two stories dominated the news out of the fracking patch this week: the OPEC semi-annual meeting, their first since Thanksgiving, and the release of a 998-page, $33 million EPA report on fracking and drinking water that was five years in the fudge making...the OPEC meeting didn't change anything - oil ministers agreed on Friday to hold their quotas at the same level they've been at over the last 6 months - but the lead up to it generated a lot of rehashing of what they've done to the oil markets and what they might do...the EPA report found plenty of instances of drinking water pollution in their thousand pages, but those didn't make it to the press release or the official comments, leading to a plethora of headlines suggesting fracking is harmless, especially in publications predisposed to that point of view...
as noted, the OPEC meeting concluded Friday with the decision by the group to maintain their maximum production limit at 30 million barrels of oil a day, the same level it has officially been set at for the past year, which amounts to about a third of global oil output...previously, when oil prices fell below the level the cartel had established, OPEC members would agree to cut production to force prices back up, so holding production at its previous level in the face of falling prices, as they have done this year, is a new tactic, which is intended to drive prices down, and which is aimed mostly at high cost North American producers, as we've discussed here many times before...the 30 million barrel daily ceiling isn't a hard and fast quota, either, as most OPEC members exceed that if they can; ie., in May, oil output from OPEC members averaged 31.22 million barrels per day, up from 31.16 million barrels per day in April, as Angolan output hit a new record, while Saudi output was stable at 10.30 million barrels a day, same as April but higher than last year, when they were consistently producing under 10 million bpd...
one thing the OPEC membership failed to address at this meeting was the request by Iran to have their quota increased; the Western embargo against their oil exports is expected to end shortly, at which time they'll be adding around 400,000 barrels per day to global supplies almost immediately, with up to as much as 1 million barrels per day by next year...if Iranian supplies come online without an adjustment from other OPEC producers, there is obviously the potential for another wave of lower oil prices...
however, oil supply, from OPEC and elsewhere, is only half the equation that goes into determining prices; demand for oil products is the other side of the calculation, and it has been rising...US light vehicle sales hit a 10 year high in May, with cars and light trucks selling at a 17.7 million a year rate, driven by a surge in purchases of gas-guzzling SUVs and pickups...furthermore, in March, we learned that vehicle miles driven on US highways had reached a new high on a rolling 12 month basis, 4.9% higher than last year, after more than seven years of Americans driving less miles than they did in 2007...and it's not just Americans who are driving more; the Chinese have been buying vehicles at a rate of over 2 million a month, around 40% more than Americans buy, with a 49% increase in Chinese SUV sales in the first quarter of this year now accounting for a quarter of Chinese sales...apparently they have a serious problem with road rage in China, and as a result Chinese drivers are buying more SUVs, for intimidation and defensive purposes, all trying to drive a bigger car than their neighbors...as a result, Chinese gasoline sales are up 20% from a year ago, and they have since surpassed US as the largest oil importer of crude oil... the point is, if OPEC holds their output steady at 30 million barrels per day for long enough, demand for oil and its products will outstrip their supply, prices will rise, and US frackers will be back in the drivers seat...
the major problem with the EPA report on fracking's impact on drinking water was the ambiguity of their press release and executive summary (pdf), leading most everyone who read it to take from it whatever they thought beforehand as the confirmed result....in the nearly thousand pages of the full report (which i havent read) they certainly documented many of cases or drinking water contamination that we've all read or heard about, but by the time the details were rung out of it for a summary, they were couched in so many weasel words that it was hard to draw any certain bead on what their conclusion was; the EPA seems to have elevated official obfuscation to an art form not seen since the days of the Greenspan Fed....hence, on the day of the report's release, we saw headlines as varied as EPA: Fracking is safe for drinking water and EPA: Fracking's no big threat to water all the way to EPA: Fracking has caused isolated, not widespread, water pollution and It’s Official: EPA Says Fracking Pollutes Drinking Water...there also seemed to be an orchestrated effort on the day of the release to establish that the conclusion of the report was that fracking was harmless; checking hundreds of headlines on google news, those that said fracking was harmless to drinking water outnumbered the others 2 to 1...so you can expect to hear the same from the majority of Americans whose only exposure to the news is to the headlines..
the EPA study concluded there was not "widespread or systemic" contamination of drinking water from fracking...surface waters might be polluted, or drinking water might be impacted by poorly sealed well casements or from ancillary activities associated with fracking, but not from fracking itself, which we all know takes place thousands of feet below the surface...so that isn't something we didn't already know; it isn't the fracking 5000 or 10,000 feet down itself that impacts the drinking water at the surface, it's something else that happens during the drilling or after the fracking is done that pollutes the water....and as widespread fracking is still relatively new, we still dont know what the longer term effects to our water supply might be...just because the millions of gallons of toxic chemical laced frack water deep underground have not yet migrated to surface layers from which we draw our drinking water now doesn't mean they wont ever...water, and any pollutants it may be carrying, tends to move through pores in layers of rock at a snails pace...so just because fracking a well a mile down and 2 miles away from your water supply hasn't yet contaminated your water today doesn't mean it wont ten or twenty years from today...
while the OPEC countries were pumping out oil at their fastest pace since 2012, US oil production also hit a new modern high in the week ending May 29th ...after the unexpected oil production jump by 3.2% to 9,566,000 barrel per day last week, US oil output again increased incrementally to another new record of 9,586,000 barrels per day in the current reporting week; that's 14.4% more than US oil companies were producing during the last week in May last year, as oil companies continue to pump out more oil even in the face of low prices so they can at least pay the interest on their debts...even with that record domestic production, however, US oil imports still rose by 677,000 barrels per day from the previous week to 7,373,000 barrels per day this week...the weekly Petroleum Status Report (62 pp pdf) tells us that over the last four weeks, crude oil imports have averaged over 7.0 million barrels per day, just 1.3% less than the same 4 weeks last year...but even with record production and higher imports, US commercial crude oil inventories fell by 1,948,000 barrels to 479,363,000 barrels, which was still 23% higher than a year ago and the highest ever for the last week in May in the 80 years of EIA data....the reason crude stocks fell was because refineries were turning much of that new crude into products, as total crude and petroleum product inventories increased by 7.4 million barrels to 1,944,356 in the current week, as both stocks of propane/propylene and stocks of distillate fuels each rose by roughly 3.8 million barrels this week...
meanwhile, there were 7 few drilling rigs operating in the US in the week just ended, as Baker Hughes reported that the US rig count fell to 868 as of June 5th, with 642 oil rigs, 4 less than last week and 894 less than a year ago, and 222 gas rigs, down 3 from a week ago and down 98 from a year ago, still working at week end...although that was the 26th consecutive decrease in the rig count, the past five weeks have all seen net decreases of less than a dozen, as the number that are restarted each week are now nearly as many as those that are shut down...this week saw 673 horizontal rigs still operating, just one less than last week, and 99 vertical rigs, a reduction of 12, as 6 additional directional rigs were started up, after 5 were added last week, bringing the directional total up to 96...however, they show 7 fewer rigs in the Eagle Ford shale of southeast Texas, which were almost certainly fracked, as well as losses of a rig each in the Utica, the Willston, the Cana Woodford. and the Arkoma Woodford, so unless the majority of those were vertical, their basin counts dont match their counts of the type of drilling rigs...by state, Texas shed 5 rigs, New Mexico and Colorado were both rid of two each, and Arkansas, North Dakota, Ohio, and Pennsylvania each saw one less, while Louisiana added 3, West Virginia added 2, and California and Kansas added one each....meanwhile, the Canadian rig count was up by 18 from a week ago, with oil rigs up 15 to 59, and gas rigs up 3 to 57...
this week also saw the release of the international rig counts for the month of May, which are an average of the number of rigs running during the month for each area and hence differ from the weekly rig counts for North America...excluding the US and Canada, there were 1,158 rigs operating in other countries worldwide, 44 lower that the rig count of 1,202 in April, and down 147 rigs from the 1,350 international rigs counted in May of last year...of those, offshore rigs were down 16 to 284, and down 42 from the 326 offshore drilling platforms running a year ago...regionally, the Middle East saw a reduction of 12 rigs, leaving 398, after they added 3 rigs in April; note that the rig count for Iran is not included here…African nations saw their average May rig count fall by 20 to 120 from 100 in April, the Asia Pacific region saw 11 fewer rigs operating at 217, and European rigs were reduced by 3 to 116....meanwhile, Latin American countries added a net 2 rigs, after they saw a reduction of 26 to 325 in April...major changes in the Middle East oil rigs included an addition of 6 rigs in Oman to bring their total to 59, and a reduction of 4 rigs in Egypt...interestingly, the Saudis shut down 10 oil rigs in May, after they added 9 in February, 5 in March, and 1 in April....at 71 oil rigs, the Saudis are still running 11 more than a year ago; they are also running 53 gas rigs, up from 41 in May of 2014...
Kasich Still Fighting To Get 'Fracking' Tax Approved This Year -- Senate leaders are talking about possibly creating a so-called "fracking" tax through this year’s budget plan. The fight over increasing the oil and natural gas tax has been a long battle on many fronts.The Senate plans on releasing a revised budget any day now and it might include an increase to what’s known as the severance tax—this is a tax on the oil and gas extracted from Ohio’s shale. If that happens, it could be Gov. John Kasich’s closest shot at getting an increase to pass in three years.Right now, the rate is at $.20 per barrel of oil and $.03 per 1,000 cubic feet, or MCF, of natural gas. Kasich says that’s way too low for a state with a booming shale natural gas industry. “That’s unbelievable. We wanted to raise it like 4 or 4.5 percent - we would have the lowest severance tax in America,” Kasich said. His fight to raise the severance tax officially began in 2012 when he proposed, in his budget update, hiking the rate to 1.5 percent of the value of the well in the first year then 4 percent every year after that. For Kasich’s 2013 budget proposal he stayed consistent, asking for a straight 4 percent severance tax rate. Then, in last year’s budget update, Kasich sought a more modest rate of 2.75 percent. The House ended up passing an increase at 2.5 percent, with some breaks attached, a proposal with which Kasich was not happy. “The House passed version on oil and gas is a joke—ok—it’s a joke. It’s an insult to Ohioans,”
Kasich "optimistic" he'll finally get fracking tax increase in Ohio - During a busy day of campaigning in New Hampshire, Ohio Gov. John Kasich also addressed one of the issues that has dogged him with his fellow Republicans in the state legislature: a proposed severance tax increase. Kasich has been shot down three times in trying to up the fees paid by oil and gas producers - who are some of the legislature's biggest campaign contributors - but the Senate is considering whether to restore a severance tax to its version of the $70 billion-plus two-year budget that will be unveiled next week. "We’ve made virtually no progress on that, although I am now more optimistic that something is going to make it through," Kasich told radio interviewer Hugh Hewitt. "You know, I can’t talk about this, Hugh, because if I do, I could blow this thing up, and I want to get a severance tax. But there’s activity going on right now in regard to moving forward on that issue, and I want to use the revenue from it to cut our income tax." Kasich proposed the fracking tax increase in his budget this year, but it again was removed by the House. When Hewitt suggested that the federal government also should levy a severance tax, Kasich replied: "Well, I think it should all be part of tax reform, because what you don’t want to do, in my judgment, at this point in time, is give the people in Washington more money to spend." Kasich - interviewed as he was driven between events yesterday - again sounded as if a presidential run is almost inevitable.
Report finds fault with Ohio pipeline routes for fracked gas - The potential for sinkholes could pose problems along interstate gas pipeline routes through northwest Ohio, warns a report submitted to federal regulators last month. At a minimum, the situation merits further study, according to the report’s authors, Robert Vincent and Charles Onasch of Bowling Green State University, and public advocate Leatra Harper of the FreshWater Accountability Project. Current plans call for Spectra Energy’s Nexus Pipeline and Energy Transfer’s twin Rover pipelines to carry natural gas from Michigan through Ohio to points east. An industry spokesman calls it “insulting” to suggest the pipeline developers might not factor the risk into their route planning and engineering. Fracking of horizontal shale formations has led to a boom in natural gas production in much of the Midwest. The resulting jump in production has strained the current infrastructure for getting natural gas to its markets.The new pipelines are part of the industry’s efforts to relieve that strain. Proposed routes for both projects will cross Wood County in northwest Ohio. According to the report, both pipelines will cross the Bowling Green fault line as well as areas of karst geology. Karst landscape forms in soluble carbonate rock formations, such as limestone and dolomite. “Water will dissolve both of those over time,” said Vincent. “Acid dissolves them much faster.”
Ohio: Natural gas production going strong despite rig cuts - For the first three months of the year, natural gas and oil drilling started off strong, but growth in production has taken a downturn due to companies pulling back rigs. According to the Ohio Department of Natural Resources (ODNR), during the first three months of 2015 natural gas production increased by more than 11 percent when compared to the previous three months. Gas production also saw an increase of 25 percent when comparing third-quarter and fourth-quarter results. However, production has seen a decrease due to the number of rigs operating. Companies operating in the Utica Shale play have pulled back rigs that are more expensive to operate and are focusing on wells in which production is less expensive. As reported by the Columbus Business First, “Hydraulic fracturing and horizontal drilling started in Ohio later than most of its state peers. Partly because of that, Ohio is home to a sizable amount of wells drilled but not completed, so it could take some time to see the impact of fewer drilling rigs on production figures, mostly in the natural gas arena.” During the first-quarter of the year, Ohio’s horizontal wells produced 183.6 billion cubic feet of natural gas, and oil production rose to 4.4 million barrels. According to the ODNR’s report, of the 926 wells drilled in Ohio, 877 of them produced some amount of oil or gas during the first-quarter of the year.
And now… Ohio operators top producing wells - Natural gas production in Ohio for the first three months of the year started off strong despite the cut backs in rigs, and operators in Ohio have definitely proved that the cuts won’t be affecting their production levels. The following is a list of each company drilling in Ohio that recorded natural gas production during the first-quarter of year. The companies listed are mainly operating in Belmont, Monroe and Guernsey counties. The information is provided by the Columbus Business First and is organized by the name of the operator, location of the well, the name of the well and how much natural gas was produced.
