there was a major spill in Alberta this week that got a lot less news coverage than we would have expected, given that it now appears to have been one of the largest environmental spills on land in North American history...on Wednesday, a contractor for the pipeline operator Nexen, now a wholly owned subsidiary of Chinese oil giant CNOOC, discovered a spill of tar sands emulsion covering 16,000 square meters, mostly along the route of their feeder pipeline from area wells to the Long Lake oilsands processing facility south of Fort McMurray in Northeast Alberta, about 200 miles north of Edmonton....after the flow was shut off, the company determined that 5 million liters of emulsion, or a solution of tar, produced water and sand, had leaked out, but their automatic detection system hadn't detect the rupture in their double walled "fail-safe" pipeline over the period of the spill, the cause of which they are still investigating...the emulsion that spilled is the product of tar sands mining, whereby superheated steam is injected deep into the tarsands, which forces the emulsion of tar, sand and produced water to flow out to the surface and into the pipeline...although the spill contaminated more than three hectares of beaver ponds and boreal muskeg bog in a densely forested area, it did not affect water supplies, as a nearby lake was protected by a berm which had been previously constructed for that purpose...access to the area, which is frozen much of the year, was restricted by the now soft ground, so a road had to be built and special mats had to be laid on the surface nearby to facilitate moving cleanup crews and equipment into the area...as of Friday, Nexen said its crews were working “around the clock” to clean up the spilled emulsion, which at 5,000 cubic meters of emulsion over a 16,000 square meter area must have largely sunk far into the peat like muskeg by now...
meanwhile, a spill of roughly 35,000 gallons of oil from a derailed train in eastern Montana garnered nearly as much press coverage...on Thursday evening, a Burlington Northern oil unit train pulling 106 loaded crude oil cars saw 21 of its tankers leave the rails near Culbertson, Montana, near the North Dakota border, of which only 2 remained upright...subsequently it was determined that 3 of the cars were leaking their loads, resulting in evacuations of nearby residents and closure of US Route 2, the region’s main artery...even with a downed power line near the leaking crude, County Sheriff Jason Frederick said that there was no immediate threat to public safety, but nonetheless he and other first responders kept their distance until a Burlington Northern haz-mat team could be brought in from Texas...and even though it's unlikely it could have been anything else, rail officials refused to say if the train was hauling explosive crude from North Dakota’s Bakken oil patch, the crude involved in the fiery derailments earlier this year...
prior to those two spills, a pump station pipeline owned by Plains All-American, the company responsible for the Santa Barbara beachfront spill at the end of May, ruptured and dumped more than 4,200 gallons of crude oil into a creek in southwest Illinois, about 40 miles east of St. Louis near Highland, Illinois...the company was on site fairly quickly and said they had deployed 2,700 feet of booms keep the oil from reaching Highland Silver Lake, which supplies drinking water to Highland...apparently this pipeline also did not have automated leak detection and shutoff technology either, because the rupture occurred overnight and was not noticed until a citizen reported the spill sometime between 7 and 8 a.m on Friday morning...
in other widely covered news of interest to us here in Ohio, a two-year study of the Utica shale by federal, state and university researchers estimated the Utica formation holds 782 trillion cubic feet of recoverable gas and nearly 2 billion barrels of oil, which would be 20 times more recoverable gas and twice as much recoverable oil as previously estimated...that would make the Utica bigger than the Marcellus, which had been considered the largest shale gas deposit in the US and the second largest in the world until this study...while the Utica is 4,000 to 6,000 feet below the Marcellus and hence more expensive to drill to, it generally makes up for that by being thicker, with the added fracking bonus of the Point Pleasant shale formation, an even more organic rock, immediately below it in Ohio...
now, you must be asking why, with the glut of gas and oil already driving prices below the cost of recovery, would the industry be so anxious to exploit these other formations for gas? the reason is that they already have a waiting customer; this week saw the christening of the first two “Dragon Class” Chinese LNG tankers, each nearly 800 feet long and able to carry over 27,500 cubic meters of liquefied gas....built by Sinopacific Offshore and Engineering, they are owned by Swiss petrochemical manufacturer Ineos Group Ltd, and will make their first transatlantic delivery of US gas to Europe later this month...Ineos has 6 more of these large tankers being built, and plans a “virtue pipeline” to transport over 800,000 tons of gas a year at minus 90 degrees centigrade across the Atlantic to their plants in Norway and Scotland.....once this gets up and running, we’d expect Americans to soon be paying European prices for their natural gas..
