the past week saw the first significant change in oil prices in the past 3 months, as US crude oil prices crashed 8% to $52.53 a barrel on Monday, then fell another 4% on Tuesday before moving higher, and finally drifted back up on Thursday and Friday to close the week at $52.80 a barrel....the immediate reason given for the Monday price crash was the Sunday vote in the Greek referendum, in which around 62% of the Greeks marked their ballots "OXI", which we're told translates as "hell no", meaning they rejected terms of a bailout offered by the Troika of the EU, the ECB, and the IMF representing their international creditors, which had imposed austerity on the Greeks & squeezed the Greek banks into a shutdown...however, an ongoing crash in the Chinese stock markets, where investors had lost more than $3.4 trillion in equity value since mid-June (ie, a half a trillion more than the GDP of France) was probably a larger factor, as a pullback by the Chinese, the world's largest importer of oil, would have a much greater impact on oil demand than an exit from the Eurozone by Greece...and that concern was certainly exacerbated by an International Energy Agency forecast that the rebalancing of the oil markets would extend well into 2016 in the face of a global market that was “massively oversupplied”…
up until late last week, US oil prices had steadied in a range near $60 a barrel since early April, after nearing $45 in price dives in January and March ...this had seemed to result in some equilibrium in drilling activity, as the net change in the total rig count over the last month was minimal...however, the $60 price and drop in the rig count hadn't affected oil production, either, as we had hit a 32 year high in output at 9,610,000 barrels per day during the first week of June, and we virtually matched that this past week with output of 9,604,000 barrels per day...early on in the oil price decline, oil companies managed to stay afloat because they had largely hedged their drilling operations to pay off at higher prices even if oil prices fell...the higher oil prices of last year also enabled them to continue to borrow heavily to fund operations during the first part of this year, based on the value of their reserves in October, when banks had last evaluated the drillers for credit worthiness, and when oil prices were between $80 and $85 a barrel....their access to funds now is limited by their latest semi-annual evaluation in April, when their reserves were valued between $50 and $55 a barrel...and with oil futures prices now also below $60 a barrel out until 2017, they've lost the ability to hedge their new drilling at prices up to $90 a barrel as they have in the past...so we have to believe with further weakness in oil prices now, we should soon see another pullback in the fracking patch, especially among the smaller drillers who are not as well capitalized as the oil giants...
the oil price drop does not appear to have affected oilfield operations yet this week, however, as there were 5 more oil rigs operating in the US than last week, when we saw 12 oil rigs added in the first oil rig increase in 29 weeks...meanwhile, 2 gas rigs were idled this week after 9 were shut down last week...with the additional stacking of 2 miscellaneous rigs, it left the total rig count at week end up 1 at 863, with 645 oil rigs, 217 gas rigs, and 1 miscellaneous rig remaining in operation...that's down from 1563 oil rigs, 311 gas rigs, and 1 miscellaneous rig that were operating as of the second weekend in July a year ago...the configuration of rigs operating in the US as of July 10th included 654 horizontal rigs, 121 vertical rigs, and 88 directional rigs, with conventional vertical rigs increasing by 13 this week after increasing by 1 last week, while horizontal drilling rigs were reduced by 3 both this week and last week and directional rigs dropped 9 this week after falling 1 last week; that's consistent with the trend of recent weeks, so while the overall rig count has stabilized, oil companies continue to idle fracking operations while they increase conventional drilling...
the pullback in fracking operations has not been consistent across all basins, however...for instance, the past week saw an addition of 7 rigs in the west Texas & eastern New Mexico Permian basin, after 1 rig was added there last week; this most active of all areas now shows 239 active rigs, which is still down from 563 a year ago; the Eagle Ford, in southeast Texas, saw 4 rigs pulled this week after 3 were added last week; they now have 102 rigs running, down from 218 a year ago...the Williston basin in North Dakota shows 71 rigs operating as of Friday, down from 179 a year ago, as 6 rigs were idled this week after 3 were started up last week...62 rigs remain in the Marcellus, down just 18 from last year's 80, but 2 of those were stacked this week after 1 was stacked last week...the 3 Woodford shale plays in Oklahoma saw a net loss of one rig over the past two weeks, with the Ardmore Woodford at 7, unchanged from last year, the Arkoma Woodford at 6, down from 7, and the Cana Woodford at 33, up from 27 and the only shale basin to see an increase in rigs since last year...there were 27 rigs running in the Haynesville shale of western Louisiana, which was unchanged over the past two week and down from 42 a year ago, while a rig was added in the Utica shale in each of the past two weeks to bring the total there back up to 21, down from 44 a year ago..those changes in the primary basins pretty much account for the changes in the state rig counts, except for Kansas, which rid themselves of 3 rigs over the past two weeks and now has 10, down from 31 a year ago...
in addition to the weekly North American rig counts, which also showed the Canadian rig count 30 higher than last week at 169, with oil rigs up 19 to 91, and gas rigs up 11 to 78, Baker Hughes also released the international rig count for June this week, which indicated that there were 1146 drilling rigs in operation outside of the US and Canada in June, down 12 from May's 1158 and down 198 from last June's 1344...the pullback in drilling was concentrated in Latin America, where the working rig total fell by 13 to 314, with a drop in offshore rigs by 7 to 62 and a reduction in land based rigs by 6 to 252, as the Mexican rig count fell by 9 from 60 to 51...a net of two rigs were also idled in the Asia Pacific area, leaving the region with 215, down from 251 last year, as India, now with 113, added 4 rigs while Indonesian drillers shut down 5, leaving 23...Europeans shut down 3, leaving 113, as the UK idled 4 offshore rigs, leaving 12 offshore remaining....meanwhile, 3 rigs were added in Africa, which ran 103 rigs in June, as Algerian rigs rose from 48 to 51 while several other countries on the continent increased or reduced theirs by 1...finally, the Middle East also added 3, bringing their June total to 401, as Egypt added 5, Kuwait and Abu-Dhabi both added 2, while the Saudis reduced their working rigs by 3 to 121...while the Saudis are now down from using 126 rigs two months ago, they're up from 104 rigs they were running a year ago and up from 82 rigs in June of 2013...and remember, when the Saudis drill a well, it produces for 40 years before the flow tapers off; but when the frackers drill one, it produces decently for 2 years and by then it's 80% depleted...the Saudis produced a record 10.3 million barrels per day in May, and claim they're ready to increase their oil output in the coming months....the frackers have to frack faster and faster just to stay in the same place...
meanwhile, as we mentioned earlier, US crude oil production rose to 9,604,000 barrels per day in the week ending July 3rd, up from 9,595,000 barrels per day the prior week, and up 12.8% from our output of 8,514,000 barrels per day in the first week of July of 2014...with near record production, our imports of crude oil fell by nearly 200,000 barrels per day, from 7,513,000 last week to 7,316,000 this week, which still works out to be a bit more than the 7,285,000 we imported in the same week last year...with lower priced oil, gross profit margins for refineries are up more than 50% from a year ago; the weekly Petroleum Status Report (62 pp pdf) indicates that US refineries were operating at 94.7% of their operable capacity last week, as refinery inputs averaged 16.6 million barrels per day, up 65,000 barrels per day from last week, but still short of the record 16.8 million barrels per day they processed in the 2nd and 3rd week of July last year...thus, with field production of crude near a record and imports virtually unchanged from a year ago, U.S. commercial crude inventories unseasonably rose for a second week in a row, adding 384,000 barrels of oil to the 465,379,000 barrels of oil that were in storage last week to give us 465,763,000 total barrels of oil in storage on July 3rd, 21.7% higher than the same week last year, and in fact much higher than had ever been stored in the 80 years of EIA record keeping, which had never seen the 400 million barrel level breached before this year...
Community leaders join environmental group asking Kasich to support local anti-fracking efforts – A citizen-based environmental advocacy group today delivered a letter signed by more than 100 elected officials calling on Gov. John Kasich to support the authority of local communities to limit and prohibit fracking operations within their borders. "Our message is clear," Sarah Frost, outreach director for Environment Ohio, said in a conference call with reporters. "Fracking brings local harm, contaminating our drinking water, polluting our air and causing earthquakes. So it should be subject to local control." The letter, signed by 74 elected officials from Northeast Ohio, reads, in part:"As local elected officials, we are deeply concerned about the significant and growing threat hydraulic fracturing poses to our health and environment. We urge you to stand up for the right of all communities to determine whether, where, and how this dirty drilling is conducted within their own borders." Kasich could not be reached for comment this morning. The Ohio Supreme Court, in a 4-3 decision in February, denied home rule power by cities and villages when it shot down a bid by Munroe Falls to use zoning a to keep a fracking company from drilling an oil and gas well inside the city's limits. The court majority cited a 2004 state law, signed by then-Gov. Bob Taft, that gave the state "sole and exclusive" power to regulate oil and gas production in Ohio. One of the signers of the Environment Ohio letter, James O'Reilly, a law professor at the University of Cincinnati and a councilman in the Hamilton County city of Wyoming, said the Supreme Court decision showed the influence of the Statehouse oil and gas lobby in Columbus.But O'Reilly said local communities are not powerless to make their own choices about whether to welcome or reject oil- and gas-drilling operations into their neighborhoods.
Local officials seek more local control from Ohio on drilling - More than 100 mayors, county commissioners, city councilors, and other local elected officials from communities across Ohio issued a letter to Governor John Kasich today, calling for the local authority to limit and prohibit dangerous fracking operations. The letter’s release follows another setback in courtfor communities seeking to ban or regulate the dirty drilling practice. “As local elected officials, we are deeply concerned about the significant and growing threat hydraulic fracturing poses to our health and environment,” reads the letter, organized by the advocacy group Environment Ohio, a member of the Environment America federation. “We urge you to stand up for the right of all communities to determine whether, where, and how this dirty drilling is conducted within their own borders.” Many of fracking’s impacts-- from air and water pollution to earthquakes and ruined roads-- are borne most heavily at the local level, prompting communities in Ohio and across the country to pass measures to regulate or ban the practice. “When the gas drillers see Ohio in their rear view mirror, we’ll want to know that we did everything we could to protect our communities from their harms,” said James O’Reilly, Wyoming City Council Member and University of Cincinnati Professor of Law and Public Health. In response to more than 100 local efforts to ban or regulate fracking nationwide, the oil and gas industry has paired up with state officials in many cases to strike back. In Ohio, a 2004 state law handed exclusive authority to the Ohio Department of Natural Resources to regulate and permit oil and gas wells. Since then, in court cases all the way up to the Ohio Supreme Court, judges have used the law to strike down local measures that block or restrict oil and gas drilling.
Ohio communities want control over fracking - More than 100 local officials asked Gov. John Kasich for the authority to ban or regulate oil and gas drilling after several courts said they had little power. A recent Ohio Supreme Court decision said state officials, not local ones, have the power to approve the location of wells used in the oil and gas drilling process called fracking. The case started when the Ohio Department of Natural Resources allowed a company to drill in an Akron suburb without city officials' approval. Since then, Cuyahoga County and Athens County courts ruled that charter cities, like Broadview Heights and Athens, don't have the power to ban fracking. That could be a problem for cities like Mansfield, where officials have said their charter status protects them from the state supreme court decision. City and county leaders say they should have more control over potentially dangerous chemicals introduced into their air and water. They asked Kasich in a letter to "stand up for the right of all communities to determine whether, where, and how this dirty drilling is conducted within their own borders." "Fracking brings local harm, so it should be subject to local control," said Sarah Frost, outreach coordinator for Environment Ohio, a non-profit environmental group that collected signatures. She cited a house explosion in Geauga County, earthquakes in Youngstown and a fire in Monroe County as examples of the dangers associated with fracking. But don't expect much change. Kasich spokesman Jim Lynch said Ohio has some of the strongest and most comprehensive fracking regulations in the country. The Ohio Oil and Gas Association would rather be regulated by the state, too.