- -American Energy–Utica LLC, Belmont County, Richland B 2H-34, 586.5 million cubic feet
- -Antero Resources Corp., Monroe County, DK Carpenter 1H, 1.3 billion cubic feet
- -Artex Oil Co., Noble County, Frec Nobl Brookfield A-3H, 31.6 million cubic feet
- -Atlas Noble LLC, Columbiana County, Firestone Homestead Pad B3H, 331.8 million cubic feet
- -Chesapeake Energy Corp., Carroll County, Kruprzak 17-13-4 6H, 628.1 million cubic feet
- –Consol Energy Inc., Noble County, Reserve Coal Properties Co. NBL19BHSU, 371.2 million cubic feet
- -Eclipse Resources Corp., Monroe County, Shroyer Unit 4H, 1.2 billion cubic feet
- -EdgeMarc Energy Ohio LLC, Washington County, Merlin 10PPH, 86.3 million cubic feet
- -EnerVest Operating LLC, Tuscarawas County, Nettle 3H, 28 million cubic feet (This is the wellpad used for experimenting with waterless fracking technology.)
- -EQT Production Co., Guernsey County, NCD3 580011, 52.3 million cubic feet
- -Gulfport Energy Corp., Belmont County, Perkins 2-4H, 1 billion cubic feet
- -Halcon Operating Company Inc., Trumbull County, Kibler 2-3H, 59.4 million cubic feet
- -Hall Drilling LLC, Monroe County, Hercher North 2HA, 508.2 million cubic feet
- -Hess Ohio LLC, Harrison County, Archer A 1H-31, 577.5 million cubic feet
- -Hilcorp Energy Co., Mahoning County, Poland-CLL2 6H, 313.7 million cubic feet
- -NGO Development Corp., Coshocton County, Cosh Mill Creek A-1H, 4.6 million cubic feet
- –PDC Energy Inc., Guernsey County, Dynamite 4-H, 146 million cubic feet (Company officials recently said this wellpad’s performance has them considering an earlier return to drilling in Ohio.)
- –Rex Energy Corp., Guernsey County, J Hall Unit 6H, 316.9 million cubic feet
- -Rice Energy Inc., Belmont County, Blue Thunder 10H, 1.41 billion cubic feet (The best-producing gas well in the quarter.)
- –Magnum Hunter Resources Corp. (aka Triad Hunter LLC), Monroe County, Stadler Unit C 7UH, 777.5 million cubic feet
- -XTO Energy Inc. (subsidiary of Exxon Mobil Corp.), Monroe County, Monroe North Unit 2H, 812 million cubic feet
According to the list, Rice Energy’s Blue Thunder 10H well takes first place and is also the best producing well this quarter. Antero Resources’ DK Carpenter 1H well takes second place, Eclipse Resources’ Shroyer Unit 4H well wins third place and Gulfport Energy’s Perkins 2-4H well steals fourth place with 1 billion cubic feet of natural gas produced.
Marcellus permit activity in Pennsylvania --The Marcellus Shale formation in Pennsylvania didn’t see a lot of action over the last week, but it did gain 8 new well permits and added a new company to its energy market. Last week, the world’s seventh largest construction company shared it will be opening a new office in Pennsylvania and is seriously interested in the state’s energy market. Skanska, a Sweden-based company, gave its American division a new office in Pittsburgh and is looking for new opportunities in power and energy. Skanska’s new office will serve Pennsylvania, Ohio and West Virginia. Along with being one of the largest construction companies in the world, Skanska is also known for being extremely environmentally friendly. Back in April, the Bullitt Center in Seattle, Washington, which was constructed by Skanska, was declared “the world’s greenest commercial building.” For more information regarding the Bullitt Center and its eco-friendly features, click here. The following information is provided by the Pennsylvania Department of Environmental Protection and covers May 25th through May 31st. New: 8 - Renewed: 0
Huge Pipeline Company Kinder Morgan Hired Off-Duty Cops to “Deter Protests” in Pennsylvania - Kinder Morgan, the self-proclaimed “largest energy infrastructure company in North America,” paid $50,000 for off-duty police officers from a Pennsylvania department to patrol a controversial gas pipeline construction site. The hiring came after a request from the corporation for uniformed officers that could “deter protests and prevent delays,” according to a report by Earth Island Journal’s Adam Federman. What’s unique about the case is not that a corporation paid off-duty officers to protect oil and gas infrastructure — a common but rarely acknowledged practice — but that a document indicates that the explicit purpose of the police presence was to stymie dissent. Federman published a May 2013letter from Kinder Morgan’s manager of corporate security to the police chief of the Eastern Pike Regional Police Department, requesting use of its officers “to provide a visible presence in our construction areas to create a deterrent effect.” The corporation asked the department to monitor its Northeast Upgrade Project, an expansion of the Tennessee Gas Pipeline, which would cut through environmentally sensitive areas of Pennsylvania. The officers were paid $54.80 per hour for their work. The document adds, “The objective is for a uniformed officer to be seen frequently making spot checks of our construction areas and be available to respond should protesters attempt to block those sites.”
Study ties fracking to low birth weight in newborns - Pregnant women who live close to multiple fracking wells were more likely to have babies with lower birth weights than those who live farther away, according to new research. The study – Perinatal Outcomes and Unconventional Natural Gas Operations in Southwest Pennsylvania – was published in the journal PLOS One. The researchers analyzed data related to 15,451 babies born in three southwestern Pennsylvania counties from 2007 through 2010, logging birth weight and tracking how close the mother lived to fracking wells. During that time, there were as many as 2,864 wells. They divided the data into four groups based on proximity to areas that had the most dense number of fracked wells. They found that pregnant women who lived closest to the most wells were 34 percent more likely to give birth to babies who were small for their age than mothers who lived farther away. The researchers considered babies to be of lower weight if they were among the lowest 10th percentile. The researchers also factored in outside variables that could affect birth weight, including whether the mother smoked, the type of prenatal care she received, her race, education, age, the baby’s gender and whether the mother had other children. Their findings still held, according to the university. Pitt said the study does not mean that pollutants from fracking wells, which can include benzene, toluene and xylene, caused the lower birth weights. But, he said, more research should be done to help parents and doctors make better choices for their children.
Citizens need protection from fracking pollution - Pittsburgh Post-Gazette The recent study on pollution from fracking exceeding U.S. Environmental Protection Agency standards for safety (“Study: Pollutant Levels High in Ohio Area With Fracking,” May 25) is the most recent addition to the ever-growing list of studies suggesting that shale gas infrastructure harms our health and environment. In April alone a study by Johns Hopkins researchers suggested that oil and gas drilling is increasing indoor radon levels, and Pennsylvania’s Department of Environmental Protection reported that volatile organic compounds (VOC) emissions rates have increased across Pennsylvania’s natural gas industry. Last fall, DEP released information on more than 240 cases of private water supply contamination from oil and gas drilling. Our leaders are long overdue to address gas industry pollution that has been linked by independent studies to asthma, heart disease, endocrine disruption, cancer and birth defects. But these public health impacts are not the only reason for alarm. Air pollution leaking from shale gas infrastructure is accompanied by methane, a greenhouse gas 86 times more potent than carbon dioxide over 20 years. Methane accelerates climate change, and the legacy of climate change for our children and grandchildren will be an unprecedented humanitarian crisis. Allowing the industry to continue polluting at such rates is irresponsible. The people’s right to clean air and pure water is guaranteed by the Pennsylvania Constitution, and we need our leaders to protect that right. Pennsylvania must adopt best-in-the-nation regulations for air pollution leaks from shale gas infrastructure.
New water rule could cause changes for energy companies -- Energy companies in Pennsylvania will be impacted by the new federal water rule that has been added to the Clean Water Act. The Clean Water Rule is an extension of the Clean Water Act and expands the protection of waterways to small tributaries and other waterways that are connected to major rivers that are a source of drinking water. Energy companies, specifically, oil and gas companies, can expect to see stricter rules when it comes to operating near waterways that flow into major rivers. As reported by State Impact Pennsylvania, “Businesses of all kinds will have to apply for a permit to operate near the waterways, and the Environmental Protection Agency (EPA) will determine on a case-by-case basis whether their activities would be in compliance with the 1972 law, which is the basis for the new rule.” According to Adam Garber, field director for PennEnvironment, as of now, it isn’t a sure thing if the oil and gas industry will be impacted by the Clean Water Rule. However, he did say that in the future the rule will have an effect on natural gas companies: “The reality is that there will be places where the drillers are developing whether it’s gas drilling platforms, if it’s pipelines, where the Clean Water Act may play a role in protecting those streams.” While the energy sector in Pennsylvania may or may not see changes caused by the rule, the city of Philadelphia will. With the Clean Water Rule, the streams and wetlands that flow into the Schuylkill and Delaware Rivers “will be subject to new protections that would prevent the entry of potentially harmful contaminants before they make their way downstream to water-treatment plants.” The new rule also implies stricter rules on upstream drainage, which will benefit swimmers, kayakers and fisherman, explained Garber.
NY Congressman (“Frack-Shill”) Reed Meets Fracktivists -- OMG! Anti-frackers, watch this 5-minute citizen serenade of gasser Congressman Tom Reed (R 23rd CD) Tuesday in Watkins Glen, New York. Savor the community’s satirical lyrics to the tune of “Danny Boy”. These wonderful folks hit ALL the hot buttons, even growing marihuana instead of piping gas! I’m finding the joy in writing a comic novel about NY’s glorious anti-fracking victory includes life imitating art, and now–shhhhh– art stealing from life!) Flash Mob @ Congessman Reed’s Town Hall Meeting
Maryland “Gets It” – Fracking Moratorium Voted In -- “You’ll never get a fracking moratorium through the Maryland Legislature” was the common refrain I heard as we at Food & Water Watch joined with more than 100 groups from throughout the state to work on preventing fracking in Maryland. But we didn’t let that stop us. And today, thanks to the tireless efforts of business owners, health professionals, activists and countless concerned Maryland residents, we proved those naysayers wrong. Today, a two and a half year fracking moratorium became law in Maryland. Over Memorial Day weekend, Gov. Hogan let it be known that he would not veto the bill. At the end of March, the Maryland General Assembly passed a bill, originally introduced by Delegate David Fraser-Hidalgo and Senator Karen Montgomery, which would prohibit any permits for fracking in the state for two and a half years. The bill passed with veto-proof majorities in each house. This critical moratorium was made possible by a coalition of more than 100 community and advocacy groups who don’t want to see Maryland fracked. The Don’t Frack Maryland Coalition worked throughout the 2015 legislative session to carry the message that Marylanders do not want fracking in their state. The organizing efforts of the coalition came in waves over several months.
DIXIE Landowner Rebellion: Take Your Pipeline and Shove It Kinder Morgan!! -- Zipperer, 60, is one of many Southern landowners challenging the nation’s largest energy infrastructure company, Kinder Morgan, as it plans to run a petroleum pipeline through 360 miles of bottom land, river forests and freshwater coastal wetlands across South Carolina, Georgia and Florida. The pipeline’s opponents argue it represents an unconstitutional use of eminent domain and an environmental threat. Georgia Gov. Nathan Deal, a Republican, entered the fray May 7, announcing that the state would fight the $1-billion project in court. The Georgia Department of Transportation rejected the pipeline plan May 19, declaring it would not serve a public need. The dispute is one of a growing number of skirmishes over pipelines nationwide. With the U.S. producing more oil and gas than it has in decades, private companies are clamoring to build new transportation infrastructure. One of two pipelines being proposed in Georgia, the Palmetto pipeline is particularly contentious because it would cross land owned by the state’s House majority leader, Jon Burns, and a local media tycoon, William S. Morris III, who owns newspapers in Augusta, Savannah and Jacksonville, Fla. “What’s different about this project — unprecedented — is that a landowner controls three major newspapers along the pipeline route,” said Allen Fore, vice president of public affairs for Kinder Morgan. It was also highly unusual, he added, for a leading oil company, Colonial Oil, to work with local river keepers to oppose a pipeline. The Palmetto pipeline would carry up to 167,000 barrels of refined petroleum a day from Belton, S.C., to Jacksonville. It would cross the Savannah River and work its way down the Georgia coast, crossing four more major rivers.
Pipeline in Arkansas River ruptures, releases natural gas - A 2-mile section of the Arkansas River near Little Rock remained closed Wednesday following the rupture of a pipeline that released enough natural gas to fuel about 65 homes for a year. U.S. Coast Guard spokesman Brian Porter said the section of the swollen river, which is near Arkansas’ busiest airport, will remain closed until Spectra Energy Corp. crews can check whether the pipeline poses a danger to boats. He said there have been no reports of injuries since the leak was reported Monday, and that the closure hasn’t affected boat traffic because the river was already mostly closed due to flooding. Spectra Energy Corp. spokesman Creighton Welch said the cause of the leak isn’t known, and he declined to estimate how much it cost the company. The leak occurred Sunday or Monday on a 24-inch-wide backup pipeline buried 4 feet below the riverbed. The line was closed when it ruptured and the roughly 4 million cubic feet of natural gas that escaped had been what was left over inside, he said. An incident report submitted by the company to the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration indicates a boat might have struck the pipeline. Welch said investigators are still working to determine if a boat was involved. Porter said a towboat reported an explosion and sustained unspecified damage.