for now, though, US natural gas prices remain depressed and US oil prices are falling again, shedding another 4% this week to close at $50.89 a barrel, down about $10 / barrel from a month ago...that's finally starting to impact oilfield activity, as the number of drilling rigs running this week fell for the first time in 4 weeks, dropping by 6 rigs to 857, with oil rigs down 7 to 638, gas rigs up 1 to 218, and miscellaneous rigs unchanged at 1...that's down from the 1871 rigs that were in use the same week a year ago, with oil rigs down 916, gas rigs down 97, and miscellaneous rigs down 1 from that time...of the net rigs idled, 3 had been land based and 3 had been on inland waters; the count of the later is now down to 2 from 18 last year, while offshore rigs in the gulf of mexico were unchanged from last week at 31 but down from the year ago 57....and speaking of offshore, shutting down a rig is not a cost free operation, either, especially since many of those drilling rigs are leased...just this week, ConocoPhillips decided to terminate their contract with Ensco to use their DS-9 drillship in the Gulf of Mexico; as a result, ConocoPhillips must pay Ensco termination fees equal to about two years’ worth of daily renting of the rig, or around $550,000 per day for two years, plus other fees that Ensco might incur from the contract cancellation...
in keeping with the trend we've seen over the past several weeks, unconventional drillers idled rigs, while conventional drillers added them…two additional vertical drilling rigs were added to bring that total to 123, while.there were 650 horizontal rigs in use at week end, down 4 from a week ago and down 693 from the same week last year, and 84 directional rigs remaining, also down 4 from a week ago and down 133 from the 217 directional rigs running on the 3rd Friday of July last year...
within the major shale basins, the Eagle Ford saw a net reduction of 4 rigs, leaving 98; the Marcellus saw 3 idled, leaving 59, while the Williston count dropped by 2 to 69...there were also rig reductions in all the Woodford shales, which hadn't seen many prior cuts; the Ardmore Woodford was down 2 to 5, the Cana Woodford was down 2 to 31, and the Arkoma Woodford was down 1 to 5....the Haynesville shale also saw a rig idled, while Permian basin drillers added 3 rigs, 2 were added in the Granite Wash, and the Utica shale and Niobrara chalk both saw the addition of 1 rig each...by state, Louisiana, where three inland water rigs were shut down, saw the greatest reduction, while 2 rigs were pulled Texas, Pennsylvania and North Dakota, and California and Oklahoma each saw one rig idled...meanwhile, drillers in Alaska, Colorado, Kansas and New Mexico each added a rig, while the rig count in Ohio and other states not herein mentioned was unchanged
meanwhile, US crude oil production fell to 9,562,000 barrels per day in the week ending July 3rd, down from the near record 9,604,000 barrels per day the prior week, but still up 11.3% from our oil output of 8,592,000 barrels per day in the second week of July last year...however, with US refineries operating at 95.3% of their operable capacity and refinery inputs of crude averaging 16.825 million barrels per day during the week ending July 10th, 229,000 barrels per day more than the the prior week, our imports of crude oil rose to 7,354,000 barrels per day, from 7,316,000 in the previous week, 1% more than the 7,427,000 we imported in the same week last year...that's a volatile figure, however, as weekly oil imports are often dependent on how many super tankers arrive and are offloaded during any given week, so we check the weekly Petroleum Status Report (62 pp pdf) for the 4 week average, which at an average of over 7.2 million barrels per day, leaves our 4 week import total 1.3% below the same 4 week period last year...but also note that U.S. commercial crude inventories fell for the first time in three weeks, from 465,763,000 barrels last week to 461,417,000 as of July t0th, which was still 23.0% more oil than 375,040,000 barrels we had stored at the end of the second week of July last year, and in fact much higher than had ever been stored in mid July in the 80 years of EIA record keeping, which had never seen the 400 million barrel level breached before this year...