Anti-fracking ‘bill of rights’ template loses again- The template for community bill of rights protections against oil and gas fracking and related activities lost another Ohio court case last week. The most recent legal defeat leaves that strategy for enacting local drilling bans and regulations 0-2 so far this year in the Buckeye State. That’s in addition to an Ohio Supreme Court decision that overruled local drilling regulations. The city of Athens has a similar bill of rights on the books, and a local group is pushing to place a charter amendment for Athens County on the November general election ballot. Notably, none of the judges ruling in the three cases so far, including Cuyahoga County Common Pleas Judge Timothy McCormick in the most recent dismissal, have addressed the core legal reasoning behind these local efforts. For the most part, the courts have ignored these legal arguments. This strategy argues that local citizens have an inherent right to self-government, guaranteed by both the U.S. and state constitutions, and as a result hold the right to pass laws to protect their health, safety and welfare. The main motivation for passing these laws has been to regulate and/or ban oil and gas drilling and associated fracking waste injection wells. In a ruling last Wednesday, Judge McCormick dismissed a class-action lawsuit filed by Mothers Against Drilling in Our Neighborhood (MADION), and its individual members, against the state of Ohio, the city of Broadview Heights, and two energy companies. He cited the Ohio Supreme Court’s Feb. 17 decision in Morrison vs. Beck Energy Corp., a case involving Munroe Falls, Ohio’s attempts to regulate oil and gas drilling with zoning laws. A 4-3 high-court majority ruled that the state constitution grants the General Assembly the authority to pass laws for “the regulation of methods of mining, weighing, measuring and marketing coal, oil, gas, and all other materials.”
Athens County Commissioners request freeze on new injection wells - The Athens County Commissioners voted to request that state officials stop issuing new oil-and-gas injection well permits in Ohio. The vote by the commissioners to request this moratorium is the result of a June 30 meeting with members of the Athens County Fracking Action Network (ACFAN). Roxanne Groff, a member of ACFAN and Bern Township trustee, said the resolution drafted by the anti-fracking group expresses the frustrations of citizens and local officials who see more harm than benefit in the approval of new injection wells. Injection wells are used to dispose of waste, including frack waste, from oil and gas wells. Currently, there are seven injection wells in Athens County, according to a previous Post report. “We’re getting all of this out-of-state and in-state waste, and it’s the shale gas extraction wastewater that is filled with toxic chemicals and radioactivity. No one at the state level will listen to us.” According to the resolution, Athens County received almost 3 million barrels of toxic, radioactive waste in 2014 with over 80 percent of the waste coming from outside Ohio. She added that 37 countries out of the 88 in Ohio host injection wells, 21 of them being Appalachian counties. Groff and Athens County Commissioner Chris Chmiel hope other counties will join with similar resolutions in order for state officials like Ohio Gov. John Kasich and the Ohio Department of Natural Resources to take notice of citizens’ concerns.“I think that’s the only way that something is going to happen, if there’s a broad, geological coalition here and not just a couple counties in one part of the state,” Athens County is not the first county in Ohio to propose a moratorium, as Trumbull County Commissioners approved a similar resolution last week. Both counties were No. 1 and No. 3 in the state for having fracking waste injected through the first quarter of 2015. Groff said Meigs County is hopefully looking into voting on a moratorium also.
Group seeks to block fracking-ban amendment - WKBN.com – A group of labor leaders and business owners wants to see an end to ballot issues trying to ban hydraulic fracturing in Youngstown. The group is calling themselves “Voters for Ballot Integrity.” They believe local elected leaders should be able to keep fracking opponents from going back to the ballot for a fifth time after four previous attempts to amend Youngstown’s charter failed. Members of the group claim thousands in tax dollars are being wasted every time groups like Frack Free Mahoning Valley mount another effort. “Why do we have to put up this fight? You know, for something that the voters have clearly four times said we don’t want. It is bad legislation. But here we are again, looking at it in November. We have better things to spend our time on, like our schools,” Mahoning-Trumbull AFL-CIO member Bill Padisak said. Padisak and the others say since the state controls oil and natural gas drilling, any attempt to ban fracking at the local level can’t be enforced even if it is approved. “This is shocking. And this should not have to happen. We as small business people, we need to generate jobs, we need to have a vibrant community, because that is what makes our business grow,” Camelot Lanes owner Bob Smith said. However, Youngstown Mayor John McNally said as long as supporters collect enough valid signatures, the city would be required to put it on the ballot and let voters decide.“In respect to the mayor, I just do believe that there is more that the city, the county, can do,” Butch Taylor of the local Plumbers and Pipefitters Union said. For starters, members of the group believe elected leaders and others should do more to educate the community that a ban on hydraulic fracturing would hurt the Valley’s economy as a whole.
Dangers Below Can Accompany Abandoned Wells - - More than a million oil and natural gas wells were drilled in this country before anyone really knew how to plug them. Once the oil or gas was gone, the wells were abandoned with little thought of future consequences. Some have been open holes in the ground since the 1800s. Others are plugged with little more than dirt and logs. For decades, old abandoned wells have leaked oil, natural gas and brine into soil and drinking water, and posed an explosion risk. The danger is often hidden. Hundreds of thousands of abandoned wells were never properly mapped. Many of the companies that drilled them no longer exist. Abandoned wells lurk beneath homes and buildings in Ohio; under the busy streets of Los Angeles and the sparse Oklahoma plains; and in parks, backyards, forests, cornfields and cemeteries from Appalachia to the Pacific Ocean. Abandoned wells are the unwanted legacy of 150 years of drilling booms and busts. Now those old wells pose a new danger as the country rides another petroleum boom driven by hydraulic fracturing techniques that unlock vast new reserves. Most drilling is concentrated in Texas, Oklahoma, North Dakota, Colorado, Pennsylvania, Ohio, West Virginia and Louisiana — a list that includes states with large numbers of abandoned wells. When abandoned wells are near the rock layer being fractured, the increased underground pressure can cause the old wells to leak oil and gas, similar to the way squeezing a juice box squirts liquid from the straw. Potentially toxic fracking fluid also can flow though old wellbores to other underground layers.
Gas Production On Fire in US - -- Even amid a drilling slowdown, nationwide natural gas production averaged 91.54 billion cubic feet per day in April compared to 85.8 Bcf per day in April 2014, according to the U.S. Energy Information Administration. Corky Demarco, executive director of the West Virginia Oil and Natural Gas Association, is impressed by the 3.69 daily Bcf the Mountain State is pumping. However, he said this is likely just the beginning because of the Rogersville shale underlying much of the southwestern portion of the state. "We have barely begun to scratch the surface of this Appalachian Basin," he said of the area that includes the Marcellus and Utica shale region. "It's all about supply and demand. Now that we have the demand - and we have the new technology of horizontal drilling - we can go after the deeper formations because it is economical." Demarco said drillers are now working in the Rogersville shale area, which he said includes the areas of Parkersburg and Charleston, all the way into Kentucky. He said a test well drilled in Putnam County went about 14,000 feet deep, or about 2.6 miles, into the earth to reach the Rogersville. By comparison, a typical Marcellus well only dives about half that far into the earth. "The early tests show it as a gas play on the West Virginia side and an oil play on the Kentucky side," Demarco said of the Rogersville. "And we have even more we can go to now because of the technology."
State DEP to use in-house database to collect fracking, well site data - The state Department of Environmental Protection is creating its own electronic database that will record all of the chemicals gas companies use in the hydraulic fracturing process. Since 2012 the state has mandated that companies list the chemicals used in the fracking process and, until now, had used an independent source called FracFocus to run the database. But DEP officials wanted a more comprehensive, searchable database that includes not just chemicals but well site locations, inspection records and other detailed information. DEP spokeswoman Amanda Witman said Thursday that the new database should be up and running by June 2016. FracFocus, which is used in several states other than Pennsylvania, had long served a purpose for allowing residents to search for fracking information, but the DEP thought it was time to increase the amount of data available. "FracFocus is an important tool but did not have all of the information DEP wants to make available in a searchable online tool,” Witman said.
Waste sand concern for landfill opponents - Some opponents of Keystone Sanitary Landfill’s expansion plan are uneasy that the facility can accept sand that is a byproduct of hydraulic fracturing, even as the landfill has not accepted any of it and some industry experts say the byproduct is not dangerous. Drillers pump water, additives and sand into the Marcellus Shale to extract natural gas. The sand holds underground voids open, but some of it escapes with the water and must be disposed of. Keystone is the only landfill in the state Department of Environmental Protection’s Northeast Region approved to accept flow-back sand from fracking operations but has never actually taken the byproduct to date, agency spokeswoman Colleen Connolly said. As of May 2013, Keystone was approved to take 19 sets of 4,000 tons of the material for a one-time total of 76,000 tons. Currently, 19 other landfills, in the Pittsburgh area, also have approval to take the flow-back sand. Keystone initially obtained the necessary forms to accept the material at the request of a gas company but has no interest in taking the sand now, landfill consultant Albert Magnotta said. Friends of Lackawanna was unaware of the approvals before they came up in DEP’s recent public meeting and is “very concerned” about the idea the operation could someday accept the material, said Michele Dempsey, a leader in the Friends group opposed to Keystone’s proposed nearly half-century expansion. Researchers know too little about the long-term health effects of fracking waste, she said.
Marcellus permit activity in Pennsylvania - The Marcellus Shale formation in Pennsylvania saw quite a bit of action over the last week. However, while drilling is continuing, so is the great battle over royalty payments. Pennsylvania Representative Garth Everett (R-Lycoming) announced last week that he is pushing his royalties bill once more. House Bill 1319 focuses on Pennsylvania landowners and making sure they receive fair royalty payments from natural gas drilling companies. Everett first introduced H.B. 1319 last year, but it did not make it on to the floor for voting, which is where Everett believes it would have been successful: It’s being held up in strategic places by strategic people– the leadership in the Republican caucus … We just need to convince them. There are so many of us in favor of the bill, they’re obligated to allow us to take it to the floor.The measure is an attempt to address complaints that have been made towards gas companies shorting lease holders on their royalty payments. Select gas companies have been charging people exorbitant fees, which are also known as post-production costs. These costs include the cost of processing and transporting natural gas through pipelines and compressor stations. Due to these incidents occurring, several landowners have filed lawsuits, and those lawsuits are now affecting leasing for public land at state and local jurisdictions. To read the full story regarding House Bill 1319 and landowners receiving fair royalty payments, click here. The following information is provided by the Pennsylvania Department of Environmental Protection and covers June 22nd through June 28th. New: 47 - Renewed: 7. Top Counties by Number of Permits Greene: 13 - Bradford: 9 - Washington: 9 - Beaver: 5
River basin watchdogs OK pipeline permits - The Constitution Pipeline company has cleared another significant hurdle in the regulatory review process, getting approval from the Susquehanna River Basin Commission to withdraw millions of gallons of water needed to pressure-test the 124-mile pipeline once it is installed. The planned withdrawals include two from the local region — up to 4 million gallons from the Charlotte Creek in Davenport and up to 9.4 million gallons from the Ouleout Creek in the town of Sidney. SRBC officials said in the permit approvals that “no adverse impacts are anticipated by the operation of this project.” The approvals were noted in a project update the company sent Tuesday to the Federal Energy Regulatory Commission, the agency that is overseeing the federal licensing of the $683 million project that would send shale gas harvested in Pennsylvania to a compressor station in the Schoharie County town of Wright. “This permit provides direction we must follow during the withdrawal and discharge of the water that will be used during our hydrostatic test, which is a key pipeline safety test used to ensure the integrity of the pipeline prior to placing it into service,” said Christopher Stockton, a spokesman for the pipeline project.
