see inventory draws accelerating," and DOE didn't disappoint reporting a 2.8 million barrel draw (against expectations of a 2 million barrel draw). Inventories remains massively high though and Crude Production soared 3.28% - the biggest rise since Oct 2013. Crude prices initially ripped on the inventory news but are fading. 4th week in a row of inventory draws For some context as to what this inventory change means... But production exploded by the most in 19 months... Lower 48 States increased production at an average of 209,000 barrels per day Crude prices ramped into the data after legging down all morning... spiked on the news but perhaps the machines have not seen the production data yet. Charts: Bloomberg

US Oil Production Sets New Modern Record Last Week -- I looked over the weekly Petroleum Inventory Report put out by the EIA today, and the biggest takeaway by far was that US Oil Production set a new modern era high at 9.566 Million Barrels per day. The last high in US Production occurred in March, and it appeared that the US Production numbers were getting slightly weaker, and maybe the top in US Production was in. But this past week Production really ramped back up with a blowout number, and if it wasn`t for a week in which imports were unusually low for the week, there would have been another huge build in Oil Inventories for the week. Refineries were operating near full capacity on the week cranking out a utilization rate just shy of 94%, which also helped avoid another weekly inventory build in oil supplies. However, Cushing Oklahoma and the Gulf Coast Region barely budged in reducing the oil inventory surplus at those two crucial storage hubs. Cushing Oklahoma still has 60 Million Barrels stuck in storage facilities, while the Gulf Coast has 242 Million Barrels awaiting refinery for end use.  However, the noteworthy takeaway is that despite a large reduction in drilling rigs, and the lower prices of the last year US Oil Production is still going up, and not tapering off at all! So much for the Saudi and OPEC strategy of putting a dent in US Oil Production by not cutting production and hoping to gain market share for their oil by putting the Shale Industry out of business.

What jump? Record U.S. oil output due to revisions, not rigs, EIA says - A reported jump in weekly U.S. crude production data that set oil traders atwitter on Thursday was chiefly caused by revisions to two-month-old figures, not a surge in immediate output, a U.S. official said. On Thursday, the Energy Information Administration’s Weekly Petroleum Status Report showed field production of crude oil rose by 304,000 barrels per day (bpd) to 9.57 million bpd last week, the highest in weekly records going back to 1983. Monthly data show U.S. output peaked at 10.04 million bpd in November 1970. While skepticism over the EIA’s model-based weekly production estimates is not new, the dramatic increase still surprised traders and investors from London to Houston, causing some to question whether the years-long shale boom was petering out. Oil prices vacillated after the data, first falling before ending 17 cents higher on the day. Robert Merriam, EIA’s manager of petroleum supply statistics, cautioned against reading too much into the figures, since they are based largely on forecast models and historical data rather than real-time information – unlike data on inventories or refinery operations. “At the end of the day, the crude production numbers are a modeled number. We don’t and no one really has real time information,” he said. “There’s a long delay.” The latest figures were sharply higher because the EIA incorporated detailed data from states including Texas showing that production in March was higher than earlier estimated. As a result, the agency raised its baseline for March by some 130,000 bpd, Merriam said. It then increased the growth trajectory to account for the higher-than-expected rise, adding another 75,000 bpd to last week’s figure.

U.S. oil drillers pull 13 rigs, biggest drop in 4 weeks -Baker Hughes – Energy firms pulled another 13 rigs from U.S. oil fields this week, the biggest drop in four weeks, data showed on Friday, showing that a near six-month slump in activity had yet to run its course despite a rebound in crude oil prices. That was the 25th straight weekly decline, bringing the total rig count down to 646, the lowest since August 2010, oil services company Baker Hughes Inc said in its closely followed report. However, in the Eagle Ford basin in South Texas, the nation’s second biggest shale oil field, drillers added one oil rig in the third weekly increase in a row, bringing the total up to 90. The market has been eyeing the U.S. rig count and the increases of a few rigs in some basins over the past few weeks ahead of next week’s meeting of the Organization of the Petroleum Exporting Countries, which is to decide on crude production levels of its 12 members. OPEC is widely expected to keep its output levels unchanged to defend market share.The Permian basin in western Texas and eastern New Mexico, the biggest and fastest growing U.S. shale oil play, meanwhile, lost one oil rig to 231, the lowest since at least 2011, according to Baker Hughes data going back to 2011. At least three other shale formations also lost one rig each this week. Since the number of oil rigs peaked at 1,609 in October, U.S. drillers have slashed spending, eliminated thousands of jobs and idled more than half of the country’s active rigs as U.S. crude futures collapsed 60 percent from over $107 a barrel last June to a six-year low near $42 in March.