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Editorial: Time to protect Great Lakes from oil spill is now - An oil pipeline running through the Straits of Mackinac should be shut down. On this point, most parties now agree — except, we presume, Enbridge Energy Partners, the Canadian company that owns and operates the pipeline. In this conflict, the cause has found a champion in state Attorney General Bill Schuette, who deserves praise for his efforts to shed light on this looming environmental disaster. Though the report details and solutions for Michigan’s aging oil pipeline network, it does not make clear how or when a shutdown might occur. The task force, led by Schuette and Michigan Department of Environmental Quality Director Dan Wyant, released its findings this week. Among its suggestions: prohibiting Enbridge from moving heavy crude through the straits pipeline, requiring Enbridge to share public safety information about the pipeline’s condition, and calling for an independent analysis of the straits with suggested alternatives — presumably, the first step toward shutting down the pipeline. Statewide, the report called for better mapping of existing pipelines and improved safety response. The report and its recommendations convey a sense of urgency. That Enbridge is the pipeline’s operator instills no one with confidence. That company was responsible for a devastating 2010 spill on the Kalamazoo River, the largest inland oil spill in U.S. history. An oil spill in the straits would be an environmental disaster that would permanently scar our lakes — not just an irreplaceable natural resource, but the source of drinking water for many Michiganders.
Special Report: Ohio invests more money into well plugging, revamps program - Ohio’s recent oil and gas boom is generating new money for the state program that finds and plugs abandoned wells. But at the program’s current pace, the state will need 24 years to plug the 580 known wells on its list. Thousands more abandoned wells are likely out there, waiting to be discovered. Since 2010, drillers have come to Ohio in increasing numbers to explore the Utica Shale, using horizontal wells and hydraulic fracturing. Some 1,500 new wells have been drilled with striking results. In 2013, the state’s natural gas production nearly doubled and oil production jumped 62 percent over the previous year. Old wells are the problem. Ohio has one the longest histories of oil and natural gas drilling in the country. At least 275,000 wells have been drilled in the state since 1860; 56,000 are still producing. As happened in other states, drilling in the early days outpaced record keeping and well plugging. Companies bankrupted during busts left wells with no one to care for them. And well plugging before the 1950s used methods that weren’t up to modern standards. The legacy is an unknown number of wells that are improperly plugged, or were never plugged at all. Those abandoned wells leak oil, natural gas and brine into water and soil, and can cause explosions when natural gas collects in a building. Leaks can increase when a new well is drilled and hydraulically fractured nearby. State regulators say Utica Shale wells haven’t caused any old wells to leak. The new wells are much deeper — more than a mile in some cases — than the older, shallow abandoned wells. But the risk of old wells leaking could increase as horizontal drilling is used in formations that have been heavily drilled, such as the Clinton Sandstone underlying Stark County.
Brown: Citizens need protection from trains with hazardous materials - (WKBN) – U.S. Senator Sherrod Brown was in Youngstown on Monday, building support for his plan to make dangerous oil trains a bit safer. Brown, D-Ohio, started working on this issue after 27 Investigates reported on major oil train routes crossing the Mahoning Valley. These routes transport millions of gallons of explosive crude oil and gas from the Bakken Crude Oil in North Dakota to refineries across the country, including some in Pittsburgh. Two of these routes cross through Mahoning and Columbiana counties. The senator said safer train cars are needed to keep people safe, and rail companies need to let local emergency crews know when the trains are coming through.“The HazMat crews that come out don’t necessarily know what was on that train and what the hazardous materials are,” Brown said. “When they arrive on scene, they have got to spend time figuring out what’s in this car, what happened, instead of arriving with the knowledge and they know what kind of strategy they can put together.” He said there have been problems all over the country as more flammable, volatile material, typically liquid material, is brought through on increasingly older tank cars. Those older tank cars can’t handle the modern chemicals extracted by the fracking process. Youngstown Fire Chief John O’Neill agrees that action is needed. “Mass quantities of the most dangerous materials we will see in transport. It is either toxic or highly flammable or explosive,” O’Neill said.
Akron passes resolution opposing state fracking bill - Akron wants to keep fracking out of its parks and the land around the parks. Akron City Council unanimously passed a resolution Monday opposing House Bill 8, which would allow the forced inclusion of public land, including municipal parks, in a drilling unit without the permission of the public entity for horizontal drilling and fracking. “The way I see it, this is a small opportunity for us to provide some assistance to preserving our parks,” said Councilman Rich Swirsky, who chairs council’s new Green and Sustainability Committee. Akron is the latest of several public entities, including the Summit Metro Parks board, that have passed resolutions against the state legislation, which has been approved by the Ohio House drilling permitand is pending in the Senate. Summit Metro Parks asked Akron City Council to take up the issue. Mike Johnson, Metro Parks’ interim director, told council’s green committee Monday that the legislation would allow a property owner who lives adjacent to a park to count acreage in the park in a request for a drilling permit. If a property owner, for example, needed 40 acres of property to get a permit and only had 30, he or she could include 10 acres of the park property and park officials would have no say in this decision. “We’re very concerned that it takes local control away,” Johnson said. Johnson said the legislation is unclear as to whether a driller would have access to park property, such as to build an access road to a drilling site or to sink a well peg on the property.