Gas storage suspect in Seneca's salt problem - Seneca Lake's deep, sparkling waters hold an ecological mystery central to the gas storage controversy. The lake — source of drinking water to more than 100,000 people along the lake in Schuyler County — is four to five times saltier than its neighboring Finger Lakes. It is so salty, in fact, people on severely sodium-restricted diets are warned about consuming its water. State Administrative Law Judge James McClymonds is reviewing theories on the cause. The question at hand: is the saltiness a natural phenomenon, or was it caused or worsened by previous salt mining and gas storage at the southwest end of the lake? John Halfman, a professor of hydrogeochemistry at Hobart William and Smith, has spent a large part of his career studying the salt levels of the lake. He says both theories are plausible. Geology underlying the lake has always been rich with salt. But the salt levels in the lake itself have risen significantly since the beginning of the 20th century, along with the development of the salt mining industry, according to Halfman's research. Levels spiked in 1960 when the gas industry began using the salt mines for storage and they peaked at close to 100 milligrams per liter around 1970. They have since dropped to between 75 and 80 milligrams per liter, but remain well above levels from the period prior to salt mining and gas storage.
Gas Free Seneca supports Gillibrand’s attempt at heritage designation — Gas Free Seneca is supporting U.S. Sen. Kirsten Gillibrand’s push to find out if the Finger Lakes region should be declared a National Heritage Area. Gillibrand, D-N.Y., announced last week she would advocate for legislation funding a study exploring a possible NHA designation. The study area would encompass several counties, including Ontario , Wayne , Seneca and Yates. Gas Free Seneca, a coalition opposing Crestwood Midstream’s plan to store liquefied petroleum gas in abandoned salt caverns on the southwest shores of Seneca Lake , applauded the news. “It is great for the Finger Lakes will be recognized as a heritage corridor,” said Scott Osborn, president and co-founder of Fox Run Vineyards in Benton , a Gas Free Seneca Business Coalition member and president of the recently formed Finger Lakes Wine Business Coalition. “This recognition would show that the Finger Lakes , with its pristine lakes, the historic wine industry and many small family farms, should be protected and appreciated as the national treasure it is.”
Dirty Energy vs. Clean Power: The Past Battles the Future at Seneca Lake - Let’s amend the famous line from Joni Mitchell’s “Yellow Taxi” to fit this moment in the Finger Lakes region of New York State. There, Big Energy seems determined to turn paradise, if not into a parking lot, then into a massive storage area for fracked natural gas. But there’s one way in which that song doesn’t quite match reality. Mitchell famously wrote, “Don't it always seem to go that you don't know what you've got till it's gone.” As part of a growing global struggle between Big Energy and a movement focused on creating a fossil-fuel-free future, however, the residents of the Finger Lakes seem to know just what they’ve got and they’re determined not to let it go. As a result, a local struggle against a corporation determined to bring in those fracked fuels catches a changing mood not just in the United States but across the world when it comes to protecting the planet, one place at a time, if necessary. There’s a battle brewing between the burgeoning clean-energy future embraced by this region and the dirty energy sources on which this planet has been running since the Industrial Revolution. Over the last six years, Crestwood Midstream Partners, a Texas-based corporation, has been pushing to build a gas storage and transportation hub for the entire northeastern United States at Seneca Lake. The company’s statements boast about setting up shop “atop the Marcellus Shale play,” a hydraulic fracturing, or fracking, hotspot. It plans to connect pipelines that will transmit two kinds of fracked gas -- methane andliquefied petroleum gas (LPG) -- probably from areas of the Marcellus Shale in Pennsylvania, Ohio, and West Virginia. These will be stockpiled in long-abandoned salt caverns, the remnants of a nineteenth-century salt-mining industry that capitalized on the remains of a 300-million-year-old ocean that once was here. Against the project, a motley coalition of farmers and vintners, doctors and lawyers, clean energy companies and reluctant do-it-yourself activists are focused on protecting this ecological marvel. Their goal: to guide the region toward a fossil-fuel-free future despite the deep pockets and corporate savvy of an out-of-state energy firm.
Watkins Glenn Gas Cavern Implodes! -- On Wall Street. Before it was ever pressurized. Imagine that. Got your shorts on ? This means that if the Watkins Gas Bomb leaks or goes kaboom, the DEC and NY AG will have to take a trip to the Caymans to try to find the hedge funds that bought Crestwood’s debt out of bankruptcy – as the responsible party to pay the fines and clean up the mess. Sound like a fun trip. Great scuba diving there. Or so I’m told . . .Crestwood Midstream Partners LP has dropped 25.1% during the last 3-month period . Year-to-Date the stock performance stands at -24.9%. Crestwood Midstream Partners LP has lost 0.87% in the last five trading days and dropped 11.49% in the last 4 weeks.
Farmers seek to avoid NY fracking ban with gelled propane - A group of five farm families is seeking a state permit for a natural gas well using gelled propane instead of water for fracking, thus avoiding New York's ban on high-volume hydraulic fracturing. The Snyder Farm Group is seeking to develop a 53-acre natural gas well in the Tioga County town of Barton, near the Pennsylvania border. A permit application is in the preliminary stage before the Department of Environmental Conservation, a lawyer who represents the company seeking the permit said Thursday. DEC spokesman Tom Mailey said the agency will review the application as required by law. "DEC will follow the mandates in the State Environmental Quality Review Act, which could include requiring an Environmental Impact Statement," Mailey said. The DEC's recent prohibition applies to fracking operations using more than 300,000 gallons of water. The proposed well would be drilled horizontally into the Marcellus Shale formation about 4,400 feet underground and would be injected with gelled propane, rather than high-pressure water, to fracture the shale and release trapped natural gas, said Albany lawyer Adam Schultz, who represents Tioga Energy Partners. After the well is fractured and gas is flowing out of it, the propane returns to a gaseous state and returns to the surface where it is recaptured, Schultz said. Liquefied propane gas fracturing was developed by a small energy company, GasFrac, in Calgary, Alberta. It relies on a gel made from propane, the same gas used in barbecue grills. Because the process avoids the need for millions of gallons of fresh water and doesn't result in the enormous volumes of polluted wastewater produced by hydraulic fracturing, proponents call propane fracking a more environmentally benign method.
Unable to Frack With Water, Locals Propose Napalm Pipe Bomb Frack - No, I couldn’t make this one up. Since New York has effectively banned high water volume horizontal fracks, a group of frack addicts is proposing to frack with gelled liquid propane (aka Napalm) as if that’s a safe loophole to get around the state’s prohibition on water fracks. Such propane fracks are so dangerous, the frack itself is done robotically. Here’s a shot of one such Moon Shots going up in smoke in Canada. The company that does such pyrotechnics in the US recently went bankrupt, so presumably the New York group are going to to attempt this themselves. Oh, and what is their purported target ? The Marcellus – about 5 miles north of the Pennsylvania border, where there might be some dry gas at a break even price of about $30mcf for a pricey propane frack. “A large crowd gathered outside Barton town hall Wednesday morning to hear about Snyder Farm Group’s proposal for a natural gas well beneath a Barton farm. The Snyder group is a collection of five Tioga County farm families who have leased land for natural gas development. The group is seeking to develop a 53-acre natural gas well in Halsey Valley, which is in the Town of Barton, Tioga County — about 25 miles south of Ithaca and 30 miles east of Elmira. The well pad would occupy about 31/2 acres on Ernest “Bucky” Snyder’s 150-acre hay and corn farm. The group has applied for two drilling permits, Frisbie said. The well would get drilled into the Utica Shale formation, about 9,500 feet underground, according to Frisbie. “Then we will do a horizontal turn and go into the Marcellus Shale at approximately 4,400 feet,” he said.
Locals: Propane fracking too dangerous -- After years of heated local debate about hydrofracking, area individuals on both sides of the issue finally found something Thursday about which they could easily agree: Substituting gelled propane for water in the drilling process for natural gas in shale is probably not a good idea. On Wednesday, five farm families, which make up the Snyder Farm Group, announced they are seeking a state permit to develop a 53-acre natural gas well in the Tioga County town of Barton using gelled propane instead of high-pressure water, according to The Associated Press. The idea is that this would evade the state Department of Environmental Conservation’s recent ban on high-volume hydraulic fracturing, which applies to fracking operations using more than 300,000 gallons of water. According to Albany lawyer Adam Schultz, who represents Tioga Energy Partners, the proposed gas well would be drilled horizontally into the Marcellus Shale formation about 4,400 feet underground and would be injected with gelled propane to fracture the shale and release trapped natural gas, the AP reported. Several local residents and officials with varying opinions on fracking said Thursday they are not sure how the propane process would work, whether it could be approved or if it would be safe.Using propane for fracking is “suicide,” according to Otego resident and hydrofracking foe Richard Averett, who noted that the company that pioneered waterless fracking, GasFrac, filed for bankruptcy early this year. “It’s crazy,” Averett said, “and it’s a good thing we’re not in a drought situation, should the consequential fire from explosions spread. How far around the area do you want to evacuate? And who’s actually going to be doing the fracking? It’s suicide if they plan to do it themselves because it’s too dangerous.”
Frackers Use EPA Draft Water Report To Raise Doubts On Science - Last month’s Environmental Protection Agency draft report on fracking’s impact on U.S. drinking water served up a sound-bite gift to the energy industry for its fight against the spread of state and local fracking bans. While the 998-page report cited specific instances where gas drilling contaminated water wells, the nation’s headline writers by a wide margin seized on the take-away line from the executive summary: The EPA “did not find evidence” that modern hydraulic fracturing has “led to widespread, systemic impacts on drinking water resources in the United States.”In the body of the report, EPA states that it may have undercounted those impacts because “there is insufficient pre- and post-fracturing data on the quality of drinking water resources. This inhibits a determination of the frequency of impacts.” But if the agency ever had inhibitions, it squelched them when it delivered the pro-industry determination, and headline writers couldn’t resist. Newsweek went with “Fracking Doesn’t Pollute Drinking Water, EPA Says.” The New York Post and many others offered close variations. The Daily Caller followed a few days later with “NY Officially Bans Fracking After EPA Says It’s Safe.” been intentional.” Few are competent to accurately analyze the motives of EPA administrators, who are buffeted by heavy political cross-winds. The agency’s funding is in the hands of a Republican-controlled House of Representatives that is unabashedly pro-industry. And the Democratic Obama Administration’s “all of the above” energy policy has high expectations for oil and gas development. Reporting fresh evidence that fracking has steep environmental consequences means raining on both of those parades.