WTI Crude Continues To Soar As Oil Rig Count Decline Re-Accelerates - With production soaring by the most in almost 2 years, the rig count declines (or additions) appear to have become noise but following last week's single oil rig decline but this week's re-acceleration of declines is rather notable. Total rigs declined 10 to 875 andoil rigs declined 13 to 646 (the biggest weekly drop in a month). Crude prices had soared into the rig count data (despite the record production in Russia, OPEC's promise to keep production at highs, US production surging, and economic growth slumping) and kept going after.

Drilling Efficiency To Keep Oil Prices Low - Economics 101 tells us that prices in a free market are set by the interaction of supply and demand. The world oil markets have gotten a graphic lesson in that truth over the last year, as the dramatic surge in US oil production has met stagnant demand. This, in turn, has pushed down spot prices by nearly half. The recent uptick in oil prices, however, has buoyed hopes among market watchers that a strong oil price rally is in order. Unfortunately economics is working against these investors.  Gasoline demand is starting to rise as prices have reached multiyear lows. As it continues to rise, motorists around the world will begin to suck up extra all of that extra supply. That would normally lead to a strong rebound in prices.  But unlike the 2008 fall in oil prices, which was driven by a collapse in demand across the industry, the current price quandary is supply based. And the massive expansion in supply is overwhelming the newfound demand. That may make it more difficult for prices to bounce back.  More impressive is the fact that even at today’s low prices, there is likely to be some small production increase in 2015. That is because many firms are looking at new efficiency improvements that should increase oil production while lowering production costs. Statoil, for example, says it has lowered its per well drilling cost by $1 million or roughly 22%, and it can now drill wells faster than ever before. The rise in efficient oil production has led to more than half of the country’s rig fleet being idled with many firms now drilling multiple wells at a time rather than single ad hoc wells. These innovations have led to a 20% fall in the per barrel cost of production according to some industry executives, and more improvements are still to come.

Saudis’ Drive To Kill U.S. Shale Has Backfired --For months Saudi Arabia was cagey about its oil strategy. The kingdom claimed its decision not to cut production and stop the slide in prices was solely about letting the oil market reset itself. That charade is over. The Saudis now openly boast that their strategy to let oil prices collapse was an attempt to kill U.S. shale production. Citing the nearly 60% drop in the U.S. oil rig count since October and the slowing of U.S. oil production (see chart above), they are claiming a brilliant triumph. But rather than kill the U.S. shale revolution, the Saudis have only made it more resilient, sped up its rate of technological innovation and capped oil prices for at least a half-decade or more. U.S. shale producers will survive and grow. American consumers, paying less for gasoline and heating oil, will be the big winners. The Saudis and their friends in OPEC, so dependent on oil-export revenue, will be the clear losers. The U.S. shale industry is by necessity becoming more efficient than ever. Low oil prices have become an opportunity. The Saudis have lit a fire under producers to trim the fat, deploy new productivity-boosting technologies and zero in on the most productive geology. Shale efficiency and innovation have created a new ceiling for the price of oil. This certainly was not the Saudis’ aim. It’s been tempting to think the shale boom is over, that a fall in the rig count and a small dip in U.S. crude production signify that the high-water mark of U.S. shale oil has come and gone (see chart above). But, as the Saudis are finding out, we are just in the early innings of a new revolution — “Shale 2.0″ as Manhattan Institute fellow Mark Mills calls it. A strong, increasingly efficient and productive U.S. shale industry — powered by American ingenuity and “Made in the USA” drilling and extraction technologies — is here to stay.

Saudi Arabia may unleash vast oil, gas reserves via fracking -  The Middle East, in particular Saudi Arabia, soon could have its own fracking boom to unleash vast reserves of oil and gas trapped in carbonite formations, writes Andrew Zaleski at "The key to an energy boom is simple: Build a technology to get at the oil and gas that geologists already know is trapped in various subterranean, or subsea, formations. "The fracking boom in the U.S. is the obvious example. Extracting seabed methane hydrate is another huge bet—energy-starved Japan has made that. "Saudi Arabia could be next to use new technology to get at currently trapped gigantic reserves of oil and gas. A small pilot project about to get under way is the energy market equivalent of a moonshot, but it could allow a Saudi fracking boom to move one step closer to reality. " ... no region has as much oil and gas trapped in carbonate formations as the Middle East. Carbonates are areas of sedimentary rock—limestone, for instance—that contain many natural cracks inside them.