Fracking Democracy - As more and more evidence emerges on the potential harm to air, water and land from fracking and as oil and gas companies get more aggressive in growing their operations, communities are saying “enough” and fighting to retain or restore their democracy. The most recent battleground is Ohio where communities are trying various tactics, including charter reform, to ban fracking operations within their borders. It’s pitted local officials against the Ohio Department of Natural Resources (ODNR) and the courts. This week Akron City Council passed a resolution opposing a bill currently in the legislature that would allow the forced inclusion of public lands in a fracking operation without permission of the public entity. Summit Metro Parks already passed such a resolution and asked the Akron City Council to do so as well. “We’re very concerned that it takes local control away,” said Summit Metro Parks interim director Mike Johnson. This is merely the latest in a series of skirmishes around the state whose eastern half, sitting atop the Utica and Marcellus shale formations, has become a mecca for fracking operations. The liberal college community of Athens, in southeastern Ohio, has long been a hotbed of fracking, as well as anti-fracking activism. It successfully passed a fracking ban last November with 78 percent of the vote, while bans failed in three other Ohio communities.
Group appeals election board rejection of charter measure - An attorney for a group proposing a charter government for Athens County, with restrictions on oil and gas drilling, has appealed a Board of Elections decision last week declaring the proposal invalid. The elections board is scheduled to meet at 9:30 this morning “concerning the request for court action from the law office of Terry Lodge on behalf of the Petition for Proposed County Charter.” The appealing group, the Athens County Bill of Rights Committee, is urging members and supporters to gather at the Athens County Courthouse before the Board of Elections meeting with protest signs urging reconsideration of the charger amendment for the local election ballot. Last Monday morning, the elections board said no to the ballot measure not because it didn’t have enough signatures but because the board determined the measure to be invalid. This was based on an opinion expressed by Athens County Prosecutor Keller Blackburn that the proposal did not meet the minimum requirements of being a county charter. At the same time, however, the prosecutor had recommended that the elections board approve the measure for a public vote anyway while awaiting the opinion of state officials.
Athens County Board of Elections Rejects Community Bill of Rights: It hasn’t been a good week for anti-fracking activists and the Community Environmental Legal Defense Fund (CELDF). Just a few days ago, CELDF suffered yet another court ruling against the so-called “Community Bill of Rights” to ban fracking. Today, the CELDF was dealt another blow, as the Athens County Board of Elections voted unanimously to reject the recent ballot initiative for a “bill of rights”, leaving anti-fracking groups devastated and calling the defeat a “travesty”.As a reminder in Ohio, local controls have been rejected as the Ohio Department of Natural Resources has been given sole regulatory authority over the oil and gas industry, per the Ohio Revised Code. Despite the clear language of the petition, which states the exact opposite found in the CELDF authored charter amendment, the Athens News reported a community leader saying,“I do not believe that enactment of this charter will allow the Board of County Commissioners to make sweeping changes on horizontal drilling, injection wells, Numbers Fest, or the use of eminent domain, as some may contemplate. The charter process allows a county to take or share power of a municipal corporation. To date, a charter has never taken authority from the state.” While the anti-frackers may have a serious case of sour grapes, as result of their two recent defeats, the taxpayers of Athens County can breathe of sigh of relief that their county board of elections did their homework before casting their unanimous votes to keep this costly ballot initiative off November’s ballot.
Judge OKs county charter for ballot - Despite the Athens County Board of Elections’ rejection of a local anti-fracking group’s petitions, Athens County Common Pleas Judge George McCarthy ruled Wednesday that the board must put the group’s issue on the November 2015 ballot. If approved at the ballot, the measure will give Athens County a charter form of government that includes a community bill of rights with restrictions on certain oil and gas drilling activities. Serious questions remain, however, on whether those restrictions would be enforceable. Judge McCarthy said during a crowded special hearing Wednesday morning that it was a matter of “constitutional importance” to put the charter on the ballot. Athens County now joins three other Ohio counties – Meigs, Medina and Fulton – which have placed county charters on their November ballots so far this year. Each contains similar “community bill of rights” language to restrict oil and gas industries’ operations in those counties, though the restrictions vary from county to county.