Texas, Louisiana hold their own amid global production numbers -- Low oil and natural gas prices have many in the industry thinking about global mass layoffs and impending production decreases. It’s hard to believe, then, that the United States is still staying competitive on a global scale on its journey to energy independence. But the U.S. doesn’t just compete as a nation. Several states hold their own when compared to other major fossil fuel-producing countries, Texas and Louisiana not the least among them. When it comes to dry natural gas production, the U.S. tops the list at #1 with 65.73 billion cubic feet per day (bcf/d). Russia comes in second at 59.46 bcf/d. The next competitor pales in comparison; Iran produces just 15.43 bcf/d in third place. According to the American Petroleum Institute, though, if Texas were considered amongst its global players, it comes in just after Russia, producing a whopping 18.84 bcf/d of the U.S. total. Qatar, Canada, Norway, China, Saudi Arabia and Algeria all make the ranks of the top 10 in dry natural gas production, according to the API’s list. Each nation produces more than 8 bcf/d. If Louisiana were included in the list for natural gas production in the state, it would rank 10th out of the 30 nations on the list with 7.98 bcf/d, even beating out Pennsylvania’s 6.13 bcf/d. Texas isn’t just a competitor in the natural gas department, though. The state is a serious competitor when it comes to crude oil production on a global scale, producing 3.14 million barrels per day (MMbd), putting it in 8th place behind Russia, Saudi Arabia, the U.S. as a whole, China, Canada, Iraq and Iran. The Lone Star state beats out countries like United Arab Emirates, Venezuela and Nigeria, all oil producers that hold their own in the global market.
Fracking Resumes In Denton, Texas, After Governor Outlaws Local Bans On Oil Drilling - Natural gas drilling is starting up again in Denton, Texas, despite the city’s 7-month-old ban on hydraulic fracturing. Vantage Energy resumed operations Monday at its Denton well just weeks after Gov. Greg Abbott passed a law prohibiting cities from banning fracking on their home turf. Three activists were arrested at the drill site Monday morning after attempting to block an access road. The Texas ban is part of a broader movement in oil- and gas-rich states to restrict decisions about fracking, drilling, wastewater disposal and pipelines to state regulators and commissioners -- leaving municipalities, local agencies and citizens with limited control over energy activities. In Ohio, the state Supreme Court ruled in February that the state has “exclusive authority” and that cities can neither ban nor regulate fracking. On Saturday, Oklahoma Gov. Mary Fallin signed a bill that similarly prohibits cities from enacting drilling bans, despite local concerns over the rising number of earthquakes tied to fracking activity in the state. “The alternative is to pursue a patchwork of regulations that, in some cases, could arbitrarily ban energy exploration and damage the state’s largest industry, largest employers and largest taxpayers,” Fallin said after approving the measure. Vantage Energy, a Colorado natural gas developer, said it ceased operations at its Denton drill site in November, after nearly 60 percent of voters approved the fracking ban.
Six arrested in Denton protest -- Two members of satirical Cabaret troupe The Frackettes were among three arrested Monday morning at a protest in Denton, Texas. According to the Star-Telegram, Adam Briggle, Tara Linn Hunter and Nikki Chochrek were arrested without incident after staging a sit-in to block Vantage Energy employees from resuming the newly-legal natural gas operations. The protest, which drew in about 20 participants, was staged in response to Gov. Greg Abbot’s recent approval of House Bill 40, which prohibits fracking bans in Texas and effectively nullifies the city’s Nov. 2 ruling to ban the practice within city limits. As Texas lawmakers finalized the bill, activists and fuel companies stood by with bated breath. Vantage moved quickly, resuming its Denton operations the next day.“It just became obvious that we had exhausted all legal means to block fracking and that this unjust law is being forced on a community that voted on it,” Hunter told the Star-Telegram. “We saw that it was about to happen so we decided it was more important to do what was right than go along.” Briggle, who heads Denton Drilling Awareness Group and teaches at the University of North Texas, particularly took issue with the energy industry’s tendency to buy land that then sits unused in order to avoid more stringent regulation via grandfathering.“This is a huge problem with mineral development in Texas,” Briggle told VICE News. Briggle also expressed frustration over legislatures’ neglect of zoning issues in their approval of HB40. “We won’t allow bakeries in certain neighborhoods, but we’ll allow fracking in all of them,” he said. “The legislature never even touched these issues… They exacerbated the problem that led to the fracking ban. It’s irrationality on a grand scale.”
Oklahoma Just Became The Second State To Outlaw Fracking Bans -- Oklahoma’s towns and cities are no longer allowed to ban fracking under a bill signed into law on Friday by Republican Gov. Mary Fallin. The new law prohibits localities from choosing whether or not to have oil and gas operations within their jurisdictions, with exceptions for “reasonable” restrictions like noise and traffic issues. Other than that, the Oklahoma Corporation Commission will retain control over oil and gas drilling. The state commission is run by three elected commissioners, all of whom are Republican. Chairman Bob Anthony is a member of the National Petroleum Council, a group that advises the U.S. Department of Energy on oil and gas industry interests. And Vice Chairman Dana Murphy is a geologist and attorney with “more than 22 years experience in the petroleum industry,” according to her bio page. Fracking is prolific in Oklahoma, and Fallin said the new law would be necessary to prevent a “patchwork of inconsistent municipal regulations across the state.” In addition, Fallin said, allowing cities and towns to have control over whether fracking occurs could “damage the state’s largest industry, largest employers and largest taxpayers.” Oklahoma is the second state to ban fracking bans. Last month, Texas became the first, when Republican Gov. Greg Abbott signed legislation to prohibit cities from banning the process. Oklahoma’s new ban comes amid warnings from the state’s own government that a recent dramatic spike in earthquakes is linked to wastewater injection, a key part of oil and gas activity and particularly fracking.
Oil, gas spill reports for June 1 - The following spills were reported to the Colorado Oil and Gas Conservation Commission in the past two weeks.
- Kerr McGee Oil & Gas Onshore LP reported on May 28 that during routine activities a release was discovered outside of Fort Lupton. It is approximated that seven barrels of condensate and produced water released, outside of containment. Excavation activities are ongoing and vacuum trucks will also be on the scene.
- Bill Barrett Corp. reported on May 27 that a corroded fitting on a vapor line was releasing gas and fluid outside of Briggsdale. It is approximated that more than one barrel of condensate was released. Contaminated soil was removed.
- DCP Midstream LLC reported on May 26 that a drip valve broke off, releasing condensate to the adjacent soil, outside of Fort Lupton. The valve was replaced and the release was stopped.
- Kerr McGee Oil & Gas Onshore LP reported on May 22 that a polishing rod liner loosened on a wellhead’s pumping unit, causing one barrel of crude oil to spray the area outside of Platteville. The spill was released outside of containment.
- Kerr McGee Oil & Gas Onshore LP reported on May 14 that during abandonment procedures, historical impacts were discovered, outside of Fort Lupton. It is unknown the amount of oil and produced water that was spilled, but it is estimated that less than five barrels of release.
- Kerr McGee Oil & Gas Onshore LP reported on May 13 that a line valve was improperly closed, outside of Frederick. It is approximated that two barrels of oil spilled outside of containment and onto the ground surface. A sample of the soil will be collected for confirmation with COGCC standards.
EPA finds drinking water vulnerable to fracking -- A five-year investigation by the U.S. Environmental Protection Agency of the boom in natural gas drilling and production has identified potentially serious vulnerabilities that could cause contamination of drinking water systems related to the use of hydraulic fracturing. While saying they found no “widespread, systematic impacts,” EPA officials say in a new report that they found “above and below ground mechanisms” through which fracking activities “have the potential to impact drinking water resources.” Among those mechanisms: fracking directly into underground water resources, water withdrawals in areas with or in times of low water availability, spills of various fluids used in or produced by fracking processes, below-ground migration of liquids and gases, and inadequate treatment and discharge of wastewater. EPA said that its investigators found “specific instances” where one or more mechanisms affected drinking water, including contamination of wells. The agency said that the number of identified cases “was small compared to the number of hydraulically fractured wells,” but conceded it wasn’t sure why. “This finding could reflect a rarity of effects on drinking water resources, but may also be due to other limiting factors,” EPA said. “These factors include: insufficient pre- and post-fracturing data on the quality of drinking water resources; the paucity of long-term systematic studies; the presence of other sources of contamination precluding a definitive link between hydraulic fracturing activities and an impact; and the inaccessibility of some information on hydraulic fracturing activities and potential impacts.”
Fracking Has Had No ‘Widespread’ Impact on Drinking Water, EPA Finds - WSJ: Fracking isn't causing widespread damage to the nation’s drinking water, the Obama administration said in a long-awaited report released Thursday. The U.S. Environmental Protection Agency—after a four-year study that is the U.S. government’s most comprehensive examination of the issue to date—concluded that hydraulic fracturing, as being carried out by industry and regulated by states, isn't having “widespread, systemic impacts on drinking water.” However, EPA said there were a small number of contaminated drinking wells and highlighted potential vulnerabilities, including the disposal of wastewater and construction of durable wells. The report was issued nearly a decade since fracking began helping unlock vast reserves of oil and natural gas across the U.S. It also bolsters the position staked out by the energy industry and its supporters: that fracking can be carried out safely. “Hydraulic fracturing activities in the U.S. are carried out in a way that have not led to widespread, systematic impact on drinking water resources,” said Thomas Burke, deputy assistant administrator of the EPA’s office of research and development, on Thursday. “In fact, the number of documented impacts to drinking water is relatively low when compared to the number of fractured wells.” Rob Jackson, an earth sciences professor at Stanford University who has published several papers on the environmental impacts of fracking, said he generally agrees with agency, although he hoped its report would be more comprehensive.
It’s Official: EPA Says Fracking Pollutes Drinking Water - In 2010, Congress commissioned the U.S. Environmental Protection Agency (EPA) to study the impact of fracking on drinking water. The U.S. EPA released its long-awaited final draft version of its report today, assessing how fracking for oil and gas can impact access to safe drinking water. Today’s results will likely not please the “drill everywhere” faction of Congress. It refuted the conclusion arrived at by the U.S. EPA’s 2004 study that fracking poses no threat to drinking water, a conclusion used to exempt the fracking process from the Safe Drinking Water Act. The report looked at water use at five stages of the water-intensive process: use of the available water supply for fracking; the mixing of chemicals with water to create fracking fluid; the flowback of the fluid after it has been injected underground to fracture shale deposits to release oil or gas; treatment of the wastewater byproduct of fracking; and the injection wells frequently used to dispose of fracking wastewater when the process is complete. The report also pointed out the declining amount of water that could be available for drinking purposes due to extended drought, saying, “The future availability of drinking water sources that are considered fresh in the U.S. will be affected by changes in climate and water use. Declines in surface water resources have already led to increased withdrawals and cumulative net depletions of ground water in some areas.”n response to these findings, Mark Ruffalo, actor and advisory board member of Americans Against Fracking, said, “Today’s EPA fracking water contamination study confirms what both the oil and gas industry and the Obama Administration have long denied—that fracking poisons American’s drinking water supplies. . It’s time to stop poisoning the American people and shift rapidly torenewable energy.”
EPA: Fracking is safe for drinking water --The issue and large debate surrounding hydraulic fracturing, or fracking, is whether or not it is safe for drinking water. Well, our questions have finally been answered thanks to a long awaited study conducted by the Environmental Protection Agency (EPA). The EPA’s five year long study concluded that tracking, in most cases, is not harmful to drinking water. However, the study did find that risks for contamination are greater in areas that have a scarce water supply. As reported by Shale Plays Media, “Some of the notable possible examples where fracking could pose a threat highlighted from the analysis include: ‘water withdrawals in times of, or in areas with, low water availability; spills of hydraulic fracturing fluids and produced water; fracturing directly into underground drinking water resources; below ground migration of liquids and gases; and inadequate treatment and discharge of water.'” The EPA’s study also found there have been instances where one or more mechanisms have affected drinking water resources, such as contaminated drinking wells. However, these instances are very rare and the number of cases where something of the sort has occurred is much smaller that number of wells that have been drilled by fracking. To read the entire article regarding the EPA’s fracking and drinking water study, click here.
EPA: Fracking has caused isolated, not widespread, water pollution - A federal Environmental Protection Agency study has for the first time determined that hydraulic fracturing, used in oil and gas development throughout the United States, has contaminated water supplies in isolated incidents but has not caused widespread, systematic damage to water resources. The study, ordered by Congress in 2010, concluded that the number of actual problems caused by the process was relatively small compared to the thousands of wells that have been drilled. Hydraulic fracturing involves pumping millions of gallons of water mixed with chemicals and sand deep underground under high pressure to crack shale formations and release the gas and oil it holds. But the study also identified a series of “vulnerabilities” created by the process. Those vulnerabilities or risks include: water withdrawals from limited water sources; groundwater contamination; inadequate well cementing and casings that allowed migration of gas and liquids into drinking water aquifers; releases of inadequately treated wastewater; and surface spills of chemical fracking fluids and wastewater. The report does acknowledge, unlike a 2004 EPA study, that the fracking process has contaminated water supplies.“I think the study recognizes instances where fracking activity impacted surface and groundwater,” said Thomas Burke, EPA’s science advisor and deputy assistant administrator of the agency’s Office of Research and Development. Mr. Burke said the study “followed the water” through collection, use, flowback and disposal and found instances of fracking releasing methane gas that strayed into groundwater and the release or leaking of fracking wastewater from surface impoundments that contaminated surface and groundwater.
EPA: Fracking's no big threat to water - The Environmental Protection Agency’s long-awaited report on fracking dismayed liberal green groups Thursday while pleasing the oil and gas industry — the latest episode in both sides’ fraught relationship with President Barack Obama.The study, more than four years in the making, said the EPA has found no signs of “widespread, systemic” drinking water pollution from hydraulic fracturing. That conclusion dramatically runs afoul of one of the great green crusades of the past half-decade, which has portrayed the oil- and gas-extraction technique as a creator of fouled drinking water wells and flame-shooting faucets. The report also jibes with Obama’s global warming policies, which have openly promoted the use of natural gas as a more climate-friendly alternative to coal. But for both anti-fracking groups and the industry, it came as yet another example of Obama’s mixed messages on fossil fuels — from the same administration that has stalled the Keystone XL pipeline and pushed to wipe out the oil industry’s tax breaks, yet is also moving to open up much of the East Coast and the Arctic to offshore drilling.“This study’s main finding flies in the face of fracking’s dangerous reality,” Rachel Richardson, director of Environment America’s Stop Drilling program, said in a statement. “The fact is, dirty drilling has caused documented, widespread water contamination across the country.”