Three earthquakes strike central Oklahoma - Fireworks weren’t the only commotion rattling central Oklahoma this Fourth of July weekend. Three separate earthquakes occurred in the area since Friday, adhering to the area’s propensity for the quakes. 7 News reported two smaller incidents occurred early Friday morning: the larger, a 3.8 magnitude quake occurred shortly after midnight near Perry and the second, a 3.1 magnitude quake shook the area surrounding Medford around 5:45 a.m. A third, smaller quake erupted near Jones in Oklahoma County, reaching a magnitude of 2.8, NewsChannel10 reports. Each of the quakes reached a magnitude the U.S. Geological Survey considers the smallest human can feel, though quakes with a magnitude under 4.0 don’t typically cause significant damage or injuries. No injuries or damage from this weekend’s quakes were reported, but mounting concern over Oklahoma’s frequent quakes has prompted action from environmentalists. Geologists in the state cite oil and gas operations for the increase in quake, slating that it is “very likely that the majority of earthquakes” are triggered by injecting wastewater into the ground. Geologists noticed the spike in earthquake activity about five years ago. Sandra Ladra suffered leg injuries during a 5.0 magnitude quake in 2011, when her chimney collapsed. Oklahoma courts ruled last week that Ladra can sue two oil companies who were injecting water near her home when the quakes occurred.
In oil-friendly Okla., Gov. Fallin moved slowly on 'awkward' issue of quakes - -- As she knocked on the federal government's door for aid in the wake of a damaging earthquake in 2011, Oklahoma Gov. Mary Fallin (R) avoided talking about one aspect of the earthquake -- its cause.Too "awkward," said Fallin's communications director, Alex Weintz."The problem is, some people are trying to blame hydraulic fracturing (a necessary process for extracting natural gas) for causing earthquakes," Weintz wrote in an email, vetoing mention of the earthquake at an energy conference. "So you see the awkward position that puts us in. I would rather not have to have that debate." That was two days after the magnitude-5.7 rupture toppled chimneys and injured two people east of Oklahoma City. Since then, the earthquake issue has only gotten more awkward for Fallin. Oil and gas has been her biggest financial backer, and it's the most prominent industry in the state. But scientists say oil and gas activities have caused hundreds of earthquakes, rattling her constituents and their homes.It's not hydraulic fracturing, or fracking, that's causing the quakes they're feeling. Instead, scientists say, it is wastewater disposal. Fracking and other production activities create millions of gallons of wastewater that get injected into deep underground wells. In certain instances, the fluid can seep into faults, lubricate them and unleash quakes.
Methane Emissions in Fracking Region 50% Higher Than EPA Estimates - Eleven new studies conclude overall that emissions of methane, a potent greenhouse gas, were 50 percent higher in the heavily fracked Texas Barnett Shale than estimated by the U.S. EPA. The release of 11 research papers Tuesday marked another milestone in the Environmental Defense Fund’s ongoing effort to understand the natural gas industry’s carbon footprint. Overall, the studies found that emissions of methane––a greenhouse gas at least 34 times more potent than carbon dioxide––in the Texas Barnett Shale were 50 percent higher than estimated by the Environmental Protection Agency. The EDF-sponsored research adds to a growing body of work on the amount of methane leaking from natural gas operations, and the results are crucial for understanding whether natural gas will accelerate or delay the effects of climate change as it’s increasingly used in place of coal. Dozens of scientists from 20 universities and private research firms contributed to the 11 studies, collectively called the “Barnett Coordinated Campaign.” Twelve research teams took measurements over an area that included 30,000 oil and gas wells, 275 compressor stations and 40 processing plants. All of the studies were published in the peer-reviewed journal Environmental Science & Engineering. Another study that synthesizes the papers’ results will be published later.The Barnett campaign is a major part of EDF’s $18 million methane study series. Launched in 2011, EDF’s project has won praise for the scope of its research and the scientists’ unprecedented access to well sites, which allowed them to take direct measurements at emission sources. But EDF has also been criticized for working closely with industry and for requiring researchers to sign nondisclosure agreements that prevent them from sharing preliminary results with the scientific community.
New research fuels ongoing fight over methane emissions - Eleven new studies published in the scientific journal Environmental Science & Technology today suggest that methane emissions in North Texas are 50 percent higher than estimates based on the Environmental Protection Agency’s greenhouse gas inventory, according to the Environmental Defense Fund. In 2013, the EPA dramatically lowered its estimate of how much of a potent heat-trapping gas such as methane, the main component of natural gas, leaks from wells, pipelines and other facilities during natural gas production. The agency said that tighter pollution controls played a role in an average annual decrease of 41.6 million metric tons of methane emissions from 1990 through 2010, a 20 percent reduction from previous estimates. But Steve Hamburg, chief scientist for the Environmental Defense Fund, writes in a blog post that the emissions are higher and that the 11 studies they’ve helped coordinate, which are consistent with previous research, “indicates the industry has a significant methane pollution problem…” The EDF, a non-profit environmental advocacy group, coordinated the production of the studies as part of a larger campaign to “better understand where oil and gas methane emissions are coming from and how best to reduce them,” Hamburg writes.
Texas Rep: Don't sleep on Mexico's energy reforms - The United States, Mexico and Canada can be the new Middle East of the world,” U.S. Rep. Henry Cuellar stated recently. However, the representative warned that if America isn’t careful, we could be side swiped by the oil appetite of China and other growing nations. Cuellar’s remarks took place at a Wednesday morning event in Reynosa hosted by Mexico’s national oil company Petróleos Mexicanos (PEMEX), according to The San Antonio Business Journal. The Laredo lawmaker, whose congressional district includes parts of the Rio Grande Valley and San Antonio, warned listeners that if American companies fail to take advantage of Mexico’s energy reforms, China would do it for them. He noted that Mexico and the U.S. should be close partners and that America should take advantage of the opportunity in its own backyard. “We have to make sure that we don’t wake up one day and the Chinese are across the river when we had an opportunity to work with Mexico,” Cuellar told the San Antonio Business Journal. Just last year, Mexico opened the door for new energy markets in its nation to private investors. Many were hoping to see a boom in revenue by empowering Mexico to develop new fields and access innovative technology to reverse a decade-long slide in production. One area in particular is the region’s Eagle Ford Shale that geographically mirrors the shale play across the border to the North. But, low oil prices came at the worst time for Mexico. Earlier this year, the Associated Press reported that Mexico’s government slashed $8.4 billion from its 2015 budget, with most of the cutbacks expected to come in the energy sector. The Mexican government relies on oil revenue for roughly a third of its spending and calculated this year’s budget based on an average price of $79 a barrel.
RRC Chairman David Porter lights up Congress with export ban testimony -- The latest push for American oil exports happened yesterday day as Texas Railroad Commission Chairman David Porter testified before the U.S. Agriculture Committee today on the importance and urgency of lifting the federal ban. Many like Porter see lifting the ban as a policy move to spur new American energy production and foster economic growth. In the his speech, the commissioner noted that the Texas Railroad Commission has recently seen a dramatic drop in the number of issued drilling permits of 2,389 in May of 2014 to only 916 as of May this year. Porter argued that the ban is not only outdated, but harming the U.S. economy. “In Texas, we understand and experience firsthand the link between U.S. oil and natural gas production and the strength of the economy,” Porter said. “The two are inextricably linked. When oil prices recently dropped, we felt the economic impacts at home. We saw thousands of hardworking men and women put out of work and rigs idled. We saw state revenues – used to support schools and infrastructure investments – decline.” Porter enlightened listeners with a finding from the University of Houston and Rice University, which reported that each drilling rig represents a total of 224 jobs, including those on the rig itself and those across the supply chain and in the broader economy.“With the loss of 1,072 rigs through June, you can do the math to see just how devastating the recent downturn in development has been for oil and natural gas producing states,” Porter said. “It comes to roughly 240,000 jobs. While repealing the ban will not bring back these jobs overnight, it will certainly get some of these men and women back to work in the near term.” Other witnesses present at the hearing in support of lifting the ban included North Dakota Petroleum Council Vice President Kari Cutting and Continental Resources CEO Harold Hamm
SD judge allows pipeline's operator to survey properties - — A South Dakota judge is allowing the operator of a proposed oil pipeline to survey the properties of nearly 20 residents who oppose the project. Judge Mark Salter on Tuesday granted Dakota Access LLC the right to get surveyors on properties that are along the project’s proposed route. The company wants to build the 1,100-mile Dakota Access Pipeline from North Dakota to Illinois. About 270 miles of the pipeline would be in eastern South Dakota. Salter’s decision comes after Dakota Access sued the Minnehaha County landowners arguing its surveyors need to check all properties along the proposed route to determine if the land is suitable for the underground pipeline. The state’s Public Utilities Commission hasn’t granted a construction permit. Landowners say they oppose the project mostly out of environmental concerns.
Oil refiners are manipulating California gas prices, consumer advocates say - Filling up at the pump is often painful in California, where drivers tend to pay more for gasoline than in most other states. Many industry watchers attribute the high fuel costs to unique forces — chiefly California’s clean-burning gasoline formula — that have isolated the market and kept it tightly balanced between supply and demand. But some consumer advocates and politicians allege that price manipulation by oil refiners is to blame. This year, price fluctuations were especially surprising. The price of crude oil began falling last summer, with pump prices following. In February, Tesoro Corp. idled its Northern California refinery in Martinez after a nationwide union walkout. Next, Exxon Mobil Corp. scaled back operations at its Torrance facility when an explosion damaged an air pollution monitoring unit. Average pump prices shot up nearly a dollar before floating back down. Last week, a gallon of regular gasoline cost an average of $3.44 in California, more than 20 cents lower than a week earlier and about 70 cents lower than a year earlier, according to AAA. But drivers in the state are still paying nearly 70 cents more than the national average. Whether those higher prices are a natural economic reaction or a sign of collusion between companies is up for debate.
California Farms Are Using Drilling Wastewater to Grow Crops - California’s epic drought is pushing Big Oil to solve a problem it’s struggled with for decades: what to do with the billions of gallons of wastewater that gush out of wells every year. Golden State drillers have pumped much of that liquid back underground into disposal wells. Now, amid a four-year dry spell, more companies are looking to recycle their water or sell it to parched farms as the industry tries to get ahead of environmental lawsuits and new regulations. The trend could have implications for oil patches across the country. With fracking boosting the industry’s thirst for water, companies have run into conflicts from Texas to Colorado to Pennsylvania. California could be an incubator for conservation efforts that have so far failed to gain traction elsewhere in the U.S.Drillers may have little choice. The state’s 50,000 disposal wells have come under increased scrutiny this year, after regulators said they’d mistakenly allowed companies to inject wastewater near underground drinking supplies. Environmental groups sued the state to stop the practice at 2,500 sites considered most sensitive. A win for environmentalists could drive up disposal prices and delay drilling by months for Chevron Corp., Linn Energy LLC and other companies, according to a June 12 report by Bloomberg Intelligence analysts Brandon Barnes and Matthew Kerner.
California Has No Idea What’s In Its Fracking Chemicals, Study Finds -- A scientific assessment on the impacts of hydraulic fracturing in California found that, in large part, the chemicals used are not being identified or tracked, and it’s nearly impossible to tell how damaging the process is to California’s water supply. The study, carried out by the California Council on Science and Technology (CCST), recommended state agencies ban the reuse of wastewater from hydraulic fracturing — or fracking — for any use that could impact human health, the environment, wildlife, and vegetation until further testing can be done. “These are things that require diligence,” CCST’s Jane Long told ThinkProgress. “There are a lot of potential issues.”During fracking, chemical-laced water is pumped at high pressure into shale rock formations that hold oil and gas deposits. Figuring out what to do with the water after it’s been used — and whether it is safe — has been an ongoing issue. According to the CCST assessment, the toxicity of half of the chemicals used in California fracking is not publicly available. More than half the chemicals have not been evaluated for basic tests “that are needed for understanding hazards and risks associated with chemicals.” In terms of water contamination, no California agency has conducted a systematical study of the possible impacts, the assessment said. In fact, across all of California, only one water contamination sampling study — near a fracking site in Los Angeles County — has been done. Results of contamination studies in other regions of the country have been mixed, the report said. But since we don’t know what’s going into the chemical mix, or how it might react with other elements over time, these types of studies might not even be testing for the right things. “Notably, most groundwater sampling studies do not even measure stimulation chemicals, partly because their full chemical composition and reaction products were unknown prior to this study,” the report said.