Athens County and Ohio deserve better fracking regulation - Ohio is becoming the dumping ground of the Midwest for fracking wastewater. And guess which of Ohio's 88 counties is going to be getting the most — Athens County. This is made possible by the opening of an injection well at Torch by S&H Partners. It will more than double the amount of wastewater brought into Athens County to something in excess of 6 million gallons a year. In 2013, 16 million gallons of fracking waste was dumped in Ohio. When the figures are added up for this year, the total is likely to be least 20 million. What disturbs me most is that half of this wastewater is coming from out of state. Most of it comes from Pennsylvania and West Virginia. You probably can guess why. Regulation of wastewater disposal is less rigorous in Ohio than in those two states. A study of fracking wastewater disposal in eight states by the Government Accounting Office said: "Ohio has the worst fracking waste disposal process of any state of the eight studied." A major problem in Ohio is that disclosure of the chemicals in the fracking compounds is not required. In the other states studied it is. The companies claim the composition of the compounds is a trade secret. This is not appropriate because the compounds could contaminate drinking water. How much wastewater disposal will affect drinking water is not known. The problem comes when disposal wells leak. If properly constructed they usually don't leak, but it is obvious that regular inspection of wells is needed. Ohio does not seem to have enough inspectors to achieve this.Many legislators have made it clear that they consider the interests of the oil and gas industry and the campaigns contributions from that industry more important than clean water for people 75 miles away from Columbus.
ODNR sets rules for fracking well pads - The Ohio Department of Natural Resources announced on Thursday that it is implementing new rules for the construction of horizontal well-pad sites. Horizontal well pads are used for fracking, when a well is drilled vertically but then goes horizontally underground, allowing for more than one well. Shawn Bennett, executive vice president of the Ohio Oil and Gas Association, said horizontal pads can include eight to 18 wells at the same time. The regulations come out of a long legislative process dating back to June 2012, when the Ohio legislature passed stricter regulations on new drilling technologies, including fracking. Eric Heis, ODNR public-information officer, said the legislation tasked ODNR with developing the rules and going more into detail with them. The regulations, he said, are necessary because the number of wells in Ohio has been growing at a fast clip. One of the regulations will require drilling companies to submit a detailed plan of the horizontal well-pad site before starting construction. But Bennett said regulations already are being followed by most drilling companies as part of the best-practices guidelines. “Some of them are necessary, others will put an unnecessary burden on the industry,” Bennett said. He mentioned that some regulations, such as needing ODNR permission before making any kind of modification to the pad construction, is costly and not time-efficient.
Commission has tight time frame for fracking taxes study - --A new legislative tax commission that must deliver a recommendation on increasing Ohio’s tax on shale fracking technically will have just 24 hours to meet and complete its work. Senate President Keith Faber, R-Celina, wanted to put a new severance tax into the two-year, $71 billion state budget that took effect July 1. But House GOP leaders who had already pulled Gov. John Kasich’s proposed severance tax out of the budget said they would not pass the tax as part of the spending bill. Instead, Faber agreed to hand the issue to a new six-member tax study commission that House leaders had already added to the budget. But not wanting the joint House-Senate panel to sit on its hands and further prolong a tax debate that has already stretched nearly three years, he insisted on a hard deadline of Oct. 1 to create a recommendation. One problem: That portion of the budget signed by Kasich on June 30 doesn’t take effect until Sept. 30. So the commission technically does not exist until one day before the severance tax study deadline. “It’s odd that they put that deadline in,” said Rep. Jeff McClain, R-Upper Sandusky, chairman of the House Ways and Means Committee and co-chairman of the new joint tax study commission.But McClain said he and Sen. Bob Peterson, R-Sabina, his fellow co-chairman of the tax commission, have been holding conversations on the process, even if it doesn’t involve formal hearings.“Bob and I are committed to have discussions and try and do as much as we can and be ready to go whenever we get the go-ahead,” McClain said. “We don’t think we can just sit here and do nothing and use it as an excuse that, ‘You didn’t appoint us until yesterday.'”