EPA: Fracking doesn't systematically pollute water -Hydraulic fracturing, or fracking, does not lead to widespread or systematic contamination of drinking water resources, the U.S. Environmental Protection Agency (EPA) said Thursday, although the agency acknowledged that its conclusion could have been affected by a lack of available data. The EPA identified key areas of vulnerability in the fracking process for its draft report on the practice’s potential effects on drinking water resources. But it said that, based on available data, fracking did not lead to systematic contamination. “We did not find evidence that these mechanisms have led to widespread, systematic impacts on drinking water resources in the U.S.,” the report said, adding that the finding was based on the low number of contamination cases compared to number of wells. The EPA report said the finding “could reflect a rarity of effects on drinking water resources” — or it could simply be the result of “insufficient pre- and post-fracturing data on the quality of drinking water resources.” An estimated 25,000 to 30,000 wells have been drilled and fracked every year in the U.S. between 2011 and 2014 — mostly concentrated in Texas, Colorado, Pennsylvania, and North Dakota — the EPA report said. About 6,800 sources of drinking water, serving more than 8.6 million people, are located within one mile of a fracking well, the report added.The EPA estimated the number of spills already taking place across the U.S. could range from 100 to 3,700 a year.
Ecologist Not Buying EPA Fracking Study -- A new EPA report on fracking found that, while the drilling technique has several “potential vulnerabilities” in the process, it has no “widespread, systemic impacts on drinking water.” But according to one ecologist, the dangers are still “quite serious.” “What they say is it’s not yet widespread and systematic … the operative word here is ‘not yet,’” ecologist and anti-fracking activist Sandra Steingraber told FBN’s Stuart Varney. Steingraber said the EPA study found multiple examples of water contaminated by fracking during “routine operations” in well-casing failures, which allowed fracking fluids to travel through unseen cracks and infiltrate into nearby drinking water. Last December, New York state declared a ban on fracking after a report found “significant uncertainties” about the oil and gas extraction technique. “New York State has made a wise decision in banning fracking … the fact that they already found cases of drinking water contamination means we have to take this very seriously. All drinking water is connected … any contamination is serious. As a biologist and cancer survivor … it is wrong to develop a form of energy that poisons people; we can do better than that in the U.S.,” she said.
Fracking Reporting a Widespread Problem? --The EPA released a draft report June 4 on fracking and water use and contamination that has already generated some screaming headlines. "No Widespread Problem with Fracking Water, EPA says!" If you believe that, I'll alert a couple of companies who will be happy to drill in your backyard. Let's be clear. The EPA is doing its job. The Congress asked for a report on the effects of fracking on water and they got it. Case closed, right? The problems with this approach are so numerous as to be called widespread. First, the headlines. The EPA is an official source and assumed in the media narrative to be friendly to, if not in league with, environmentalists. Some folks even believe they will seize your land if it has puddles on it (wetlands) or a snail darter or two. And fracking is a major bugaboo for their allies in the backpacking and demonstrating set. Headlines grab readers, bizarre or unexpected twists are news, and having the EPA seem to support fracking is surprising and controversial. Hence, your Uncle Joe, a Fox News fan, and maybe even Aunt Sarah, an NPR listener, will soon be telling you that they've heard that fracking is OK. Then there is that slippery word, widespread. The EPA was tasked to see if fracking was using up or contaminating water nationwide. Fracking has gone on in 25 states between 1990-2013, and the EPA has analyzed 20 states with fracking, so it can seem widespread. But only a few states have substantial fracking, with Texas ahead by far with about half of all fracking wells. And all of the nation's fracking occurs in just 400 counties. In Colorado, a distant second to Texas in fracking, 85% of the wells are in just two counties. And liberally defined, water systems within range of potential fracking contamination serve only 9.6 million Americans. The EPA, in its careful scientific and bureaucratic language, says that fracking is really a localized problem. But they were asked to talk about the whole nation. So of course fracking and fracking water problems are not widespread, given the question EPA was required to answer.
Both sides claim victory, after EPA issues fracking-water review - The American shale drilling industry and national environmental groups both claimed victory, after the U.S. Environmental Protection Agency on Thursday released its long-awaited draft national report on whether hydraulic fracturing or fracking threatens drinking water. The EPA said that fracking has “not led to widespread, systemic impacts on drinking water resources.” But the agency acknowledged that the whole drilling process, not just fracking, has impacted drinking water in some locales. The agency in a teleconference said drinking water remains vulnerable to these problems in drilling Ohio’s Utica Shale and other shale areas:
- •Water withdrawals in areas with little water.
- •Fracking conducted into formations containing drinking water.
- •Inadequately cased or cemented wells allowing below-ground migration of gases and liquids.
- •Inadequately treated wastewater being discharged into drinking water.
- •Spills of hydraulic fluids and fracking wastewater.
But the number of water-pollution problems from drilling was “small compared to the number of hydraulically fractured wells,” the EPA said in its 28-page executive summary. EPA spokesman Dr. Thomas A. Burke called the EPA’s assessment — it is thousands of pages in length and includes 20 peer-reviewed scientific reports — the most complete scientific compilation of scientific data to date with more than 950 sources. It will provide state regulators, the drilling industry and others “a critical resource to identify how best to protect public health and their drinking-water resources,” he said.
All The Spin About EPA Fracking Study's Confusing Results In Just One Hilarious Picture - When the Environmental Protection Agency released its landmark study of the impact of fracking yesterday, there was, as our contributor Tom Zeller pointed out, something for everyone in there. The energy industry latched on to the big headline finding: That four years of study by the EPA had found there exists no evidence fracking has had any “widespread, systemic impact on drinking water.” Anti-fracking activists said the devil was most definitely in the details of the report, and focused attention on the half-empty side of the glass. Groundwater pollution had occurred in some places, and thus, fracking was potentially hazardous anywhere. The result of all this spin, as Zeller pointed out on Twitter Twitter, is a confusing hodgepodge of headlines that leave readers about as confused about fracking safety as they were before the report came out. See “EPA Fracking Study” on Google Google news. Here’s what the feed looked like this morning: So what’s the bottom line? Perhaps the best way to find out is to just read the report for yourself and draw your own conclusions.
Don’t Be Fooled by Yesterday’s Headlines, EPA Finds Fracking Contaminates Drinking Water - Don’t be fooled. Headlines in the New York Times and other news media about the U.S. Environmental Protection Agency’s (EPA) long-awaited study on the impacts of fracking on drinking water are another tragic case of not looking beyond the timid agency’s spin. Despite the lack of new substantive data and the limited scope of the study, the EPA did find instances of water contamination and outlined the areas where this could happen in the fracking process. The multi-million dollar study did not answer the fundamental questions about the pollution of water from hydraulic fracturing. The oil and gas industry pressured the agency in the design of the study, narrowing its scope and focusing it on theoretical modeling conducted by researchers that often conduct research favorable to the industry. In a shocking display of the power of oil and gas interests, they successfully blocked the agency from gathering data from direct monitoring of fracking operations. Rather than demanding that companies like Exxon (the largest fracker in the U.S.) or Chesapeake allow them to monitor water wells near fracking operations, the EPA caved to industry pressure. For the study to be meaningful, the agency needed to conduct baseline water testing at prospective wells that would provide a snapshot of water quality before fracking and that would be retested after a year or more after oil or gas production began. Yet even with the study’s poor design and the deceptive headlines, the 600-page document does include concrete examples that fracking does indeed contaminate groundwater resources, a fact already confirmed by numerous studies based on existing scientific data. The study confirmed cases of water contamination with five after-the-fact, or retrospective, case studies, each focused on a community where residents have complained about water problems for years. This embarrassingly limited review of the impacts from spills and releases, water withdrawals, and issues with waste disposal provide proof that fracking negatively impacts our water resources.
Fracking Does Cause ‘Widespread, Systemic’ Contamination of American’s Drinking Water --In a draft report five years in the making, the U.S. Environmental Protection Agency (EPA) has confirmed that fracking does indeed contaminate drinking water, a fact the oil and gas industry has vehemently denied. But instead of dismantling the industry’s “not one single case of groundwater contamination caused by fracking” refrain, the EPA decided to go with the misleading headline “there is no evidence fracking has led to widespread, systemic impacts on drinking water resources.” It’s a puzzling conclusion since their study was conspicuously narrow (they did no new case studies, dropped three marquee cases that proved water contamination and dropped all air quality studies from the report).OurMap of the Week shows 313 cases where families reported water contamination due to drilling in just six counties in North Eastern, Pennsylvania. Seems pretty widespread to me for a fracking and drilling campaign that’s still in its infancy. So far there’s been around 9,000 wells drilled in Pennsylvania. One report showed the potential for 200,000 – 600,000 fracked wells in the state. If the EPA is looking for proof of “widespread” contamination before declaring fracking unsafe, they may not have to wait long. The industries own data shows that 5 percent of fracking wells leak upon drilling and that number only grows over time. What the EPA presented to the public yesterday was PR, not science and proof of the widespread, systemic contamination of our regulatory bodies by the oil and gas industry. This isn’t the first time the EPA has released a report burying the science with a misleading headline that supports the Obama Administration’s pro-fracking policies rather than reveal the true dangers of fracking. It’s a disturbing trend we reported on extensively inGASLAND Part II with cases in Dimock, Pennsylvania; Parker County, Texas; and Pavilion, Wyoming.
EPA’s Fracking Study: Another Waste of Taxpayer Money! --Long-Awaited EPA Study Says Fracking Pollutes Drinking Water - In 2010, Congress commissioned the U.S. Environmental Protection Agency (EPA) to study the impact of fracking on drinking water. The U.S. EPA released its long-awaited final draft of its report today, assessing how fracking for oil and gas can impact access to safe drinking water. The report refuted the conclusion arrived at by the U.S. EPA’s 2004 study that fracking poses no threat to drinking water, a conclusion used to exempt the fracking process from the Safe Drinking Water Act. The report looked at water use at five stages of the water-intensive process: use of the available water supply for fracking; the mixing of chemicals with water to create fracking fluid; the flowback of the fluid after it has been injected underground to fracture shale deposits to release oil or gas; treatment of the wastewater byproduct of fracking; and the injection wells frequently used to dispose of fracking wastewater when the process is complete. . “The growth in domestic oil and gas exploration and production made possible by the expanded use of hydraulic fracturing, has raised concerns about its potential for impacts to human health and the environment. Specific concerns have been raised by the public about the effects of hydraulic fracturing on the quality and quantity of drinking water resources.” It noted the reason for that concern: “Millions of people live in areas where their drinking water resources are located near hydraulically fractured wells. While most hydraulic fracturing activity from 2000 to 2013 did not occur in close proximity to public water supplies, a sizeable number of hydraulically fractured wells (21,900) were located within 1 mile of at least one PWS source (e.g., infiltration galleries, intakes, reservoirs, springs and ground water wells). Approximately 6,800 sources of drinking water for public water systems, serving more than 8.6 million people year-round, were located within 1 mile of at least one hydraulically fractured well. An additional 3.6 million people obtain drinking water from private water systems.”
EPA Didn’t Fracking Find What It Didn’t Fracking Look For -- As noted here and by others at the outset of the EPA Frack Study – they were not likely to find evidence of fracking pollution that they said at the outset they were not looking for. To wit, they did not look for any of the following:
- 1. Methane migration up gas well bores – ie. “flaming faucets” – perhaps the most common form of groundwater pollution in NE Pennsylvania. The EPA said they did not have the resources to look into that in depth. So they didn’t.
- 2. Air pollution – by definition, not part of the study
- 3. Soil pollution – ditto, not considered. Note this includes frack waste spreading on roads, TENORM frackwaste dumped in landfills, etc.
- 4. Frackquakes – were not even on the radar when the study commenced.
- 6. Methane Contamination of Atmosphere – ie. greenhouse impacts, were not considered.
Not only is the EPA not permitted to regulate fracking by the Halliburton Loophole, they aren’t even permitted to study fracking in any comprehensive fashion. If you want more of the same from Washington, by all means be sure to vote for any one of the presidential candidates in the Republican Clown Bus or the Distaff Member of the Bonnie & Clyde of American Politics
EPA's Fracking Finding May Prove a Boon for Industry - US News: In the few hours following the release of a 998-page, $33 million federal report on fracking five years in the making, supporters of shale oil and gas development took to news opinion pages and social media to churn out what’s proving a potent narrative – one that may ultimately drown out the opposition. The Environmental Protection Agency announced Thursday that, while hydraulic fracturing activities had contaminated some drinking water supplies, the agency “did not find evidence” of “widespread, systemic impacts on drinking water resources” by the controversial oil and gas extraction process. Almost immediately, advocates on both sides of the fracking debate – industry groups, workers and landowners who have benefited from the energy boom it sparked, and advocates and local residents concerned about its health and environmental impacts – claimed victory in hastily issued press releases and on platforms like Facebook and Twitter. But it is industry supporters who perhaps have the most to cheer. “This further removes EPA under this president or any other president from doing the big jump into fracking,” “We’re not going to see any more big shifts in EPA on fracking on lands not held by the federal government.” Its role boosting the economy, not to mention the oil and gas industry’s immense lobbying power, has also allegedly tempered federal regulation – a trend experts say is only strengthened by the EPA report. And while the agency did say Thursday that fracking activities can and have leaked harmful chemicals into current and potential future drinking water supplies, some local residents, environmental advocates and researchers say the paper's narrow scope and nuanced findings pose a public relations challenge.