The Tanker Market Is Sending a Big Warning to Oil Bulls -- Four months into oil’s rebound from a six-year low, the tanker market is sending a clear signal that the rally is under threat. A sudden surge in demand for supertankers drove benchmark charter rates 57 percent higher in the two weeks through May 20. OPEC will have almost half a billion barrels of oil in transit to buyers at the start of June, the most this year, while analysts say about 20 million barrels is being stored on ships in another indication the glut has yet to dissipate.  The Organization of Petroleum Exporting Countries is pumping the most oil in more than two years, determined to defend market share rather than prices. A record cut to the number of active U.S. drilling rigs and billions of dollars of spending reductions by companies since last year’s price plunge has yet to translate into a slump in barrels produced. The world is pumping about 1.9 million barrels a day more crude than it needs, according to Goldman Sachs Group Inc. “Supply of oil continues to build,” said Paddy Rodgers, the chief executive officer of Antwerp, Belgium-based Euronav NV, whose supertanker fleet can haul 56 million barrels of crude. “All of this oil needs to go somewhere,” he wrote in an e-mail May 19. Daily rates for supertankers on the industry’s benchmark route reached $83,412 on May 20, from $52,987 on May 6, according to the Baltic Exchange in London. While rates since retreated to $65,784, they’re still the highest for this time of year since at least 2008.

Rare run of oil finds is little respite for price-hit explorers - Exploration firms have made a rare run of oil and gas discoveries in recent weeks as more targeted search strategies bear fruit, but they offer little respite to a sector that remains severely bruised by the oil price slump. Global exploration and production (E&P) companies that scour frontier lands and seas in search of new energy reserves have had meager success in recent years, putting many under pressure before a near halving of oil prices since last June. Seven successful discoveries with potential to become commercial have been made so far in 2015 by explorers ranging from independents such as Premier Oil to majors including ExxonMobil, according to Anish Kapadia, Managing Director, International Upstream Research at Tudor, Pickering Holt and Co (TPH) investment bank. Of the seven, all but one were made in the second quarter of the year. By contrast, Last year saw a total of 10 new well discoveries, of which only 2 are estimated to be commercially viable, based on the TPH “Top 50ish” wells index. “We haven’t had 6 discoveries in a single quarter for a long time,” Kapadia said. “This year people are drilling a lot less as exploration spending has fallen sharply, so companies are focusing on higher quality projects,” Kapadia said. The decline in oil price due in large part to growing production from U.S. shale production has led the oil and gas sector to slash budgets and their exploration programs.

Jim Chanos Warns Of Devastating ‘Disaster Waiting To Happen’ In Oil And Gas Industries: Hedge fund manager Jim Chanos wants us to know that the gas and oil industries are on the verge of a major disaster. The famed businessman warns that companies are working more inefficiently than ever to produce an ever increase demand for their products. “[W]e’re just seeing that … these guys like Exxon and Chevron and Royal Dutch Shell are simply replacing $20 [per barrel] oil with $80 oil,” Chanos said May 24 on the PBS television program “Wall Street Week.” “So high return-on-capital businesses are becoming more mundane return-on-capital businesses.” His warning arrives after oil plummeted from $110 per barrel 11 months ago, to the mid-$60 range. Chanos, the president and founder of the New York investment adviser Kynikos Associates, said the reason that operating expenses are racking up is because oil majors have to “deal with Mr. Putin” – while “having to do things like drill in the Arctic.” The hedge fund manager also notes that energy companies are now being forced to “construct these enormously expensive LNG – liquefied natural gas – plants and increasingly add … risk to the portfolio where it just used to be much simpler. You know, drill somewhere and pull the oil out.” Jim Chanos says he and fellow hedge fund managers are now feeling “really negative” about integrated oil companies. Kynikos is already short-selling some of its most prominent energy giant holdings. Chanos says the surplus of oil and gas is a “disaster waiting to happen” in the energy industry.

Sour is the new sweet: OPEC's view of oil quality dilemma – The U.S. shale oil boom is turning global crude pricing on its head with the historical notion that light grades shall be priced at a premium to heavy ones quickly disappearing, according to predictions from producer group OPEC. The trend will have big implications for global oil flows, reducing revenues of light-oil-producing nations such as Nigeria and refiners geared toward heavy crude processing, OPEC said in a draft long-term report, a copy of which was seen by Reuters. Global oil prices have plunged in the past year due to a global glut, which arose from a steep increase in predominantly light U.S. oil production and a subsequent decision by OPEC to defend market share by not cutting its output. OPEC produces a third of global crude, which is a mixture of light and heavy. “This supply glut, primarily of light sweet crudes, needs to ease sizably before the oil market steadies. Low oil prices are expected to force some of the costly light sweet crude oil to idle, but the displaced African light sweet crude is also forced to find an alternative market,” OPEC said. This could be a challenge if oil demand growth in Asia and Europe were to stay fragile, the cartel said.

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