Study finds natural gas reserves in Appalachia larger than estimated - A shale formation that runs through portions of West Virginia and neighboring Appalachian states has more recoverable natural gas reserves than initially estimated, a new study released on Tuesday has found. Release of the findings comes one day after industry officials announced that natural gas has surpassed coal as the nation’s top source of electricity, a development made possible by years of investment in gas extraction and the passage of costly federal regulations that require coal-fired power plants to reduce their planet-warming carbon emissions. The two-year study, led by West Virginia University, found evidence that the Utica Shale, which spans from New York to Kentucky and includes portions of Pennsylvania, West Virginia and Ohio, is much larger than predicted, holding recoverable resources that could rival those found in the Marcellus Shale, the largest shale oil and gas reserve in the country and second largest in the world.Study findings, compiled by the Appalachian Oil and Natural Gas Research Consortium, an offshoot of the National Research Center for Coal and Energy in Morgantown, estimate that the Utica Shale holds 782 trillion cubic feet of natural gas and nearly 2 billion barrels of oil, reserves one researcher said will likely push forward the “shale revolution.” “As far as West Virginia is concerned, natural gas can legitimately become a second player in the state,” Currently, coal dominates West Virginia’s energy sector, accounting for more than 90 percent of the state’s electricity production. According to U.S. Energy Information Administration data, West Virginia produces 5,776 gigawatt hours of coal-fired electricity, compared to just 36 for natural gas. Patchen went on to say that oil and gas companies in the region will have to determine whether it is financially feasible to drill into the formation, which lies 4,000 to 12,000 feet below West Virginia’s Marcellus Shale play, something he said could be done in conjunction with current drilling into higher strata of rock.
Study estimates Utica shale holds gigantic amount of recoverable gas - The amount of natural gas trapped in the Utica shale might rival what drillers hope to extract from its more famous neighbor the Marcellus, a group of geologists said Tuesday. “It’s comparable to the highest number I’ve seen for the Marcellus,” said Doug Patchen, head of the Appalachian Oil and Natural Gas Research Consortium at West Virginia University and lead editor of a geologic report on the Utica. The Utica Shale Play Book, the result of a two-year study by federal, state and university researchers, estimates the shale rock formation below the Marcellus holds 782 trillion cubic feet of recoverable gas. Estimates for the Marcellus range from 500 to 800 trillion. Gas companies last year pulled 4 trillion cubic feet from Pennsylvania shale wells. “It’s going to take many years to drill it up. It will take decades,” Patchen said of the implications of the report. “It’s not a flash-in-the-pan thing.” Estimates of recoverable gas in shale layers fluctuate. In 2012, the U.S. Geological Survey estimated the Utica had 38 trillion cubic feet. Exploration of the reserves help improve estimates. The study led by Patchen used core samples of rock from drilling operations and production data from companies. Drillers have been tapping the Utica — which is below the Marcellus — in Ohio since 2012 and have moved east to the northern panhandle of West Virginia and western Greene and Washington counties. A few Utica test wells in northeastern Pennsylvania showed big results, though Patchen said the rock there is riskier.
WVU Study Finds Bounty of Utica Shale NatGas Waiting For Production -- A West Virginia University-led study released Tuesday suggests that the Utica Shale formation contains more than 20 times as much technically recoverable natural gas resources than a previous estimate from the U.S. Geological Survey (USGS) released in 2012. To an extent, the study reaffirms the work of producers in Pennsylvania, Ohio and West Virginia in recent years that have padded their reserves through the drill bit. But the latest estimates, taken from a broader study that defined the Utica's fairways, examined its geological characteristics and compared the formation to equivalent rocks, surpasses the USGS' most recent estimate for all recoverable resources across the Appalachian Basin and shows that the Utica is comparable to the nation's largest gas field in the Marcellus Shale. The Appalachian Oil and Natural Gas Research Consortium -- a program of the National Research Center for Coal and Energy at WVU -- said the Utica contains technically recoverable resources of 782 Tcf of natural gas and nearly 2 billion bbl of oil. That's compared to the USGS' last Utica estimate of 38 Tcf of natural gas and 940 million bbl of oil (see Shale Daily, Oct. 5, 2012). Based on cumulative production data and proven reserves recorded in 2004, the USGS said earlier this year that the ultimate recoverable oil and natural gas in the Appalachian Basin is about 25.5 billion boe, or 4.76 bbl of oil and 124.9 Tcf of natural gas (see Shale Daily, March 27).