Corroded pipeline, insufficient repairs to blame for California oil spill - It is a truth universally acknowledged that pipelines will inevitably leak. However, it is something quite different when a pipeline is left to corrode and an oil spill is the result. Investigators have discovered that the oil pipeline which spilled roughly 2,409 barrels of oil into the Pacific Ocean off the coast of Santa Barbara was heavily deteriorated, The Guardian reports. Federal regulators released preliminary findings this week that indicated the pipeline had reached a mere 1/16 of an inch in thickness before it finally ruptured and began to leak. The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) indicated that over 80 percent of the pipeline’s wall had been eaten away by corrosion. The PHMSA also reported that corrosion was a sizeable problem in the expanse of pipeline where the rupture took place. Three other repairs had been completed since 2012. Many in California are likely wondering why the pipeline’s operator, Plains All American Pipeline, failed to take the appropriate preventative action, given the known poor state of the infrastructure. The state’s leadership has also stated that the company’s response to the spill has been insufficient.
Owner of ruptured oil pipeline has history of big spills, fines -- Nearly two decades ago, Plains All American Pipeline embarked on a buying spree across the United States and Canada, acquiring thousands of miles of aging pipeline. The purchases turned Plains into one of North America’s biggest energy pipeline companies. But it also left the firm with a patchwork of pipes, some in need of crucial maintenance. Mechanical failures on the company’s network have contributed to more than a dozen spills that have released nearly 2 million gallons of hazardous liquid in the U.S. and Canada since 2004. That does not include more than 100,000 gallons of oil spilled along the Santa Barbara County coast on May 19, about 20,000 gallons of which went into the Pacific Ocean, prompting a massive and ongoing cleanup. Several beaches have been closed since the spill. More than 100 birds and 58 mammals, including sea lions and dolphins, have died from contact with the oil. The spill occurred on a section of a 1,750-mile-long pipeline built in 1987 that carries heavy crude from offshore in the Pacific to the Gulf of Mexico in Texas. Plains bought it in 1998 at the start of its acquisition boom. In preliminary findings released this week, the Pipeline and Hazardous Materials Safety Administration determined the section of pipe was severely corroded and had lost nearly half its wall thickness. One six-inch crack in a section of pipe had been repaired repeatedly, officials noted.. Regulators have cited cracked joints, failed screws, faulty pins and an undersized storage tank as causes of previous spills that led to millions of dollars in fines against the company, according to court records and regulatory filings.
Bakken & Eagle Ford production up overall, flat in April -- Oil production from major shale plays in North Dakota and Texas were flat in April compared to March, according to Bentek Energy, an analytics and forecasting branch of Platts, a leading provider of energy, petrochemicals, metals and agriculture information. As reported by PennEnergy, production in North Dakota’s Bakken shale only increased about 2,000 barrels per day (b/d) in the month of April, a growth rate of less than 1 percent. The production trajectory from the Eagle Ford basin in Texas also continued on its flat path in April and grew only 1,000 b/d. Despite the flat growth trajectory for April compared to last month, both regions are producing more than this same time last year. Crude production in the Williston Basin averaged 1.2 million b/d according to Bentek data, about 173,000 b/d higher than a year ago. Production in the Eagle Ford formation reached an average 1.6 million b/d last month, a 284,000 b/d increase (22 percent) from last year’s figures. “The number of active rigs in the Eagle Ford basin currently stands at 116 rigs, down 27 rigs from the previous month. The efficiency gains noted in the region – such as the trimming of average drill time per well from 12 to 11 days between [the fourth quarter of] 2014 and [the first quarter of] 2015 – have helped in preventing oil production decline so far. Nonetheless, we do expect to see declines, however marginal, in Eagle Ford oil production as soon as next month.” Oil production in the Bakken formation, however, is anticipated to continue growing, but at a slower pace.
North Dakota to sink $40M in highway beat up by oil traffic - bakken.com: — Heavy oil truck traffic has prematurely beat up North Dakota’s northernmost U.S. highway, which was widened to four lanes between Williston and Minot in recent years, and officials say parts of it are in need of major repairs. The 100-mile stretch of U.S. Highway 2, the last to be converted to four lanes in the state, was completed in 2008 at a cost of $124 million, with the federal government footing 80 percent of the bill. It was to last more than two decades, yet North Dakota will spend $40 million this year to fix rutted, broken and cracked portions. It’s one of many projects tied to a spending bill that was rushed through the House and Senate with overwhelming support and signed by Gov. Jack Dalrymple in February so infrastructure projects could begin by summer. Engineers couldn’t have known that the highway would eventually be overrun by the state’s oil boom, which was only in its infancy when the project was completed. Planners had predicted only 2,000 vehicles daily along the route but at least 11,000 have been using the highway each day since 2012, state Transportation Department engineer Steve Salwei said. “No one ever dreamed there would be so much traffic and the road would deteriorate so quickly,” said Ken Munson, the mayor of Ray, a town along U.S. Highway 2. “No one could have imagined anything like this.”
After oil, ex-North Dakota Indian leader forms marijuana firm – The former chairman of a North Dakota Indian nation that controls one-third of the state’s oil output has formed a marijuana company to help tribes around the United States produce and distribute the drug. Tex “Red-Tipped Arrow” Hall, who until last fall led the Three Affiliated Tribes of the Mandan, Hidatsa and Arikara (MHA) Nation, has formed Native American Organics LLC with California-based Wright Family Organics LLC, a medical marijuana company, the companies said in a statement. Native American Organics said it will help Indian tribes grow and distribute marijuana to wherever legally possible, as well as offer expertise on hydroponics and genetics and advice on how best to work with state and federal officials. “In a matter of time, this industry could be just as big as gaming is for tribes, if not bigger,” Hall said in an interview on Tuesday. While legal jurisdiction can be complex, most Indian reservations are technically sovereign nations within the United States, with some federal law enforcement oversight. Last December, the U.S. Department of Justice said it would no longer enforce laws that regulate the growing and selling of marijuana on reservations, a ruling that paved the way for Native American Organics.
The U.S. oil fracker's dilemma: crouch or pounce? – U.S. shale oil producers, having weathered the worst price plunge in their industry’s brief history, now face a dilemma: whether to stay in a defensive crouch after slashing their rig fleets, or start drilling more wells to capture a partial recovery in prices. In a way, the conundrum is as old as the first oil well. If producers start pumping more crude, as some executives have said they might do if prices edge a bit higher, they risk contributing to another slump in a fragile global market; if they hold back, they forego regaining revenue lost during a price slide of 60 percent that started in June. Yet it is also a changed world. For decades the global industry has been dominated by a handful of mega-majors, which made shifts to the supply and demand balance less rapid and more predictable. Today, about 100 public firms and many more private ones are shaping the North American shale industry, raising the risk that hundreds of rigs might quickly reenter service, even if individual companies tread lightly.
Grand Central: Easy Money Finds its Way into Energy - It ought to make central bankers sit up and notice when easy money causes investors, lenders or businessmen to start making odd choices. My colleague Russell Gold documents what might fall into this category in a story about the continued flow of funds into the U.S. energy belt. Banks, private-equity firms and institutional investors have poured money into the energy sector even as oil prices collapsed and oil companies slashed billions of dollars in spending from their budgets, Russell reports. Private-equity firms are on pace to invest a record $20.6 billion in startup oil and gas companies this year, according to Preqin, which tracks private-equity expenditures. Investors and lenders appear to be of the view that now is the right time to put money into the sector, because oil prices are low. Buy low, sell high. Simple as that. The flow of money is likely to keep U.S. drillers pumping. Taken together with Saudi Arabia’s plan to keep pumping, oil prices could see continued downward pressure. That’s good news for American households. For financial regulators, however, this reach for returns in a slumping sector might be a sign that this era of super-easy money is breeding the kind of behavior that leads to excess or instability.
The Shale Boom Shifts Into Higher Gear - WSJ: Have the American entrepreneurs who developed horizontal drilling and hydraulic fracturing—“fracking”—done their jobs too well? The increase in domestic crude oil production of 3.6 million barrels a day in less than four years, reversing almost four decades of decline, has created a spectacular macroeconomic anomaly—a crash in oil prices without a recession to cause it. Now, in response to sharply lower prices, domestic oil producers have shed jobs and cut operating rigs by more than half. This has sent shock waves through the entire U.S. economy. The drop in fixed assets for drilling, alone, slashed about half a percentage point off first quarter gross domestic product. The crash in oil prices wasn’t due to lower demand. Petroleum demand in the U.S. is at its highest since 2010, and demand in China is higher than ever. Nor was the crash due to monopolistic OPEC manipulation. To be sure, the cartel, led by Saudi Arabia, chose not to cut production to support falling prices. But looking at the fracking tidal wave in the U.S., OPEC was only following the old Chinese proverb: When faced with the inevitable, try to enjoy it. Now the question is whether U.S. frackers can adapt to the lower prices they created. The nimblest and smartest competitors have worked relentlessly to increase their productivity. Leading-edge operators report that they can produce more profitably today at a price of $65 a barrel than they could at $95 a barrel three years ago. Where can they be profitable three years hence—$40 a barrel? $30? The oil patch today is afire with the same technological imperative and competitive mission that has powered the U.S. electronics revolution—think Moore’s Law—to dash headlong down the learning curve, crushing costs and prices and making up for it in volume.
How Wall Street Helps US Oil Producers Extend-And-Pretend - In “When QE Leads To Deflation: A Look At The Global Supply Glut”, we outlined, for all to see, how the monetary policies pursued by the world’s central banks have not only failed to create demand and meaningfully lift inflation expectations, but have in fact the opposite effect, creating a global supply glut and, in an irony of ironies, deflation. The cycle, which Citi says is “how zombies are born”, is nowhere more evident than among US oil drillers. Companies who would have otherwise been rendered insolvent by plunging crude prices have been able to keep drilling thanks to i) record low borrowing costs and ii) voracious demand for corporate issuance and ‘undervalued’ equity attributable to the fact that risk free assets fetch at best an inflation adjusted zero and at worst have a negative carry. Access to cheap cash keeps the supply coming which in turn keeps prices suppressed in a cycle that feeds on itself creating Citi’s “zombie” companies in the process. We’ve bemoaned this central bank-assisted aberration for quite a while now have variously warned that given the completely illiquid conditions that exist in the secondary market for corporate credit, the last thing anyone needs is a primary market bonanza for junk-rated borrowers. As for equity issuance, what gullible investor wouldn’t want to jump on a secondary from an otherwise insolvent producer. After all, prices will rebound eventually. BTFD, people. Once the revolver raids start up again in October (when banks will once again assess credit lines to oil and gas producers) the defaults may be just around the corner. Then comes the rush to the HY ETF exits at which point horrified fund managers seeking to unload the underlying bonds will discover that there’s no one home at dealer desks thanks to the post-crisis regulatory regime. Now, everyone is picking up on the narrative. Here’s WSJ on how Wall Street is keeping the sector afloat and the world awash in crude: Wall Street’s generous supply of funds to U.S. oil drillers helped create the American energy boom. Now that same access to easy money is keeping them going, despite oil prices that are languishing around $60 a barrel. The flow of money into oil has allowed U.S. companies to avoid liquidity problems and kept American crude production from falling sharply… Helped by a ready supply of money, the flow of oil from the U.S. could keep crude prices low for the remainder of 2015 and beyond…
Video: oil company debt and the oil price - See below for short view videographic, corporate credit related thoughts, as well as some additional sauce. The credit team at UBS deserve credit for pushing the concern about oil corporates. Here they are in early May: We believe the rubber will hit the road later this year for HY Energy. The recent rally in oil prices is insufficient for lower-quality energy firms who have most of 2016 production unhedged. Not to be forgotten for many E&Ps, natural gas prices are still struggling, and haven’t enjoyed the same bounce as oil prices YTD (Figure 3). Banks may not have cut reserve bank lending facilities aggressively yet, but the October review may be less forgiving with this backdrop. And again, more recently: Won’t defaults be limited to a small handful of issuers? There is some truth to that statement with respect to US high yield issuers; however, investors should not dismiss the bigger picture. The total debt of the oil and gas sector globally stands at roughly $2.5tn, two and a half times what it was at the end of 2006. According to the BIS this figure is comprised of 1.4tn of bonds and over 1.6tn in loans (but some of this portion represents undrawn facilities). But what is the credit worthiness of that debt?We would make a few key points: first, about one-third of the debt is tied to E&P companies; roughly 20% is integrated while 15% are oil service and pipeline firms. Second, of the bonds 35% are rated BBB, 17% BB, 7% B and 7% CCC. However, a large share of the loans outstanding are unrated. Third, just over 50% and 10% of debt is from US and European issuers, respectively, with a majority of the rest from EM firms. Finally while under 5% (c100bn) is due in 2015, 50% matures through 2019 with 30% (c650-700bn) due in 2018-19…
Federal Reserve finds a huge reduction in oil service costs -- The newest monthly assessment from the Federal Reserve claims that oil production companies are experiencing lower than usual service costs. For the most part, the June issue of the Beige Book prepared by the Federal Reserve Bank of Dallas regurgitated what most already know about the state of the industry. Oil and natural gas activity continued to decline for majority of the 12 districts which the analysis splits the U.S. into. In addition, well over half of the districts were reported to have experienced job cuts and a “tempered manufacturing growth” due to the oil slump. Company contacts for the energy industry told the Federal Reserve that the cost of drilling and bringing wells into production have dropped 20 to 30 percent since the beginning of the year. Data to back up the claims of reduced service cost has been scarce at best, until the respected voice of the Fed that is. Last month, market analysis Wood Mackenzie found service companies are slashing costs of drilling tools, fracturing proppants and rigs by an average 16 percent this year. According to them, the slash in costs could reduce a breakeven barrel value in the Eagle Ford shale Play from $56 to as low as $41 by summer 2016. The newest statements from the Fed could mean this prediction is right on track. The Fed also noted that energy production and extraction companies are cut spending 30 to 40 percent this year. Nonetheless, with more efficient drilling of horizontal wells and advancing technology, a dollar in the field will do much more this time around if service companies keep costs low.