Most fracking waste dumped in unlined pits in CA, study finds - More than half of the water used for fracking in California is disposed in open, unlined pits and could contaminate groundwater, according to a major, state-mandated study of hydraulic fracturing issued Thursday. The study, from the California Council on Science and Technology, reports that no cases of water contamination due to fracking or acid stimulation have been reported in the state so far. And the authors, many of them drawn from Lawrence Berkeley National Laboratory, stress that fracking in the state uses far less water than other oil-production techniques, such as flooding old oil reservoirs with steam. “We found no documented instances of hydraulic fracturing or acid stimulations directly causing groundwater contamination in California,” the authors write. “However, we did find that fracturing in California tends to be in shallow wells and in mature reservoirs that have many existing boreholes. These practices warrant more attention to ensure that they have not and will not cause contamination.” The authors also found no recorded cases in California of earthquakes triggered by fracking or by the underground disposal of waste water from oil drilling. But they say that given the state’s active geology, more research and monitoring is needed. The disposal of waste water from fracking and other oil production techniques has recently triggered a rash of earthquakes in states not known for them, including Ohio and Oklahoma.
Water and wildlife may be at risk from fracking's toxic chemicals, panel finds - Hydraulic fracturing uses a host of highly toxic chemicals — the impacts of which are for the most part unknown — that could be contaminating drinking water supplies, wildlife and crops, according to a report released Thursday by a California science panel. The long-awaited final assessment from the California Council on Science and Technology said that because of data gaps and inadequate state testing, overwhelmed regulatory agencies do not have a complete picture of what oil companies are doing. The risks and hazards associated with about two-thirds of the additives used in fracking are not clear, and the toxicity of more than half, the report concluded, remains “uninvestigated, unmeasured and unknown. Basic information about how these chemicals would move through the environment does not exist.” Jane Long, the report’s co-lead, said officials should fully understand the toxicity and environmental profiles of all chemicals before allowing them to be used in California’s oil operations. Recycled oil field wastewater used for crop irrigation may contain chemicals used during fracking and other well stimulation procedures, the report said. While treatment of that water is required, the testing is not adequate, the report said. Long said researchers did not find strong evidence of fracking fluids in irrigation water but added: “What we did find was that there was not any control in place to prevent it from happening.” The probability of toxic exposure to humans and the environment is low, but no studies have been conducted assessing the risk, the report’s authors said.
Billions in gas projects stranded by climate change action, says thinktank - More than $280bn (£180bn) of liquefied natural gas (LNG) projects being planned over the next decade risk becoming “stranded” if global action is taken to limit climate change to 2C, according to a report by the thinktank Carbon Tracker. LNG projects allow gas to be compressed into tankers and sold around the world, making it key to hopes in the US, Canada and Australia of fully exploiting their gas reserves. But the new analysis shows that if emissions are cut to keep global temperature rise below the internationally agreed target many LNG projects being considered will not be needed. The report concludes that over the next 10 years $82bn of LNG plants in Canada would be surplus to requirements, $71bn in the US and $68bn in Australia, with the rest of the world, led by Russia and Indonesia, accounting for the remaining $59bn. The analysis found Shell’s agreed takeover of BG makes it by far the biggest player in the market and $85bn of the combined company’s potential LNG projects would not be needed. Shell said it was only the biggest in LNG compared to oil majors, and no comparison had been with national oil companies. The report is the latest to raise concerns that increasing action to cut carbon emissions, combined with falling renewable energy prices, will put some fossil fuel investments at risk. Carbon Tracker has pioneered this analysis, which has been backed by the Bank of England and the World Bank.
Natural Gas Price Slumps as Inventory Swells - The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 91 billion cubic feet for the week ending July 3. Analysts polled by The Wall Street Journal expected a storage injection (increase) of about 85 billion cubic feet. The five-year average for the week is an increase of around 75 billion cubic feet. Natural gas futures for August delivery traded up about 0.6% in advance of the EIA’s report, at around $2.70 per million BTUs, and slumped to about $2.66 following release of the report. Last Thursday, natural gas closed at $2.83 per million BTUs, and natural gas futures peaked at around $2.87 in the past five days. The 52-week low for natural gas futures is $2.57. One year ago, the price for a million BTUs was around $4.10. Natural gas prices have slipped in the past week largely due to cooler weather lowering the demand for air conditioning. The large addition to storage compounds the weight on price. Temperatures next week are forecast to warm up over the West and then move into the central United States over the weekend and into next week. Hot weather over the central Plains, Texas, and the Southeast U.S. is likely to boost demand for cooling and, by extension, natural gas to generate the electricity to run all those coolers.
Exports of Liquified Natural Gas Increase Fracking and Pollution -A big corporate push to start exporting liquefied natural gas, or LNG, could ramp up fracking even further. When it comes to creating the pollution that leads to climate disruption, scientists say fracked LNG is on par with coal, which has long held the mantle as the dirtiest fuel around. But there’s more than just climate to worry about. Exporting natural gas also threatens our air, water, and health. That’s because it requires massive pipelines and other infrastructure to transport the fracked gas, liquefy it, and then store, load, and transport it by ship to foreign markets. Much of this infrastructure is located in ecologically sensitive areas or near homes, schools, and urban areas. No wonder communities along the East and West coasts alike are trying to block the construction of these large industrial facilities. In late May alone, hundreds turned out at rallies and marches everywhere from the Cove Point facility in Lusby , Maryland to the statehouse in Salem , Oregon . Shipping fracked gas overseas would inflict damage hundreds of miles away from the new LNG-export terminals, since most of the gas sold to foreign markets would be drilled elsewhere. That would increase the air, water, and climate pollution already impacting gas-producing regions of America . People living near fracked gas wells in Pennsylvania , for example, are suffering from increased air pollution and associated public health risks like respiratory and neurological disease, the Pennsylvania Department of Environmental Protection found. Many rural communities in the West, meanwhile, put up with air that’s dirtier than in downtown Los Angeles. And homeowners in frontline fracking towns like Pavilion, Wyoming are finding toxic, cancer-causing chemicals in their drinking water. The damage to air quality and public health will increase as more wells are drilled to meet foreign demand.
CSX to hold public meeting on oil train derailment cleanup -- Five months after the CSX oil train derailment in Mount Carbon, the railroad will hold a “public availability session” later this month to discuss past, current and future cleanup efforts. According to information provided by the railroad, CSX remains in Phase I of a two-phase cleanup plan. This part focuses on short-term remediation efforts with the goal of removing crude oil at the site and preventing potential oil sheens on the Kanawha River. The first phase also includes working with the United States Environmental Protection Agency and state Department of Environmental Protection to finalize plans for excavation and offsite disposal of any remaining oil-contaminated soil at the site. CSX is operating the remediation efforts under a March 6 consent order with the EPA. The second phase, following EPA approval, will focus on long-term environmental remediation and monitoring, including new soil and groundwater samples, the removal of a sheet pile wall installed along the riverbank and sampling of sediment at the bottom of the Kanawha River and Armstrong Creek, a tributary of the Kanawha. The results from that testing will guide any ongoing remediation requirements. The cleanup stems from the derailment of an oil train during a winter storm on Feb. 16. The train, which was traveling from the Bakken oil fields in North Dakota to Yorktown, Va., had two locomotives, two buffer cars and 107 tank cars. Each tank car contained around 29,000 gallons of crude oil. Around 1:30 p.m., 27 of the train’s 107 tank cars derailed and subsequent explosions and fires occurred in 20 of the derailed cars.
Nationwide Protests Call for Immediate Ban on Oil Bomb Trains --Monday was the second anniversary of the tragic Lac-Mégantic, Quebec, oil train disaster that killed 47 people. Since then, oil trains continue to derail and explode with five already this year. Four of the derailments occurred within just four weeks. A coalition of environmental and social justice organizations including Sierra Club, Greenpeace, ForestEthics, Oil Change International, Center for Biological Diversity, Rainforest Action Network, 350.org, Friends of the Earth,Food and Water Watch and Earthworks, have launched a week of action to call for an end to crude by rail shipments. The coalition has organized more than 80 events across the U.S. and Canada to call for an immediate ban on oil trains. Lena Moffitt, director of the Sierra Club’s Dirty Fuels campaign made the following statement: Exploding crude oil trains do not belong on the nation’s rails, and 25 million Americans—most of them people of color—do not deserve to be living in a blast zone. The Department of Transportation needs to take responsibility, and rather than put forward wholly inadequate rules that jeopardize the health and safety of communities along rail lines, the administration should ban bomb trains outright. For the health and safety of all Americans, we need to leave dirty, volatile fuels like tar sands and Bakken crude in the ground. We don’t have to choose between pipelines that spill and bomb trains that explode because we can choose clean energy instead. From Vermont to Oregon, organizers remember those who lost their lives in the disaster.
It’s Been Two Years Since This Deadly Oil Train Explosion. What’s Changed? - It was the second anniversary of what’s become the town’s defining tragedy, when a unit train carrying 72 tankers of highly volatile crude oil derailed and exploded. There were fires, fumes, and an approximately 1.5 million gallon oil spill — emergency responders described a “war zone.” A “river of burning oil” ran down city streets and engulfed buildings in flames. Today, there are still scars on the soul of the town. Though it happened in Canada, the explosion forced a fierce discussion in America about whether we were doing enough to prevent similar incidents at home. The volatile oil that caused the explosion, after all, came from North Dakota. And, safety advocates pointed out, that North Dakota oil was being shipped across America by train at a rate 40 times greater than just five years prior to the accident. Worse, there had been no upgrades in federal safety regulations to account for that increase. Canada had just experienced a major tragedy — it seemed like America was vulnerable to one as well. The American public is still being kept in the dark What’s happened in those two years? For one, we’ve had more derailments of oil cars — at least six in 2015 alone, averaging about one per month. The latest one was just last week in Tennessee, causing the evacuation of 5,000 people. But in May, we also got new and final safety standards for trains that carry oil and other flammable materials. Those standards include a new maximum speed of 50 miles per hour, and 40 miles per hour through urban areas. They also include updated braking systems for trains, and better classification of materials. But according to some rail safety experts, the most worrisome thing about the new regulations is what they don’t include. Americans still lack information about when trains are coming through their neighborhoods, what those trains contain, and what the worse case scenario would be if one derailed.
Erie group holds vigil to protest oil trains | bakken.com: Sam Miller raised his hands in disgust and yelled at Erie’s federal courthouse this afternoon. “Gov. Wolf, President Obama, if you can hear us, we need clean energy.” Miller was one of about 35 people who gathered in front of the courthouse for a vigil organized by the Benedictines for Peace. The group commemorated the two-year anniversary of the Lac-Megantic, Quebec, train derailment that killed 47 people. It hoped to spread awareness of the possible dangers associated with the oil trains that pass through Erie. Vigil participants held signs stating “Crude Oil Trains = Bomb Trains” and “Bomb Trains = Disaster.” An average of more than 30 trains each week carry crude oil from the Bakken Shale in North Dakota through Erie County. Each train carries more than 1 million gallons of Bakken crude, the same type of oil that exploded two years ago in Quebec. Sister Marlene Bertke, coordinator for the Erie Benedictines for Peace, said she has found Erie-area residents to be largely unaware of the possible dangers. “I just get disgusted with the lack of awareness of people in Erie about these bomb trains,” she said. “We’re here today to make people aware that there are, each week, 32 bomb trains going through Erie. They’re loaded with a very combustible explosive, crude oil, and there’s been four major derailments.”