Chinese tankers to carry US shale gas to Europe - Two gas tankers built by the Sinopacific Offshore and Engineering were named on Tuesday, and will soon be shipping shale gas to Europe from the United States, officials said. The ships will join an eventual eight-strong fleet of tankers operated by Swiss-headquartered petrochemical manufacturer Ineos Group Ltd, which will carry 800,000 tons of shale gas annually from the US to its European manufacturing plants. Jim Ratcliffe, Ineos’ founder and chairman, said the US$1 billion project will help revolutionize the European chemicals industry by reducing both feedstock and energy costs. “Bringing US shale gas to Europe is a huge undertaking, involving Ineos experts from across the globe. To see these two ships finally completed here in China means that this vast project will soon be fully operational.” Simon Liang, Sinopacific Offshore and Engineering’s chairman and CEO, said more than 2,000 people had been involved in the building of the two “Dragon Class” ships, each of which required about one-million man hours of work. The JS Ineos Insight and JS Ineos Ingenuity will join six other vessels in creating what the company described as a “virtue pipeline”, to transport over 800,000 tons of gas a year at minus 90 degrees centigrade across the Atlantic to plants in Norway and Scotland. Each ship will be the length of two soccer pitches and be able to carry over 27,500 cubic meters of liquefied gas. The first two ships will begin their maiden voyage this month.
Utica bigger than Marcellus - — It’s been known for some time that the Marcellus shale is just the beginning of the natural gas horizontal fracking boom for this part of the country. More than 200 industry members got a look at the next big thing Tuesday: The Utica shale. . WVU’s Doug Patchen, consortium director and co-editor and co-author of the study, explained before the daylong workshop that the majority of the Utica play lies beneath the Marcellus Shale play — ranging from 4,000 feet below the Marcellus in Ohio to more than 6,500 feet in West Virginia. The Utica plunges as deep as 12,000 feet in West Virginia. Attendees learned that while the play is referred to as the Utica Shale Play, the play is neither technically Utica nor purely shale. Evidence points to beds of limestone and organic-rich shale in the underlying Point Pleasant Formation as the preferred drilling target.Because the formation sits closer to the surface in eastern Ohio, drilling activity in the Point Pleasant has been concentrated in roughly a north-south trend in eastern Ohio, where the gas is rich in oil and other liquids — such as ethane — but is moving eastward and may eventually dip south into Kentucky.Through the end of May, attendees learned, about 2,425 permits have been issued to drill horizontal wells into (what everyone is still calling) the Utica — the lion’s share in eastern Ohio, but with about 253 in Pennsylvania and 29 in the Northern Panhandle counties of West Virginia. The Utica footprint is slightly larger and thicker than the Marcellus (which is the largest shale oil and gas play in the nation and the second-largest in the world), Patchen said. As a result of the study, estimates for the potential recoverable Utica yield have been revised dramatically upward.
Reaction to Utica Shale Study Mixed - A study released earlier this week about the potential of the Utica Shale formation was met with praise from the Consumer Energy Alliance. But the West Virginia Sierra Club doesn’t share that enthusiasm. The Utica Shale Play Book Study released on Tuesday says there may be 20 times as much recoverable gas and twice as much recoverable oil in the Utica Shale formation as was previously thought. Brydon Ross was very excited to hear the news. Ross is the vice president of state affairs with theConsumer Energy Alliance, a nonprofit group that bills itself as an advocate for energy consumers with ties to the energy industry. “For companies and industries that are looking to invest in the Utica Shale area and all through Appalachia as well, I mean you’re talking about areas that really need the money and need the investment is right where a lot of this resource potential is, so we see this as nothing but positive,” he said. The Utica Shale runs under parts of five states, including northern West Virginia and Kentucky, eastern Ohio, Pennsylvania and New York. Not everyone agrees that looking for more fossil fuels is the way to go. Jim Kotcon deals with energy issues for the West Virginia chapter of the Sierra Club. He says the emphasis on hydro-carbon extraction is misplaced. “We cannot use all of the reserves we’ve already found without very serious adverse affects from climate change. And so if we’re going to control the increase in temperature from climate change, then finding more gas won’t help us,” Kotcon said.