This time, low price signals longer-lasting retrenchment for oil industry – The slump in crude prices has jolted the oil industry into deep cost cutting which, unlike the previous downturn, could last for a few years at least. After overspending by the industry during the boom years, the collapse in prices in the second half of last year laid bare the need to reduce costs and introduce efficiencies. Oil producers globally have embarked on billions of dollars in savings in recent months, forcing oil service providers and contractors, in turn, to slash rates by as much as 50 percent in some cases. A partial rebound in crude prices this year will give service companies such as Baker Hughes, Schlumberger and Petrofac little respite. Unlike the previous collapse in 2009, when prices plunged 75 percent only to rebound within months, industry analysts forecast a very gradual recovery in prices this time, which means costs will need to fall a lot further still. “Higher prices have led to cost inflation over the past years and now we need to reverse that trend,” BP’s Chief Executive Officer, Bob Dudley, told the OPEC seminar in Vienna on Wednesday. “This will be tough and will require some very new thinking, but I believe it will lead the industry leaner and thinner into the future to use capital more efficiently.”
Amazing Proof of Shale’s Seismic Shift — Last December the Energy Information Administration (EIA) updated its estimate of U.S. Crude Oil and Natural Gas Proved Reserves. Both natural gas and oil reserves rose, with the EIA reporting that U.S. proved reserves of crude oil and lease condensate had increased for the fifth year in a row, exceeding 36 billion barrels for the first time since 1975: Increases to proved reserves can occur either through new discoveries, or because higher oil prices have pushed previously uneconomic-to-produce oil resources into the reserves category. The latter is the primary reason why over the past decade Venezuela’s proved oil reserves jumped from 77 billion barrels in 2003 to a world-beating 289 billion barrels in 2013 — more even than Saudi Arabia at 266 billion barrels and more than six times the volume of proved U.S. reserves. Venezuela’s heavy crude resource in the Orinoco region of the country became economically viable as oil prices rose dramatically over the past decade and oil resources became classified as proved reserves. (Such additions can also be declassified as proved reserves should oil prices fall and remain low.) In the same way, higher prices are partially responsible for the increase in U.S. reserves. Higher oil and gas prices enabled economical production from the combination of horizontal drilling and hydraulic fracturing (“fracking”) for the first time, pushing shale oil and gas resources in North Dakota, Texas, and Pennsylvania into the proved reserves category. But the role of new discoveries in adding to new reserves can also be significant. In March 2015 the EIA released its update to the Top 100 U.S. Oil and Gas Fields as a supplement to the December report. This was the EIA’s first update on the Top 100 fields since 2009. The map has changed substantially since 2009, because there were no significant oil fields in South Texas at that time. With the new update, the largest field in the U.S. is now in South Texas:
Canadian shale field could rival the Bakken - The Canadian oil industry is associated mostly with the bitumen recovered from reserves such as the Alberta tar sands, but recent data from the National Energy Board (NEB) and the Northwest Territories Geological Survey has revealed a shale oil reserve that could rival the Bakken formation. Money Morning reports that the massive, untapped oil reserve could hold upwards of 200 billion barrels of shale oil. Of these reserves, though, officials predict that with current technology approximately 7 billion barrels of oil could be recovered economically. For comparison, the U.S. Geological Survey estimates that the Bakken shale formation could produce around 7.4 billion barrels. The area, located in the Northwest Territories, is north of British Columbia and east of the Yukon 90 miles south of the Arctic Circle. One of the formations, known as the Canol field, is already being explored by several major oil producers such as Royal Dutch Shell and ConocoPhillips. As reported by Peter Krauth for Money Morning, since 2010, there have been 14 exploration licenses granted with $628 million in commitments. The Canol field is estimated to hold up to 145 billion barrels of oil. The other formation, the Bluefish field, has yet to be explored but is estimated to contain as much as 46 billion barrels of oil.
Appeals Court: KXL South Approval Legal, Lifts Cloud Over TransCanada -- In a 3-0 vote, the U.S. Appeals Court for the Tenth Circuit has ruled that the southern leg of TransCanada's Keystone XL pipeline was permitted in a lawful manner by the U.S. Army Corps of Engineers. Keystone XL South was approved via a controversial Army Corps Nationwide Permit 12 and an accompanying March 2012 Executive Order from President Barack Obama. The pipeline, open for business since January 2014, will now carry tar sands crude from Cushing, Oklahoma to Port Arthur, Texas without the cloud of the legal challenge hanging over its head since 2012. As previously reported here on DeSmog, the Sierra Club and co-plaintiffs already lost their Appeals Court legal challenge to impose an injunction and stop diluted bitumen (“dilbit”) from flowing through Keystone XL South back in October 2013. Now that same Court, albeit different judges, have ruled that the pipeline approval process itself was also legally acceptable. At its core, the case centered around legal issues pertaining to the March 2012 Obama White House Executive Order and accompanying Army Corps' Nationwide Permit 12 issued to TransCanada to build Keystone XL South. Sierra Club and co-plaintiffs had argued that by issuing a Nationwide Permit 12, the Army Corps helped TransCanada dodge the more rigorous National Environmental Policy Act (NEPA) process, thus violating NEPA. The judges begged to differ, saying no violation of NEPA transpired because Sierra Club never mentioned concerns during the public commenting period, such as potential oil spills. In turn, argued one judge, that was not something “obvious” the Corps should have examined. Not mentioned: the Nationwide Permit 12 process, unlike a NEPA review, does not allow for public comment. Nor does it have public hearings.
Banks Behind Hillary Clinton's Canadian Speeches Really Want The Keystone Pipeline: Two Canadian banks tightly connected to promoting the controversial Keystone XL pipeline in the United States either fully or partially paid for eight speeches made by former Secretary of State Hillary Clinton in the period not long before she announced her campaign for president. Those speeches put more than $1.6 million in the Democratic candidate's pocket. Canadian Imperial Bank of Commerce and TD Bank were both primary sponsors of paid Clinton speeches in 2014 and early 2015, although only the former appears on the financial disclosure form she filed May 15. According to that document, CIBC paid Clinton $150,000 for a speech she gave in Whistler, British Columbia, on Jan. 22, 2015. Clinton reported that another five speeches she gave across Canada were paid for by tinePublic Inc., a promotional company known for hosting speeches by world leaders and celebrities. Another speech was reported as paid for by the think tank Canada 2020, while yet another speech was reportedly funded by the Vancouver Board of Trade. But a review of invitations, press releases and media reports for those seven other speeches reveals that they, too, were either sponsored by or directly involved the two banks. Both banks have financialties to TransCanada, the company behind the Keystone XL pipeline, and have advocated for a massive increase in pipeline capacity, including construction of Keystone. Further, Gordon Giffin, a CIBC board member and onetime U.S. ambassador to Canada, is a former lobbyist for TransCanada and was a contributions bundler for Clinton’s 2008 presidential campaign.
Rick Perry Says He’ll Approve Keystone XL ‘On Day One’ If Elected President -- If elected president, former Texas Governor Rick Perry said that he would immediately approve the Keystone XL pipeline, authorize natural gas exports, and freeze the Obama administration’s proposed regulations on carbon dioxide. m“On my first day of office I will issue an immediate freeze on pending regulations from the Obama administration,” Perry said while announcing his second bid for the White House at an event in Addison, Texas on Thursday. “On day one I’ll also sign an executive order approving the construction of the Keystone pipeline. … On day one I’ll sign an executive order authorizing the export of american natural gas and freeing our allies from the dependence of Russia’s energy supplies.”
For green activists, Arctic drilling could be the next big thing - Michael Brune is pleased that activists in kayaks are training for another "Paddle in Seattle" to confront an expected Royal Dutch Shell rig on its way to the Arctic to explore for oil. What makes the head of the Sierra Club just as happy is the effect Shell's Arctic ambitions are having on his own environmental organization. Sierra's funding drive against the resumption in Arctic drilling has taken in three times more money than usual campaigns by the nation's oldest green group, said Brune, though he wouldn't reveal specific amounts. And the group's petition opposing President Barack Obama's decision in favor of Shell last month has collected more signatures than any appeal in two years. "Our members are outraged because they believe fighting climate change is a moral challenge and they ask how the president can reconcile this move with his goals on climate change," Brune said. "All of it is getting a much higher response rate than we expected." For environmental groups from the Sierra Club to Greenpeace, that combination makes Arctic drilling a powerful symbol for the broader fight over climate change. Global activists are increasingly focused on stopping major extraction projects, with the aim of keeping carbon reserves buried to avoid emissions many scientists say would result in runaway global warming. The stakes are also high for Shell, which has already invested $7 billion in Arctic operations, though commercial oil production remains 10 to 15 years away. Shell understands some people oppose Arctic drilling, but global energy demand is expected to double by 2050, said spokesman Curtis Smith. "We'll need energy in all forms, and Alaska's outer continental shelf resources could play a crucial role in helping meet that challenge," he said.
Should Arctic drilling opponents take on Shell, or our own craving for crude? - Ok, admit it — you’re a little queasy about the recent “Paddle in Seattle” protests against Shell. It’s not that you questioned their cause: the Arctic is highly sensitive, the risks of an accident are high and Shell’s record in the Arctic is hardly inspiring. Nor did you doubt the effectiveness of a flotilla of tiny Davids standing up — okay, sitting down — against an oily Goliath: Shell’s operational window in the Chukchi Sea is so narrow that any delay in the port permitting process could cause Shell to rethink the whole project. Rather, what bothered you was the small-picture feel to the campaign. Even if Greenpeace and others involved do stop Shell from wintering its Arctic fleet in Seattle, the victory will be short-lived. As soon as oil prices rise, Shell or a rival will be back for the billions of barrels under the Chukchi. Why? Because, what is actually driving this drama isn’t oil-industry greed, or even the wimpiness of the Obama administration. It is our own insatiable appetite for crude. Put another way, unless the zeal we saw on Elliott Bay can somehow be channeled toward the more complicated, and less glamorous, task of curbing that demand, the “Paddle for Seattle” will ultimately be less political action than performance art. This isn’t a dig at the protestors, exactly. Groups like Greenpeace, for all their emphasis on immediacy and real-time spectacle, recognize that these “events” must be part of a larger campaign to shift the global economy away from fossil fuels. The problem, really, is the way that larger story is being articulated and received — by activists, but also by journalists, politicians, citizens and the larger culture. And cynical as it may sound, when it comes to stories about social change, ours is a culture that increasingly insists on, not only obvious conflict and identifiable heroes and villains, but plot lines that move swiftly and uncomplicatedly toward concrete resolution, whether it’s a success or failure. “Reducing oil demand” just doesn’t fit that criteria.
This Week in Energy: Oil Glut Easing At A Snail’s Pace - The EIA released fresh weekly data this week that solidified a trend underway in the US. Oil inventories posted their fourth weekly decline, falling by another 2.8 million barrels. The US has now burned through 10 million barrels of oil from storage in a month, indicating that the supply glut continues to ease, although at a very slow rate. At the same time, however, the EIA also revealed a shocking jump in weekly production. Crude output across the country jumped by 300,000 barrels per day, an eye-grabbing number considering many other indicators point to an overall contraction. Still, that figure should be treated with a large grain of salt, as it is not the EIA’s most reliable metric. Weekly figures tend to be less accurate than forthcoming monthly data, which usually captures a clearer picture of the state of play. The draw on inventories is largely attributable to the demand from downstream. Refineries are running at their highest levels in several months, providing a further boost to oil prices. Gasoline consumption is rocketing towards a ten-year high for the season. But there is a lot of hesitation in the oil markets. After two solid months of price gains between March and May, prices have hit a plateau and have even pulled back a bit. Global supplies are still elevated, and while demand is rising, it is not accelerating fast enough to significantly relieve the glut. It appears it will take some more time for things to balance out. Meanwhile, the cost to use oil tankers is shooting through the roof as more are being called upon to ship and store oil. Chartering an oil tanker now costs 57 percent higher than it has in recent weeks. On May 20, tanker rates hit $83,412 per day, up from just $52,987 at the beginning of the month. Part of the reason for the huge jump in daily tanker rates is because more oil is being exported from OPEC countries. The massive increase in oil exports from Iraq, in particular, is a huge development for oil markets. Another reason for high tanker rates is the ongoing use of ships to store oil. With oil prices expected to rise in the future, oil traders are parking their crude on ships, waiting for prices to bounce upwards. There are an estimated 20 million barrels floating somewhere out there in the oceans.
Oil cuts gains after industry group API forecasts U.S. stockpile build - (Reuters) - Oil pared gains in post-settlement trade on Tuesday after industry group American Petroleum Institute (API) estimated a stock build for last week versus market expectations for a draw. API said U.S. crude inventories rose by 1.8 million barrels in the week to May 29. Analysts polled by Reuters had forecast stocks to drop instead by 1.7 million barrels, for a fifth straight week of declines. U.S. crude was up 81 cents at $61.01 a barrel by 4:56 p.m. EDT (2056 GMT), after settling up $1.06. Brent crude was up 44 cents at $65.32, after closing 61 cents higher.
Oil Prices Slide as High Supplies Persist - WSJ: —Oil prices slumped Wednesday on concerns that the global crude market continues to be oversupplied. Robust production from the U.S. and member nations of the Organization of the Petroleum Exporting Countries sent oil prices plunging last year, and prices remain more than 40% below their June highs. The market rallied earlier this year on expectations that spending cuts would help shrink the global glut of crude, but large supply cuts haven't materialized so far. U.S. data released Wednesday showed domestic oil production at a new weekly high, and OPEC is widely expected to keep its production target unchanged at its June 5 meeting. Light, sweet crude for July delivery settled down $1.62, or 2.6%, at $59.64 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell $1.69, or 2.6%, to $63.80 a barrel on ICE Futures Europe. Traders have closely scrutinized weekly U.S. inventory data this year for hints of when spending cutbacks by oil companies will lead to lower U.S. production. Commercial stockpiles of crude oil fell by 1.9 million barrels last week, the fifth straight weekly decline, the U.S. Energy Information Administration said Wednesday. Stocks now stand at 477.4 million barrels, 2.7% below the high reached in April. Though stockpiles are declining, they are not shrinking as quickly as they grew earlier in the year. Inventories are 23% above year-ago levels.