Shell Places Huge Bet on Arctic Oil Riches - WSJ - Royal Dutch Shell PLC is days away from drilling in the Arctic Ocean—betting it can find enough oil to justify the huge risks that keep almost every other competitor out of those icy waters. The company is hauling two massive rigs—the Polar Pioneer and the Noble Discoverer—more than 2,000 miles up and around the Alaska coast to the Chukchi Sea, where it plans to begin work the third week of July. Accompanying the rigs are 30 support vessels and seven aircraft, a large entourage even by big oil-company standards. The voyage represents Shell’s effort to mount a comeback in the Arctic three years after a different rig ran aground following an unsuccessful drilling season. This time, Shell executives say they have both costs and safety under control, but the project has already hit a snag. A federal agency said last week that Shell can’t drill wells simultaneously within a 15-mile radius to minimize impacts on walruses, which means the company may only be able to drill one well this year instead of the two it had planned. And on Tuesday, Shell said that it discovered a small breach in the hull of a vessel carrying equipment for spill response and is examining what repairs are necessary. A Shell spokesman said the company has modified its plans based on the new drilling requirement. It doesn’t expect the damaged vessel to affect those plans, but “the answer will ultimately depend on the extent of the repairs,” the spokesman said.
House panel subpoenas Kerry on Keystone XL documents— A House panel has issued a subpoena to Secretary of State John Kerry for department documents, reports and letters related to the contentious push to build the Keystone XL pipeline. Republicans on the House Oversight and Government Reform Committee announced the subpoena on Wednesday. The $8 billion pipeline would transport oil harvested from Canada’s tar sands to pipelines linked to refineries on the Gulf of Mexico. Earlier this year, Congress approved legislation to build the pipeline and sent the measure to President Barack Obama. The president vetoed the bill and the GOP-run Senate failed to override the veto in March. Obama has said that the bill circumvented the well-established process for approving cross-border pipelines, which must be determined to be in the national interest.
Editorial: The Keystone XL pipeline: No surrender - The Keystone XL oil pipeline is back in the news as the State Department completes its final review of the Canada-to-Texas project and the company behind it urges approval by the Obama administration. When last we visited this no-brainer for economic growth and increased energy independence, President Obama vetoed legislation to approve Keystone, saying he objected to Congress’ “interference,” before the State Department completed its review. Now TransCanada, the company behind the project, has sent a letter to Secretary of State John Kerry seeking the administration’s approval. Mr. Obama has said repeatedly that his primary concern is whether the pipeline would contribute to “climate change.” But the State Department’s own environmental study showed Keystone would not significantly increase greenhouse gas emissions. Now the environmental lobby cites a study by the research firm Wood Mackenzie that says Canada’s oil-sands region depends on new pipelines, The Washington Times reports. The illogic follows that if Keystone is not built, Canada’s readily available oil won’t be burned. This presupposes that China or India or other countries wouldn’t be interested in tapping this abundant supply.
Alec Baldwin Helps Uncover 3,000 Square Miles of Oil Blanketing the Gulf Floor Since BP Disaster - Last week, BP reached an $18.7 billion settlement for civil lawsuits over the 2010 Deepwater Horizon oil spill in the Gulf of Mexico, which was the worst oil spill in U.S. history. Yesterday on his radio show, Here’s The Thing, Alec Baldwin spoke with journalist and author Antonia Juhasz, who has covered the spill extensively. In 2011, she wrote Black Tide: The Devastating Impact of the Gulf Oil Spill and this June she was featured inHarper’s Magazine for taking a submersible to the floor of the Gulf of Mexico.What she discovered down there may surprise those who think the Gulf has completely recovered in the five years since the spill. In her exploration of the ocean floor, Juhasz got closer to the BP Macondo well-head than anyone had gotten since it was sealed five years ago. WYNC, which broadcasts Baldwin’s show, explains what Juhasz found:Her story in the June issue of Harper’s Magazine details what she didn’t see down there—any vibrant sea life—as well as what she did see: a huge carpet of oil 3,000 square miles in size. And evidence indicates that companies are preparing to resume drilling in the region. Juhasz has been monitoring energy companies for over a decade, and has seen how routine spills have become, but as she explains to host Alec Baldwin, she still feels shock and anger over the ongoing impacts of these spills on the environment. Listen to the interview here:
Report: BP could save $4 billion in tax breaks from oil spill settlement: – According to a report from the New Orleans Times-Picayune, BP could receive billions of dollars in tax breaks following its settlement over claims from the 2010 oil spill in the Gulf of Mexico. Last week, BP announced it had reached a settlement deal with five Gulf Coast states worth $18.7 billion. However, the Public Interest Research Group noted at least $13.2 million of the settlement is not defined as a penalty, meaning the oil company can file for tax breaks on that amount. According to the Times-Picayune report, federal tax law prevents companies from deducting penalties paid for breaking the law on taxes, but damage payments can be treated as a business expense. Assuming BP files at the top corporate tax rate, the settlement only will cost BP approximately $14 billion. The settlement must undergo a public comment period before being approved. A final settlement could be approved by early 2016. Phineas Baxandall, a senior analyst for tax and budget policy from the PIRG, believes the settlement passes undue responsibility to taxpayers and believes the public should speak out to help push legislation to combat tax-deductible settlements.
Crude Carnage Continues After Another Inventory Build & Production Rise -- For the 2nd week in a row, crude oil inventories saw a build (after 8 weeks of draws) albeit a modest 384k barrels. Cushing also saw an inventory build. At the same time,production rose very modestly back to near cycle record highs (thouygh we note an extremely small drop in Lower 48 production). Crude prices have tumbled on the news as apparently yesterday's exuberance over better demand data from EIA has been long forgotten...Another build (and near record production)... And prices give back yesterday's exuberant gains... Charts: Bloomberg
Crude Oil Price Dives After Inventory Posts Surprise Rise - The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories increased by 400,000 barrels last week, maintaining a total U.S. commercial crude inventory of 465.8 million barrels. The commercial crude inventory remains near levels not seen at this time of year in at least the past 80 years. Tuesday evening, the American Petroleum Institute (API) reported that crude inventories fell by 958,000 barrels, gasoline inventories decreased by 2 million barrels and distillate inventories rose by 4.2 million barrels in the week ending July 3. For the same period, analysts polled by Reuters estimated a decrease of 700,000 barrels in crude inventories. Total gasoline inventories increased by 1.2 million barrels last week, according to the EIA, and remain in the upper half of the five-year average range. Total motor gasoline supplied (the agency’s measure of consumption) averaged over 9.5 million barrels a day for the past four weeks, up by 5.3% compared with the same period a year ago. The collapse in China’s stock prices, combined with the prior week’s unexpected increase in the crude oil inventory and the uncertainty surrounding Greece and the European Union, has been enough to push the West Texas Intermediate (WTI) price down by nearly $6 a barrel since last week. Expectations for rising prices have all but disappeared from the minds of hedge funds. Fund managers cut their long positions on the futures markets to their lowest level in more than three months. To top it off, OPEC production in June remained at around 31 million barrels a day and the cartel even lowered prices a bit in order to maintain market share. Traders also worry that a deal with Iran over that country’s nuclear program will lead to a raising of sanctions and more oil on the market. There is little to prop up crude prices in the very near term.
US oil production could hit 45-year high = On Tuesday the Energy Information Administration (EIA) released its production forecast through the year’s end and it looks like the United States will have the most productive year for crude in over four decades. As reported by The Hill, the EIA forecast put the average U.S. crude production figures for the year at an average of 9.5 million barrels per day. During the first half of the year daily crude production averaged 9.6 million barrels. The last time U.S. production reached these levels was during 1970, the most productive year in U.S. history with 9.6 million barrels per day. However, the EIA’s prediction also indicated that crude oil production will decline during the second half of the year and into the first months of 2016. In a statement, EIA Administrator Adam Sieminski said, “The forecast decline in U.S. monthly production through early 2016 is the result of low oil prices, which pushed oil companies to reduce their investment in drilling that resulted in the lowest number of rigs drilling for oil in nearly five years.” Last year the U.S. produced an average of 8.7 million barrels of oil per day. The EIA also found that this year, record road travel will cause gasoline demand to reach 9 million barrels per day, a level not seen since 2007. Sieminski said, “Low gasoline prices and higher employment will contribute to more driving this year, boosting U.S. gasoline consumption an estimated 170,000 barrels per day higher than in 2014.”
The surprising decline in US petroleum consumption - Jason Furman, et al - US oil production has transformed itself fundamentally in the past decade. Between 1970 and 2008, US crude oil production fell by nearly half as conventional wells were depleted. Since 2008, however, production has rebounded from 5 million barrels per day to an average of 8.7 million barrels per day in 2014. The almost entirely unexpected increase – largely attributable to technological innovations such as advances in horizontal drilling, hydraulic fracturing, and seismic imaging – has helped the US become the world leader in oil production. Whereas the developments in oil production have been widely reported and appreciated, far less attention has been paid to US petroleum consumption’s remarkable decline relative to both recent levels and past projections — one of the biggest surprises to have occurred in global oil markets in recent years. Petroleum consumption in the US was lower in 2014 than it was in 1997, despite the fact that the economy grew almost 50% over this period. As illustrated in Figure 1, consumption rose steadily from 1984 through the early 2000s, peaking in 2004 before decreasing in conjunction with rising oil prices.
U.S. gasoline cracks hit multi-year highs on strong fuel demand -- Tremendous demand for gasoline in the United States has pushed refining margins for motor fuel to the highest seasonal level in a decade. U.S. refiners currently earn a gross margin before costs and taxes of 65 cents per gallon for turning Brent into gasoline and 77 cents for processing WTI. At the same point last year, margins for refining Brent and WTI were 37 cents and 51 cents respectively, close to their long-term averages. The enormous profitability of turning crude into gasoline explains why U.S. refiners are running flat-out. U.S. refineries are processing a near-record 16.6 million barrels per day (bpd) of crude, almost 350,000 bpd higher than in 2014 and more than 1 million bpd above the 10-year seasonal average. Despite near-record runs, gasoline stocks remain modest, however, almost exactly in line with the long-term seasonal average, as strong demand from motorists absorbs all the fuel refiners can make. Gasoline consumption is running at more than 9.5 million bpd, the highest level since the third quarter of 2007, the U.S. Energy Information Administration says. From massive California to tiny New Hampshire, traffic on U.S. roads is growing at some of the fastest rates for a decade, according to state transportation agencies.
Oil refiners' "mini golden era" will end soon - IEA - A brief period of high profitability for the world’s oil refineries is likely to come to an end as quickly as it began, the International Energy Agency (IEA) said on Friday. Weak crude oil and relatively high prices for gasoline, diesel and petrochemical feedstock have pushed up refining profits sharply over the last six months, helping oil companies cope with much lower profits from upstream production. In the first quarter of this year, combined profits for the likes of BP, Royal Dutch Shell, Exxon Mobil , Total and Eni from refining and trading represented 60 percent of total earnings, compared with 18 percent last year, according to Reuters calculations. Crude oil prices collapsed from $115 a barrel in June 2014 to a low near $45 in January. They have since recovered some ground but are still close to half their peak last year. By 1230 GMT on Friday, benchmark Brent crude oil was trading around $59 a barrel. But the IEA, which advises the world’s biggest economies on energy policy, says this mini golden era will soon end. New refineries coming on stream this year and next, along with upgraded units at existing refineries, are set to reverse those gains. “In 2015-2016, net capacity additions will be more than needed, which will cause the global utilization rate to decline, and casts a doubt on the continuation of current unusually high refining margins,” the IEA said in its monthly report.
Oil under $60 beyond 2016 suggests market rethinking shale - The almost 10 percent nosedive in headline oil prices this week has many hallmarks of a shocking but short-lived slump, triggered by a confluence of external events and exacerbated by safety-seeking investors and momentum-chasing traders. By Tuesday afternoon, the crowded race to the exit was winding down, with prices recovering from three-month lows as traders reassessed the factors they blamed for the worst slide in four months: Greece’s debt woes; China’s stock market meltdown; talks with Iran over its nuclear program; a stronger dollar; a rise in the number of U.S. oil rigs; a breach of key technical triggers. Yet a deeper look at the market suggests an important and more lasting rethink may now be afoot: longer-term oil prices, normally less volatile and reactive than immediate delivery, have suffered an almost equally violent collapse, pushing crude prices for 2017 to below $60 a barrel for the first time ever. If U.S. shale drillers – the world’s new ‘swing’ producers – can still turn a profit at below $60 a barrel, then the fall in long-dated oil prices may be rational. If not, as some bullish market analysts worry, then lower prices could be choking off new supplies the world may need as soon as next year. “If you take the curve at face value, it appears to be saying that U.S. shale can grow … if WTI stays below $60 for three years. That doesn’t seem very likely,”
Data availability bias in the oil market - Why is there such good data about oil in the United States but such poor data about everywhere else? Accurate information is essential for good decision-making, so it is remarkable how little reliable and timely data exists about the production and consumption of crude oil and refined fuels outside the United States. The situation in the other advanced economies, not to mention emerging markets, is mostly guesswork. The result is that oil analysts cannot even agree on production and consumption yesterday and today, let alone predict what will happen tomorrow. And because the best and most readily accessible data is for the United States, the market puts excessive emphasis on what happens there and neglects developments elsewhere. The obsession with weekly rig counts, production estimates and crude inventories in the United States as a sign of wider supply-demand trends in the oil market has been a case in point. But as long as U.S. data is more accurate, detailed and timely than the numbers for other countries, this example of “availability bias” is set to continue.
Tanker arrivals create volatility in U.S. oil stocks - U.S. crude stocks unexpectedly rose by almost 2.4 million barrels last week, breaking a run of eight consecutive weekly declines and sending oil prices sharply lower. But did the market overreact when the stock numbers were released on Wednesday – misinterpreting normal week-to-week variability in the data as a fundamental shift in the balance between supply and demand? Tanker arrivals create quite a bit of “noise” in the weekly inventory data which can easily be confused with shifts in the supply-demand balance over short periods. Reported crude stockpiles are driven by three factors: domestic crude production, crude imports, and refinery runs. Domestic output is fairly constant week to week, but imports and runs are highly variable. In 2014, U.S. refineries processed an average of 15.8 million barrels per day (bpd). Domestic crude production was around 8.7 million bpd in 2014 and the country imported around 7.3 million bpd of crude, according to the Energy Information Administration. Almost 3 million bpd of imported oil arrived by pipeline or train from Canada, while most of the remaining 4.5 million bpd from other destinations came by tanker.The typical very large crude carrier (VLCC) or supertanker employed in long-distance voyages carries around 2 million barrels of oil. So, the United States receives the equivalent of two to three VLCC cargoes per day or around 15-16 per week. But there is significant variability around these daily and weekly averages. The timing of individual tanker arrivals and completion of customs formalities therefore has a major impact on reported imports for a given week.
Oil Prices Tumble Nearly 8% -- Oil prices on Monday skidded to their biggest single-day declines in more than three months, as gyrations in Chinese stocks and the prospect of more crude from the U.S. and Iran revived worries about the global supply glut. ...The U.S. benchmark oil price slid for the third session in a row, closing down $4.38, or 7.7%, to $52.53 a barrel on the New York Mercantile Exchange. ......Brent crude, the global benchmark, closed down $3.78, or 6.3%, to $56.54 a barrel on ICE Futures Europe.
Oil crashes 8 percent as Greek vote, Iran talks set off exodus -Oil prices suffered their biggest selloff in five months on Monday, falling as much as 8 percent as Greece's rejection of debt bailout terms and China's stock market woes set off a deepening spiral of losses. Adding to the pressure on oil, Iran and global powers were trying to meet a July 7 deadline on a nuclear deal, which could bring more supply to the market if sanctions on Tehran are eased. The self-imposed deadline could be extended again, officials at the negotiations said. A slump that began last week gathered pace through the session, taking four-day losses to more than 10 percent, the largest rout since early January, as weeks of range-bound trading abruptly ended. Global Brent prices collapsed below the $60 a barrel mark for the first time since mid-April. "With the number of bearish elements weighing on the market now, the only support has been the seasonal demand in gasoline, and even that will be going away soon," . U.S. crude settled at $52.53 a barrel, down $4.40 or 7.7 percent, from its settlement on Thursday and below the 100-day moving average. It was the biggest percentage drop in a day for U.S. crude since early February, and more downside momentum could push it to test the six-year low of $42.03 set in mid-March, technical analysts said.
Oil Prices Crash Again – Another Downturn Ahead? - We had warned over the past few weeks that there was an outside chance that the Greek crisis would infect oil markets, and over the weekend Greek voters ensured that it did. With an overwhelming “no” vote, just about every corner of Greece voted against Europe’s debt package. While that handed Tsipras a strong victory, it also led to a plunge in oil prices. WTI fell by 8 percent on July 6, falling to around $53 per barrel. Brent lost nearly 5 percent, dropping to under $58 per barrel. Oil is now trading at its lowest level in months, erasing several weeks of stability as well as optimism that the market had begun the arduous process of adjustment. But it isn’t just Greece. In another (much more positive) geopolitical development, the Iranian negotiations are at the finish line. The outcome is still in doubt, as the deadline has once again been pushed back, this time until July 10, but all sides are extremely close to a deal. After weeks and months of uncertainty, the progress over the past week seems to have finally convinced the oil markets that a return of Iranian oil is close to becoming a reality. Over the past two weeks we have also closely watched the plunge in China’s stock market. After having failed to stop the hemorrhaging, China’s central government rolled out fresh measures over the weekend to prop up its key stock exchanges. Through a complex arrangement with the stock exchanges, the central bank will back the purchase of 120 billion yuan ($19.3 billion) worth of shares to prevent a full blown meltdown.The Shanghai Composite steadied on July 6, but China is not yet in the clear. A market meltdown in the world’s largest oil importer would send oil prices spiraling downward. The perfect storm of events is battering oil prices. The rout is on, volatility has returned, and all bets are off. Some analysts even raise the possibility that oil prices could flirt with the lows of earlier this year (low $40s for WTI).
As oil teeters at $50, a few shale producers still drilling more – A handful of optimistic U.S. shale drillers are sticking with plans to deploy more rigs in the coming months even as oil prices take a sharp dive well below many producers’ $60-a-barrel breakeven point. On Wednesday, Pioneer Natural Resources Co. became the first big company to publicly confirm it was drilling more wells, saying it had already added two rigs in the Permian Basin of Texas this month and would keep on adding two a month as long as the oil price “remains constructive.” Smaller shale oil producer WPX Energy Inc, whose operations are focused on North Dakota’s Bakken shale, said this week that its decision to add two rigs later this year was unaffected by a nearly $8 drop in crude prices since June to toward $50 a barrel. While half a dozen or so other companies in the U.S. shale industry have indicated they may add rigs, none have publicly confirmed a move, although a few have quietly done so. Last week the U.S. oil drilling rig count rose for the first time since December, inching up by 12 to 640 across the country. The industry is now in a difficult bind. While executives were quick to slash rigs to a five-year low as oil prices halved through the first quarter, many were beginning to grow hopeful that a new equilibrium was settling in the market, as U.S. crude traded steady in May and June at around $60 a barrel.
U.S. oil-rig count up for second straight week - The total number of active U.S. rigs drilling for oil climbed as of July 10, according to data from Baker Hughes BHI, -0.73% released Friday. That marked the second weekly increase in a row. The number of active oil drilling rigs saw a weekly climb of 5 to 645. The total active rig count was at 863, up 1 from last week. Compared to last year, the total rig count has fallen by 1,012, with the oil rig count down 918. August crude was down 11 cents, or 0.2%, at $52.67 a barrel on the New York Mercantile Exchange. That's about where it was trading before the data.
US Adds More Oil Rigs Despite Low Crude Prices - 24/7 Wall St. --In the week ended July 10, the number of rigs drilling for oil in the United States totaled 645, compared with 640 in the prior week and 1,563 a year ago. Including 218 other rigs mostly drilling for natural gas, there are a total of 863 working rigs in the country, up one from last week and down 1,012 year over year. The past week marks the second consecutive week of increases in the U.S. rig count. The data come from the latest Baker Hughes Inc. (NYSE: BHI) North American Rotary Rig Count. The state of North Dakota reported on Friday that oil production reached 1.2 million barrels a day in the month of May, a 2.7% increase over May 2014. The state’s director of mineral resources, Lynn Helms, said that the 73 rigs operating in North Dakota on Friday was the lowest total since November 2009, according to a report in the Grand Forks Herald. The rig count in North Dakota is down by two-thirds year over year, and applications for new drilling permits are down 48%. At the end of May, an estimated 925 wells in the state were waiting for fracking crews. Until prices return to around $65, Helms does not think those wells will be fracked and completed. A price of $70 a barrel is probably the level that will attract more drilling rigs to the state.Nationwide, refineries were running at nearly 95% of capacity, with daily input of more than 16.6 million barrels a day, about 65,000 barrels a day more than the previous week. Imports also dropped by about 200,000 barrels a day compared with the prior week. The number of rigs drilling for oil in North America fell by 918 year over year and rose by five from the previous week. The natural gas rig count decreased by two to a total of 217. The count for natural gas rigs is down by 94, relative to a year ago. Gasoline stockpiles rose by 1.2 million barrels last week, even though refineries lowered run levels. Gasoline inventories remain in the upper half of the five-year average range.
Oil price could fall further, warns International Energy Agency - FT.com: The rebalancing of the oil market that started last year has yet to run its course and a bottom in prices “may still be ahead”, according to the world’s leading energy forecaster. In a bearish assessment of market conditions the International Energy Agency said the adjustment process would “extend well into 2016” as production — led by Opec nations — continued to swell and demand growth softened. The Paris-based agency, which advises the world’s biggest economies on energy policy, said the oil market was “massively oversupplied”. Global oil supply surged by 550,000 barrels a day in June to 96.6m b/d, up 3.1m b/d from the same month a year ago, the IEA said in a widely followed monthly report “The market’s ability to absorb that oversupply is unlikely to last. Onshore storage space is limited. So is the tanker fleet. New refineries do not get built every day,” the IEA said. “Something has to give.” That something could be US shale oil, the agency said. Relentless supply growth from North America has been one of the factors contributing to the glut in crude oil. While some weakness in US shale oil output was beginning to show “it may also take another price drop for the full supply response to unfold”, the IEA warned. Oil prices on both sides of the Atlantic fell sharply this week, with Brent crude — the international benchmark — entering bear market territory. Brent hit $55 a barrel on Monday, rattled by the financial turmoil in Greece and the stock market rout in China. On Friday, Brent had risen back to $59 a barrel — a level that is still almost 50 per cent lower than last year’s $115 a barrel June peak.