WTI Crude Pumps-And-Dumps As Increased Production Trumps Surprise Inventory Draw -- Following last night's inventory build report from API, expectations adjusted to a 818k build for the DOE data this morning. However, for the 5th week in a row, DOE reported a draw (this time of 1.95 million barrels). WTI Crude had rallied into the data but was still in the red from yesterday's close and spiked on the inventory news. However, once the machines had a chance to see that production rose once again - to a new cycle record - prices began to slide.... 5th weekly inventory draw...
Oil prices dip as crude glut overshadows strong fuel demand - Oil prices dipped on Thursday as a large crude glut and a sliding dollar overshadowed strong global fuel demand. Crude markets remain oversupplied ahead of Friday's meeting of the Organization of the Petroleum Exporting Countries, which is expected to continue to produce about 2 million barrels per day above demand, adding to a glut that has left millions of barrels stored on tankers without a buyer. Front-month Brent futures were down 9 cents at $63.71 per barrel by 0606 GMT. U.S. crude futures dropped 8 cents to $59.56. Energy advisory Wood Mackenzie said that it was very unlikely that OPEC would agree to cut output at its June 5 meeting and that it expected the group's crude output to remain just above its 30 million bpd production ceiling through 2016. The company said it forecast Brent to average $60 a barrel in 2015 and $70 in 2016. But strong global fuel demand curbed declines in prices. In China, almost 2 million new gasoline-thirsty cars are sold every month despite its economic slowdown. Asian refiners are also consuming a lot of crude for processing fuel as they benefit from near-record gasoline margins.
Oil extends losses ahead of OPEC meeting -- Crude oil prices fell more than $1 on Thursday as investors prepared for a widely expected decision by OPEC members to maintain current production levels, despite worries over a global supply glut. The Organization of the Petroleum Exporting Countries is expected on Friday to keep a group output target of 30 million barrels per day (bpd), ignoring calls from some producers to cut supply to support prices. The cartel is now pumping about 2 million bpd more than needed, analysts say, feeding a glut that has left millions of barrels in storage and kept prices at close to half their peak levels last year. "A roll-over in OPEC's production target is built into prices," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates. "Given the exciting fundamental backdrop, volatility is all but guaranteed." Brent for July LCOc1 was down $1 at $62.80 a barrel by 1400 GMT. U.S. crude futures CLc1 were also $1 lower at $58.64. Energy analysts at Morgan Stanley, who earlier this week raised the possibility of an OPEC production rise, said on Thursday the cartel was "highly unlikely" to change its target. Strong global fuel demand has helped support oil prices despite the glut. In China, almost 2 million new cars are sold every month despite its economic slowdown.
Is $60 the new normal for oil? -- Weak global economic growth momentum and a supply glut will cap oil prices at around $60 for the rest of 2015 and into 2016, analysts say. "WTI oil futures will remain range bound at around $60 for the rest of 2015 and will only start trending up towards $70 a barrel heading into the end of 2016," Mizuho Research Institute senior economist Jun Inoue told CNBC in a phone interview. "Global economic growth looks soft, but there are no signs that oil supplies will fall," he said. After falling to six-year lows earlier this year, oil prices have stabilized over the past two months. WTI futures have hovered in a $50-$60 a barrel range since early April. Ahead of Friday's Organization of Petroleum Exporting Countries (OPEC) meeting, ministers from oil-producing countries such as Iraq, Venezuela and Angola, have been touting a higher target of around $75—$80 range, Reuters reports. But analysts don't see much scope for upside to those levels. "Oil prices appear to be settling in a range of $60 to $70 per barrel," said Capital Economics in a note on Wednesday. "We think that prices are more likely to fall than to rise over the remainder of this year." Capital Economics is forecasting Brent at $60 by the end of the year. Brent futures were trading at $63.38 a barrel at mid-day Asia Thursday.
The Last Three years Of Global Crude Oil Production --The EIA publishes every possible energy stat for the USA and hardly anything for the rest of the world. Well, anything current for the rest of the world anyway. Their International Energy Statistics report is already five full months behind and working on six. December 2014 is the last international oil production data we have. Anyway during this lull in other data I decided to look at the last three years of international data, from December 2011 to December 2014. All data is in thousand barrels per day. World C+C production was flat for most of 2012 and 2013 but in late 2013 production took off and has increased by about 3 million barrels per day above the average for 2012 and 2013. December C+C production was 79,300,000 BPD. While total C+C production has increased by 3,000,000 BPD over the last three years the top ten gainers have increased just over twice as much, 6,200,000 BPD. Related: Three Eagle Ford Stocks Worth A Look And just who were the big C+C production increasers for the last three years. Keep in mind this is the total change, or increase, over the last three years, not total production. (Click to enlarge) The largest gainer, by a wide margin, was the USA. Iraq and Canada were runners up and the rest were also rans. Almost everyone else had declines. (Click to enlarge) Here are the 20 biggest decliners. Iran of course declined the most but surprisingly, the second largest decliner was Mexico, not Libya. Saudi, the fourth largest decliner has, since December, increased production by about half a million barrels per day.
OPEC likely to keep output unchanged at June 5 meeting: delegates - OPEC is likely to keep its output target unchanged when it meets on Friday because the global oil market appears to be in good shape and prices are expected to firm up from current levels, a senior Gulf OPEC delegate told Reuters. Two more OPEC delegates said they expect no change in policy on June 5 when oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet in Vienna. Oil prices have rallied after falling to a near six-year low close to $45 a barrel in January due to a global glut. Brent crude settled at $65.56 on Friday, up $2.98, or 4.8 percent, on the day. [O/R] "It is unlikely that OPEC will make a decision regarding its production ceiling for two reasons: the first one that Russia and other non-OPEC producers have expressed their non-desire to cooperate in any idea of a production cut," the Gulf delegate said on Sunday. "And the second one is that the market is firming up. Prices are expected to continue at current levels and most likely will go higher. Demand is also strong and the inventories are balanced. The market seems to be in good shape," the delegate said. Crude oil inventories are above the five-year average but oil products stocks are within the five-year average, the delegate added.
Expect The Recent Oil Rally To End Badly If OPEC Doesn’t Cut -- The U.S. rig count dropped by 10 rigs this week after only falling by 3 last week. No doubt some analysts will say that this increase is somehow important and that a return to normal–i.e., high oil prices–is around the corner. Well, don’t get too excited because the rig count that matters–the horizontal Bakken, Eagle Ford and Permian plays–only fell by 2 rigs after not falling last week. This is a normal fluctuation when oil is $100/barrel. Production has fallen and will fall more but rig count is the wrong measure at this time. The real measure is capital given to U.S. tight oil companies. And there seems to be plenty of really stupid capital that thinks that investing now means buying low. Good luck with that once oil prices fall. There have been a steady stream of articles championing the ingenuity of U.S. tight oil producers for figuring out how to maintain production with fewer rigs. It doesn’t strike me as ingenious to produce more oil at low prices that ensure losing money. OPEC will meet on Friday and most doubt that a production cut will result. If that is the outcome, expect the recent rally in oil prices to end badly. If producers cared about their investors and shareholders, they would be slashing production by shutting in wells. That might help oil prices rebound sooner and then, they could sell the oil at a profit instead of losing money while celebrating their own ingenuity.
Busting The Myth Of Saudi America -- The Saudi reticence to cut production was just a catalyst. The bigger theme was an already overdue bust that was happening in U.S. shale oil. This oil bonanza had been built on a house of cards, ready at any moment to topple over. The list of fragile flaws in the system was long. Each state had its own set of regulations and oversights on leases and operations, with no consistent framework for oil shale fracking. Despite (or because of) the complete freedom in oversight, fracking for oil from shale had grown at a frightening and undisciplined pace. As prices declined, it became clear that much of this breakneck activity had been financed by very risky and highly leveraged capital investments that mirrored some of the worst pyramiding schemes I had ever seen. But because prices had been high, many of the shortcomings had been conveniently overlooked: oil was being taken out of the ground as quickly as it could be drilled. The months following the OPEC announcement showed me just how rickety the entire structure for retrieving shale oil had become. Oil companies that had been the darlings of Wall Street not one year earlier were now losing 70-80% of their share value, as their corporate bonds, which were already poorly rated, risked complete default. Virtually every company involved in shale production was forced to slash development budgets, hoping to ride out what they prayed was a temporary dip in the price of oil. Yet projected production numbers from all of these players continued to rise, almost insuring that prices would stay cheap. What had been a universally optimistic industry not 6 months prior had changed overnight into a frightened group playing a collective game of chicken, as oil producers hunkered down with reduced budgets and hoped like mad that the “other guy” would go broke first. That shale oil had folded like a cheap suitcase so quickly and completely was incredible to witness and, I thought, incredibly important: it was undeniable proof that as a nation, we had completely bolloxed this once-in-a-lifetime opportunity.
U.S. shale and OPEC, the altered balance of power -- Two landmark events this month will underscore the extent to which the oil market’s balance of power has been transformed by the shale revolution. In Washington, Congress will begin considering legislation to permit the export of crude oil from the United States, reversing a four decade ban put in place after the first oil crisis in 1973/74. In Vienna, the Organization of the Petroleum Exporting Countries (OPEC) is expected to roll over its crude production target of 30 million barrels per day (bpd) even though prices have fallen more than 40 percent over the last 12 months. Rather than reduce production to boost prices, Saudi Arabia and the other OPEC members are prepared to continue pumping to defend market share and maximize revenue. After 40 years when OPEC appeared to play the dominant role balancing supply and demand and influencing prices (sometimes successfully, sometimes not), power has passed to the shale drillers of North America. Now it is the shale drillers who must decide whether to respond to the recent price rebound by re-activating rigs and completing more wells, at the risk of sending the price tumbling again.
OPEC oil output in May reaches highest since 2012 - survey - OPEC oil supply in May climbed further to its highest in more than two years as increasing Angolan exports and record or near-record output from Saudi Arabia and Iraq outweighed outages in smaller producers, a Reuters survey showed. The boost from the Organization of the Petroleum Exporting Countries puts output further above its target of 30 million barrels per day (bpd), underlining the focus of top exporter Saudi Arabia and other key members on market share. OPEC supply rose in May to 31.22 million bpd from a revised 31.16 million bpd in April, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants. The group meets on Friday and is not expected to alter policy as oil has risen to $65 a barrel from a low close to $45 in January and there are signs of slowing growth in the higher-cost supplies that have been eroding OPEC’s market share. “Anything but a renewed confirmation of the production target at the forthcoming OPEC meeting would be a major surprise,” Commerzbank analyst Carsten Fritsch said. “The rapid rise in U.S. crude oil production has been stopped and the oil price has recovered considerably.” The biggest increase came from Angola, which exported 58 cargoes in May, more than originally planned in April, according to loading schedules. Top exporter Saudi Arabia has not reduced output from April’s record high of 10.30 million bpd, sources in the survey said, as it meets higher demand from export customers and in domestic power plants.
How OPEC Hurt Big Oil - WSJ: The world’s biggest oil companies have taken a beating since the Organization of the Petroleum Exporting Countries let prices fall last year in favor of pumping more crude, injecting a note of tension into a long-standing marriage of convenience. Oil company earnings plunged 50% in the first quarter from a year earlier. Some of the industry’s biggest projects are on ice, and a new mood of uncertainty hangs over the sector as it goes through a rough patch after years of stability. The meeting of the cartel this week amounts to a counseling session of sorts for global integrated oil companies and OPEC, as they all converge on Vienna. But no one expects the good times to return soon. OPEC, at its meeting here on Friday, appears likely to stay the course it set last November, keeping production levels the same. The shale-oil boom has accounted for the bulk of supply growth globally in recent years. Its persistence is the main reason OPEC’s leadership, particularly that of Saudi Arabia, saw little point in cutting production last year and likely now, as well. Any shortfall would likely be quickly met by producers outside the cartel. “It’s clear that we don’t have any more a balance because as soon as the price recovers shale oil can shift and start again production,” said Claudio Descalzi, chief executive of Eni, the Italian energy giant. “We have to get used to a different dynamic.” But the abdication by OPEC of its longtime role of swing producer has thrown the business models of big oil into disarray. “By jettisoning its ‘swing supply’ role, OPEC is dumping that burden upon the market. The international oil companies are now carrying some of the load,” On the one hand, the oil majors are seeing their revenues plunge with lower prices. For instance, BP’s measure of earnings fell 40% in the first quarter from a year earlier, while its cash flow dropped by more than 75%. On the other, the companies have been able to use that pressure to cut expenses and operate more cost-effectively. Eni slashed its dividend, and Exxon trimmed a share-buyback program. All of the big firms have pushed contractors to lower costs.
Big Oil chiefs tell OPEC they're adapting to price shock - (Reuters) – Six months after OPEC upended oil markets and sent prices crashing, the head of U.S. oil giant ExxonMobil has an unusual message for the cartel: thanks. While Exxon and other large oil companies have been forced to slash spending, cut staff and sacrifice tens of billions of dollars in revenue as oil prices halved, they have also watched with quiet satisfaction as upstart rivals from the U.S. shale patch struggle simply to survive through the downturn. The price collapse has helped shine a sharper light on the highest-cost producers, Rex Tillerson, head of the world’s largest publicly traded oil company, told a rare meeting of oil executives and OPEC ministers. “We’re trying to discover where the marginal barrels are around the world. It’s important for all of us to know,” he said. “We are constantly chasing the price against the cost of supply.” “We live with a lot of uncertainty and we’re rewarded for how well we manage it,” said Tillerson, one of the best-paid CEOs in the world. If you can’t live with uncertainty, “be a librarian,” he said.