Oil may have further to fall due to oversupply – Massive oversupply is likely to push oil prices down even further, the International Energy Agency (IEA) said on Friday, adding that the rebalancing of the market was likely to last well into 2016. The agency, which advises the world’s biggest economies on energy policy, said “something has to give” because the world oil market was unable to absorb the huge volumes of fuel now being produced. “The oil market was massively oversupplied in 2Q 2015, and remains so today,” the IEA said in its monthly report. “It is equally clear that the market’s ability to absorb that oversupply is unlikely to last. Onshore storage space is limited,” it said, adding: “Something has to give.” “The bottom of the market may still be ahead.” Core members of the Organization of the Petroleum Exporting Countries have been pumping strongly for most of the last year in an attempt to regain market share. Oil prices have staged a recovery this year after hitting a near six-year low close to $45 in January. Prices collapsed from $115 in June 2014 in a decline that deepened after OPEC refused to prop up prices and chose instead to defend its market share. The IEA said OPEC crude oil production rose 340,000 barrels per day (bpd) in June to 31.7 million bpd, a three-year high, led by record output from Iraq, Saudi Arabia and the United Arab Emirates. The IEA said Saudi Arabian crude oil supply rose 50,000 bpd to a record high of 10.35 million bpd in June, while Iraq crude oil output surged 270,000 bpd in June to its highest-ever rate of 4.12 million bpd. Meanwhile, world oil demand growth is slowing.
The Next Fracking Boom May Be Closer Than You Think -- Recent reports suggest that fracking is beginning to take hold in Mexico with numerous wells being drilled. Unsurprisingly given the state of oil prices and the resources Mexico has available, thus far the fracking appears concentrated on natural gas, rather than oil. The important point though is that the use of the technology on a broad scale suggests a new opportunity for investors. Fracking requires a very specialized set of skills and consistently significant capex given the substantial decline rates in those wells. This combined with the new infrastructure needs creates some intriguing possibilities for profits at firms in the space. Fracking in Mexico is very controversial, just as the energy sector overhaul in the country itself is. Water scarcity in Mexico for instance may limit the country’s ability to engage in long-term fracking the way the U.S has. In many respects, these challenges create opportunities for companies like Haliburton and Schlumberger which have technical advantages over smaller operators. Similarly opportunities for fracking offshore in the Gulf of Mexico, a technologically challenging feat, offers new business opportunities for the major servicing companies as well. The oil and gas industry in Mexico is dominated by state giant Pemex, and while the state may be giving up some control over the industry, investors should not expect that Pemex’s dominance in the market is going to evaporate overnight. Pemex appears to be very interested in fracking opportunities, but with the potential for local uproar given environmental and water concerns, the company is playing things close to the vest.
Iranian Oil Exports To Double Following Nuclear Deal - While not predicting that Tehran and six world powers will strike a deal by the new July 10 deadline, a senior Iranian oil official says his country hopes to nearly double its crude exports immediately if and when sanctions are lifted and hopes that OPEC will accommodate this growth by capping production by the cartel’s other members. “We are like a pilot on the runway ready to take off,” Mansour Moazami, Iran’s deputy oil minister for planning and supervision, told The Wall Street Journal in Tehran on July 5. “This is how the whole country is right now.” Today Iran is exporting about 1.2 million barrels of oil per day, but that figure would reach 2.3 million barrels after sanctions are lifted, Moazami said. That would pose problems for OPEC, which is exceeding its formal ceiling of 30 million barrels per day, a high level of output intended to hold onto market share and force higher cost producers from around the world to cut back. Moazami is urging OPEC to return to setting production limits on individual members.“Their mechanism right now is not proper. It has to return to its past ability and capacity,” he said. OPEC ended that practice in 2011 because it generated bad feelings among the members, who flouted them anyway for their own profit. But individual quotas can’t be reintroduced except by unanimous vote. Even if Iran is able to double its oil output, the notion that OPEC might change its output quota is unlikely given Saudi Arabia’s already strained relations with Tehran.Not only have the two countries long been at odds over Islam – Iran is Shi’a and Saudi Arabia is Sunni – Iran, through Houthi rebels, is today fighting what many call a “proxy war” with Saudi Arabia in Yemen. Further, Saudi Arabia, whose Oil Minister Ali al-Naimi is the architect of OPEC’s price war against American shale producers, has been producing oil at near-record highs over the past several months and probably would be reluctant to cut back to make room for increased Iranian production.
India eyes Canadian crude oil contracts as it looks to diversify supply sources - Indian state-owned oil companies are pursuing opportunities to lift additional cargoes of Canadian crude and also enter into long-term offtake contracts, in line with efforts to reduce their dependence on the Middle East, senior government officials from New Delhi said. "OPEC is an important club for our crude oil procurement, but simultaneously we would like to diversify our strategy and go by our economic interests and long-term relations," Indian oil minister Dharmendra Pradhan said over the weekend in Calgary, on the sidelines of an energy partnership forum hosted by ONGC Videsh Ltd. India is expanding its import base by procuring increasing volumes of crude from Latin America and West Africa and would like to include Canada too, he said. "[State-owned refiner] Indian Oil Corp.'s 300,000 b/d new refinery at Paradip in the East Coast, which is now in the final stages of full commissioning, could process Canadian heavy crude," Pradhan said, noting that previously Indian refineries were limited in the grades of crude they could process."Our capability and capacity has now changed and we can process heavy, sour and lighter grades. Compared with our 2013 import of 3 million b/d, we see that figure doubling to 6 million b/d by 2030, based on current forecasts. Our appetite as an energy consumer will grow substantially and we are keen on engaging the Canadians in a bigger way,"
Energy Hungry India To Import More Canadian Crude -- India is becoming increasingly interested in Canadian oil in its effort to reduce energy dependence on the Middle East, and Canada is interested in India as a customer with a growing demand for its oil. “OPEC is an important club for our crude oil procurement, but simultaneously we would like to diversify our strategy and go by our economic interests and long-term relations,” India’s oil minister, Dharmendra Pradhan, said July 5 at the second India-Canada Ministerial Energy Dialogue in Calgary. Already, Pradhan said, India has been increasing oil imports from both West Africa and Latin America, and would like to buy more oil from Canada, too. He said the state-owned Indian Oil Corp. (IOC) has a new refinery in Paradip, on the country’s northeast coast, capable of processing 300,000 barrels per day of the heavy tar sands from Western Canada, something other Indian refiners can’t handle. As a result, he said, “[c]ompared with our 2013 import of 3 million barrels per day, we see that figure doubling to 6 million barrels per day by 2030, based on current forecasts. Our appetite as an energy consumer will grow substantially, and we are keen on engaging the Canadians in a bigger way.” IOC’s CEO, B. Ashok, agreed, saying only two issues need to be resolved before India can increase its import of Canadian oil: “economics,” he said without elaborating, and “finding a way to deliver [the crude] to Indian shores.”
Saudi Arabia to invest record $10bn in Russia — The Public Investment Fund (PIF) of Saudi Arabia in partnership with the Russian Direct Investment Fund (RDIF) has agreed to invest $10 billion into Russian projects. It is the largest foreign investment in Russia. "We have reached final agreements and are announcing the creation of a partnership with the sovereign fund of Saudi Arabia, under which PIF will invest $10 billion into projects on Russian territory. These funds are expected to be implemented within 4-5 years,” said the head of RDIF Kirill Dmitriev, RIA Novosti reported on Tuesday. He said the first four or five investment deals are expected to be signed in the next 2-3 months and could also attract partners from China, South Korea and the United Arab Emirates. The Russian Investment Fund plans to implement 10 deals with PIF before the end of 2015, seven of them are in the final stages. The new partnership may use the mechanism of automatic co-investment, already tested in the framework of the Russian-Chinese Investment Fund. PIF expressed interest in investing in agriculture, medicine, retail, logistics and real estate, according to Dmitriev. The Russian and Saudi Arabian funds’ partnership does not exclude the possibility of investment in other
While Saudi Arabia Goes to War Abroad, It's Simmering at Home - To hear Saudi leaders tell it, the primary threat to the kingdom’s stability is the Islamic Republic of Iran. Worried over Washington and Tehran’s slowly improving relationship, Riyadh has projected an increasingly militarized and sectarian foreign policy aimed at countering Iran’s alleged hegemonic aims in the Middle East. Yet tension with Iran is only one element of an increasingly complicated mosaic of threats to Saudi Arabia. In fact, the gravest dangers to the kingdom come from within. Saudi Arabia is a classic rentier state. In exchange for the absolute acquiescence of its 29 million subjects, the ruling al-Saud family provides services such as housing, health care, education, and a variety of subsidies — all funded by the country’s substantial oil wealth. Combined with intolerance for dissent, control over these resources has historically served as the ruling family’s hedge against instability of all varieties. In 2011, for example, the Saudi leadership responded to the Arab Spring revolts across the region by injecting $130 billion in the form of salary increases, public-sector job creation, and housing subsidies to minimize the potential for an uprising. Meanwhile, the kingdom’s appalling human rights record has deteriorated. Over the past four years, beheadings have skyrocketed and torture has flourished. However, this authoritarian rentier state model is unsustainable. Oil revenues are down, local unrest is simmering, and extremists are taking aim at the kingdom from without and within. The roots of all these problems come not from Iran but from inside Saudi Arabia itself.
Saudi crude consumption to reach 3 million b/d in Q3: analyst - Saudi Arabia's refinery intake increased by 235,000 b/d or 12% year on year in the second quarter, and total consumption is expected to reach 3 million b/d in Q3, analysts at Jadwa Investment said late Tuesday. The report did not give an estimated total for Q2. The bank said in a research note that refinery intake increased as the new 400,000 b/d Yasref refinery ramped up to full capacity. The refinery, a joint venture between Saudi Aramco and Sinopec, will contribute to total Saudi crude consumption reaching 3 million b/d in Q3, as demand peaks due to the summer months, it said.Quarterly growth in Q3 over the last three years has averaged 250,000 b/d, a trend Jadwa expects to continue. It forecasts 2015 Saudi crude consumption will average 2.7 million b/d. "Although we expect increases in gas output from the Hasbah and Arabiyah fields to replace some domestic crude consumption, there is a risk that delays in bringing these projects online will lead to upside risk in our full year crude consumption forecast," the research note said.
Oil Rout Seen Ending as Demand Trumps China’s Market Crash - Oil’s biggest slump in four years will lose momentum because the plunge in Chinese equities and Greece’s economic crisis won’t dent global demand, according to Morgan Stanley, UBS Group AG and Societe Generale SA. Crude is set for a “modest recovery” after declining 13 percent in the five sessions through Wednesday, Morgan Stanley estimates, while demand will push prices up by year-end, according to hedge fund manager Andrew J. Hall. Any nuclear deal with Iran won’t quickly revive the OPEC member’s crude exports, so wouldn’t immediately weigh on prices, Societe Generale said. U.S. crude erased this year’s gains to trade at about $52 a barrel amid a stock-market rout in China, the world’s second-largest oil consumer. European leaders talked openly about a Greek exit from the euro before a weekend summit, a break from years dismissing the possibility. Nuclear talks between world powers and Iran, the fourth-largest producer in the Organization of Petroleum Exporting Countries, missed another deadline. “The market has no need to re-test the lows” of $42 reached in March, Paul Horsnell, head of commodities research at Standard Chartered Plc in London, said by e-mail Thursday. “Iran will be slow to return even if there is a deal. And the longer the market stays low, the greater the squeeze on supplies” from outside OPEC.