Tight oil is here to stay, Conoco CEO tells OPEC - The U.S. tight-oil boom is here to stay despite low crude prices as technological breakthroughs will allow steep reductions in costs, the head of U.S. firm ConocoPhillips told a seminar organized by oil-producing group OPEC. “Innovations have already led to a U.S. energy renaissance. Tight-oil reservoirs can remain viable today, breakeven costs are already down by 15 to 30 percent,” Ryan Lance, chairman and CEO of Conoco, said on Thursday. The North American shale oil industry “will survive at $100 and it will survive at $50 or $60 Brent pricing too,” Lance told an audience packed with OPEC officials, including Saudi Arabia’s influential oil minister Ali al-Naimi. International benchmark Brent crude was trading just below $64 a barrel at 1015 GMT. Oil prices crashed over the past year after OPEC decided against cutting production to tackle a global glut that arose from a U.S. shale oil boom. OPEC chose instead to fight for market share, betting that a price drop would depress output in higher-cost producers such as the United States. Lance said cost reductions had been partly achieved due to cuts in service costs. “We’re in the second inning of a nine-inning game. We’re still trying to figure out how to get the optimum amount of flow through the reservoir. There are more (gains) to come.” Breakeven costs for tight oil would likely go down another 15-20 percent by 2020, he said. “So the message – unconventional production is here to stay,”
Saudis Believe They are Winning The Oil Price War - It’s almost a foregone conclusion that OPEC won’t cut its production levels at its June 5 meeting in Vienna. Anyone needing strong evidence, if not proof, of this need only listen to Ali al-Naimi, the architect of the cartel’s effort to reclaim market share. In fact, some observers say OPEC not only won’t cut overall production levels from 30 million barrels a day to shore up prices, but may even increase them.It’s important to remember that shoring up oil prices is not the highest priority on al-Naimi’s list right now. While some OPEC members may have trouble making ends meet, wealthier Gulf Arab states can withstand lower revenues. This is especially true for Saudi Arabia, which has currency reserves of nearly $750 billion. Instead, the strategy was aprice war against non-OPEC members who were ramping up production, particularly those in the United States exploiting the boom in shale oil. The question, posed to the Saudi minister when he arrived June 1 in Vienna in advance of the cartel’s meeting, was whether that strategy was working. “The answer is yes,” al-Naimi replied. “Demand is picking up, supply is slowing.” This isn’t just wishful thinking. OPEC is, in fact, gradually reclaiming its market share, according to a June 2 report from Barclays. It said that the cartel captured an average market share of 33 percent in April, up by 1 percentage point from the same month last year, but still 35 percent below the share it controlled in the middle of 2012.
What's OPEC Going to Do With Iran's Million Barrels a Day? - Just when it looked like OPEC was winning the war with U.S. shale-oil drillers, a new front is opening up within its own ranks. The Organization of Petroleum Exporting Countries’ summit on June 5 to determine the group’s output will come three weeks before a deadline for a deal on Iran’s nuclear program. The government in Tehran says it can add almost 1 million barrels to daily production within six months of sanctions being lifted. That’s a million barrels that OPEC hasn’t had to worry about since it adopted a new strategy in November of favoring market share over propping up prices. The group is already pumping the most oil in more than two years to quash higher-cost producers, and while Iran’s return would add to the pressure on OPEC’s rivals, it will also heighten competition within the group for buyers. “The Saudis are increasing production and anyone else in OPEC who can is also doing the same. If OPEC’s not willing to cut output to make room for Iran, they have to look for reductions from producers outside the group.” OPEC will maintain its output target of 30 million barrels a day when it meets in Vienna, according to all but one of 34 analysts and traders surveyed by Bloomberg last month. In reality, the group has been pumping more than that for a year, a sign of its determination not to cede a single barrel of market share to rival producers. OPEC’s strategy is working: The number of active U.S. oil drilling rigs has fallen by a record 60 percent to 646; output from American shale formations fell in May for the first time since February 2011; and producers have cut billions of dollars from their spending plans. In contrast, Saudi Arabia, OPEC’s biggest member and the architect of its strategy, is deploying the most rigs in at least two decades and operating with the lowest spare production capacity in about three years.
OPEC Keeps Production Limit At 30mln Barrels Daily: The Organisation of Petroleum Exporting Countries (OPEC) has said it has decided to maintain its maximum production limit at 30 million barrels of oil a day. The decision was made at the cartel’s meeting in Vienna on Friday. The cartel sticks to its strategy of unconstrained oil production which seeks to fight for its market share and curb production from high-cost instead of boosting the oil price by cutting output. OPEC refused to cut its output in the November meeting. The cartel signaled it would not cut output alone without a coordinated production reduction with other Non-OPEC oil producers. OPEC, an international organisation with headquarters in Vienna, Austria, was established in Baghdad on September 1960. Its mandate is to “coordinate and unify the petroleum policies of its members.” It also works to ensure the stabilisation of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers. OPEC also maintains a steady income for producers and a fair return on capital for investments in the petroleum industry.
OPEC to maintain current oil output (video) The oil producers' organisation OPEC has decided to maintain current production levels despite calls from the industry to push oil prices higher. The Organisation of the Petroleum Exporting Countries took the decision to keep the "same" output target of 30 million barrels per day, Saudi Arabia's Oil Minister Ali al-Naimi said in Vienna on Friday. He dismissed rumours of disagreement between poorer members, who are believed to have been pressing for a drop in production at the gathering of the 12-nation group in Austria's capital. "The ceiling is the same. You will be surprised how amicable the meeting was," Naimi said after the meeting. Angola, Ecuador, Iran, Iraq and Venezuela had all appealed that the organisation, which produces one-third of global oil output, increases output for higher prices. OPEC is pursuing its plan to maintain market share and exert pressure on high-cost US shale producers. The decision leaves OPEC's official collective target at a level where it has stood for more than three and a half years. However, OPEC, which comprises nations from Africa, Latin America and the Middle East, is actually pumping 31.2 million billion barrels per day, due to increased supplies from Saudi Arabia and Iraq, according to International Energy Agency estimates.
OPEC - As Expected - Maintains Production At 30 Million Barrels, Crude Pops -- When OPEC did not cut production last November, the oil market collapsed in shock and awe that the cartel would not just give in and allow non-OPEC members to walk away with market share. Today, in Vienna, "exactly as expected," OPEC once again confirmed production will remasin at 30 million barrels per day in the face of the global oil glut and prices forWTI and Brent have jumped $0.50 to $1.00 (we presume on machines and removal of a worst case boost to production). Saudi oil minister Ali Al Naimi described as an “amicable” OPEC meeting. Prices wer weask going in and have reflexively bounced on the news that this was not a worst case scenario boost in production... “No surprise, exactly what was expected,” says Marina Petroleka, head of oil & gas at BMI Research, after the OPEC decision to leave its output target unchanged. According to Ms. Petroleka, the cartel’s 30 million notional production target remains, but production will remain well above it – especially in the summer months as Middle East produces more to meet higher domestic demand. “Eyes are now to the next meeting in end November, depending on what happens with the Iranian nuclear negotiations. The next meeting could be where a lot more internal negotiation and change of policy may need to take place,” she said.
OilPrice Intelligence Report: No Surprises From OPEC: Unless you have been living under a rock, by now you have read that OPEC has decided to leave its production target unchanged. A widely expected move, OPEC’s decision to leave its collective output at 30 million barrels per day will likely not have an enormous effect on the oil markets in the short-term. Prices were down a bit on June 5, but the markets had largely baked OPEC’s move into the price already. In fact, there were rumors that the group may even lift its production target, but that was not generally seen as likely. If that had occurred, prices would have been crushed. But with the status quo affirmed for now, OPEC appears comfortable with its strategy to play for market share, and the markets will have to continue on their path towards slowly balancing out. Heading into the meeting, OPEC officials cited the early success of its market share strategy. Having forced US shale production to level off and rig counts to drop by more than half, Saudi Arabia and its OPEC companions are maintaining their share. They expect that to continue. Also, prices have rebounded from their lows, jumping from the mid-$40s per barrel for Brent to above $60, and that didn’t come on the backs of OPEC. One interesting development during the OPEC meeting in Vienna was the difficulty Iran had at getting its voice heard. Iranian officials insisted that OPEC make room for its expected increase in oil output, assuming that western sanctions are lifted following an historic agreement with the West over Iran’s nuclear program. Iran may be able to rapidly ratchet up its oil output, with expected increases ranging from 400,000 barrels per day within a few months, to as much as 1 million barrels per day by next year. That would require some change in policy on behalf of OPEC. If a deal with the West is secured and sanctions are lifted, the November 2015 OPEC meeting will be much more interesting than the one that just concluded.
North Sea Oil Weighing Down British Economy - The output of oil and gas from Britain’s North Sea energy sector, plus disappointing export numbers, are beginning to weaken manufacturing in the kingdom and threatening the new Conservative government’s efforts to improve the overall economy. Manufacturing appeared healthy at the start of 2015, but orders and production have diminished so far in the second quarter, mirroring to some extent the reduction in North Sea output caused by the plunge in oil prices during the past year. The British manufacturers’ association, the EEF, says the industries most affected were mechanical engineering and metals. The latest quarterly report by EEF – which once stood for the Engineering Employers’ Federation – said the problem also has affected the British industrial morale, leading to a reduction in investment and employee recruitment. The conclusions are based on a survey of more than 400 companies. Certainly the fall in energy prices has been both good and bad news for British industry. For example, Mark Carney, governor of the Bank of England, has described the phenomenon “unambiguously positive” for the economy by controlling costs. But the EEF report shows its unfavorable impact on the supply chain that manufacturers rely on. In the survey, the manufacturers pointed to a decline in demand over the past three months, particularly due to falling orders for British energy. Its source is primarily from the North Sea, which has become less productive over the past 15 years.
Russia Weathering Oil Price Plunge Better than Expected - The World Bank says Russia’s economy may not be headed for as bad a recession as previously forecasted, yet it stressed that global economic ambiguities leave the outlook uncertain. The report, posted on the bank’s website on June 1, said Russia’s economy, hit hard by the drop in energy prices over the past year as well as by Western sanctions, attributed its improved forecast to a modest revival of oil prices, a stronger ruble and “a slightly faster retreat of inflation.” As a result, the Bank of Russia, the country’s central bank, would be able to ease its monetary policy more quickly, further bolstering the economy, according to Birgit Hansl, the World Bank’s lead economist for Russia. Hansl’s report forecasted a contraction of 2.7 percent in gross domestic product (GDP) for 2015, an improvement over the 3.8 percent contraction it said it expected in its report on the Russian economy as recently as April 1. The June 1 report also projected GDP growth of 0.7 percent in 2016, compared to the contraction of 0.3 percent expected in the April report. Despite the World Bank’s more optimistic view, Hansl’s statement said the overall outlook is subject to economic factors, some of them outside of Russia’s control.
Nigeria's "petrocalypse" to be new president's first test - Nigeria, a nation which received 85 percent of its federal budget from oil and gas revenues in 2012, has a new president. Sworn in on May 29, Muhammadu Buhari now faces the monumental task of fulfilling his campaign promises, at least if he wants Nigerians to continue wishing him well. But first, Buhari will have to deal with the country’s current crisis: a wide scale fuel shortage that’s crippling the nation’s day-to-day operations. Despite the fact that Nigeria is Africa’s top oil producing nation (and ranks 12th globally), it has almost no refining capacity. As a result, about 80 percent of Nigeria’s fuel is imported. Right now, there’s very little to go around. The BBC recently reported that a crumbling deal between the Nigerian government and the nation’s fuel suppliers has left Nigeria without the much-needed resource. The country’s distributors choked off shipments over a massive $1 billion debt owed by the government. The shortfall has shut down businesses and grounded planes, and it is altogether hampering the economy. Although more recent talks have eased the issue slightly, Buhari still needs to resolve the problem entirely in order for Nigeria to get back to normal.
China upbeat on gasoline demand as gas guzzlers become popular - The Chinese bought nearly 49% more gasoline-guzzling sports utility vehicles, or SUVs, in the first quarter of 2015 compared with Q1 2014 -- a statistic that is expected to support China's gasoline demand growth. According to data from the China Association of Automobile Manufacturers, sales of multi-purpose vehicles, or MPVs, rose by 19.3% year on year in Q1. The trend of strong sales growth in these gasoline guzzlers more than offset the adverse impact on gasoline demand due to overall slowdown in vehicle sales growth in China. According to CAAM, total vehicle sales rose just 4% year on year in Q1 compared with 9% a year earlier. In a research note covering state-owned PetroChina published April 29, Nomura Research said the increasing popularity of SUVs in China could translate into higher-than-expected gasoline sales.
How China’s SUV Craze Will Drive Oil to $80 - Barron's: China oil demand for the first four months in 2015 has been stronger than expected and decoupled from weak industrial production growth. Lower oil prices have helped stimulate SUV sales which are in turn pushing up demand for gasoline. As demand proves more elastic to price than many expect, we anticipate further positive revisions to demand, which will be positive for oil price and oil linked equities in the near term.
- • China has surpassed US as the largest oil importer of crude oil as lower prices have led to stronger apparent demand growth and increased stockpiling.
- - Chinese oil imports reached an all-time high of 7.4MMbls/d (+9% y-o-y, +0.6MMbls/d) in April, exceeding US crude oil imports for the same month (7.2MMbls/d).
- - Stripping out crude purchases for the strategic petroleum reserve and commercial inventories, underlying apparent demand increased by 6% y-o-y.
- - While industrial output growth has been a good proxy for oil demand in the past, there are clear signs of decoupling, as oil demand becomes increasingly a function of demand for transports than industrial activity.
- • China oil demand is being driven by exceptionally strong gasoline sales, which reflects stronger underlying demand for transportation fuels.
- - Apparent gasoline demand increased by 20% y-o-y in April to 10MMT per month (2.8MMbls/d), which was an all-time high and double the level from 2008.
- - While jet fuel (kerosene) demand was also strong, diesel demand remains relatively sluggish on weak industrial growth in China. Further loosening of monetary conditions could help boost demand near term.
- • Stronger gasoline demand has in turn been driven by stronger SUV sales which we partially attribute to the 30% decline in gasoline prices in 1Q15.
- - SUV sales have been growing at 50% y-o-y in China and now represent over 25% of passenger vehicle sales in mainland China