Utica and Marcellus activity in Ohio --Activity in the Utica and Marcellus Shale formations in Ohio have seen some changes compared to the last the well activity update, and according to a new report, the Utica Shale formation might just be larger than the Marcellus Shale formation. The Appalachian Oil and Natural Gas Research Consortium, a program of the National Research Center for Coal and Energy at West Virginia University (WVU), recently shared a report from its two-year geological study focusing on the Utica Shale formation. The report, titled Utica Shale Play Book Study, involved over 200 industry members and was co-edited and co-authored by WVU’s Consortium Director Dan Patchen. Evidence points to beds of limestone and organic-rich shale in the underlying Point Pleasant Formation as the preferred drilling target.” Attendees also learned that while many refer to the Utica as Ohio’s shale formation, operations are now moving into Kentucky. While the Marcellus Shale formation has been known as the largest shale oil and gas play in the U.S., the Utica’s footprint is actually larger and thicker than the Marcellus. According to Patchen, the shale’s recoverable natural gas and oil yield has been revised and increased dramatically.To read the full article regarding WVU’ Utica report and study, click here.The following information is provided by the Ohio Department of Natural Resources (ODNR) and is through the week of July 11th. The ODNR reported 443 wells were permitted, 421 drilled, 188 drilling, 922 producing, 25 inactive, 24 in final restoration and 3 abandoned wells in Ohio’s Utica formation. This brings the total number of wells in the Utica to 1,974. The Marcellus Shale in Ohio remains unchanged from last week’s well report. The area is still sitting at 15 wells permitted, 11 drilled, 17 wells producing and one well inactive. There are a total of 44 wells in the Ohio Marcellus Shale.
Marcellus permit activity in Pennsylvania --The Marcellus Shale formation in Pennsylvania saw a little bit of action over the last week, along with the U.S.’s largest publicly traded water and wastewater utility company. American Water Works Company announced last week that it has officially acquired Keystone Clearwater Solutions. The Hershey, Pennsylvania-based company is a water service provider that offers a wide range of water services to the energy industry, specifically oil and gas companies. Keystone’s customers are mainly located in the Appalachian region, which is located throughout Pennsylvania, Ohio and West Virginia. According to American Water, the acquisition helps it achieve its goal of developing complementary businesses. Paired with the company’s already existing shale activity, Keystone will allow American Water to enhance its ability to provide additional water services solutions to shale development related companies. To read the full article regarding American Water Works Company’s latest acquisition and future plans, click here. The following information is provided by the Pennsylvania Department of Environmental Protection and covers July 7th through July 12th. New: 22 - Renewed: 2
Marcellus shale field lab zeroes in on gas drilling efficiency - The first integrated, long-term examination of shale gas drilling — from before a rig breaks ground to post-production — is under way in West Virginia to help energy companies find ways to drill more cheaply and lessen environmental impacts. “We call it unprecedented, and it is,” said Ray Boswell, technology manager for the federal Department of Energy's National Energy Technology Laboratory, a partner in the five-year, $11 million Marcellus Shale Energy and Environmental Laboratory at a well pad in Morgantown. Technology has moved so fast, enabling extraction of so much natural gas from deep shale, that “the only way you survive is to become more efficient,” said Tim Carr, a geology professor at West Virginia University, which is leading the research. The project began last fall, and vertical drilling of “top holes” for three gas wells started recently at the field laboratory in Morgantown Industrial Park. Other partners in the project are Ohio State University and Northeast Natural Energy, a Charleston-based oil and gas company that owns and operates the well pad.
Other shales than Marcellus drawing industry attention -- The Marcellus Shale put Pennsylvania on the map as a gas-producing state, but other rock layers have the potential to keep it there far into the future. Drillers have sought unconventional well permits for 12 geological formations other than the Marcellus, according to state records compiled and organized by MarcellusGas.org. The state Department of Environmental Protection has issued permits for about 900 wells, site developer Carl Hagstrom said. Most of those are in the western part of the state; about 520 of those have been drilled. Other than the Marcellus, which has more than 15,000 well permits, the most popular target formations in Pennsylvania are the Utica Shale with 258 permits, the Burket/Geneseo Shale with 246 permits and the Point Pleasant Shale with 159 permits. Although sometimes listed separately, the Point Pleasant is technically considered part of the Utica, according to a presentation by the Pennsylvania Geological Survey. “They are all classic formations that have new life due to horizontals with classic hydraulic fracturing,” Lackawanna College School of Petroleum and Natural Gas dean Richard Marquardt said in an email. “They are all basically silty shales.” These black shales with high organic content were formed over hundreds of millions of years ago when organisms, most likely algae, died then settled to the bottom of the ocean, said Allegheny County petroleum geologist Gregory Wrightstone, who has more than 35 years’ experience with unconventional formations in the Appalachian Basin.
Study shows increased hospitalizations in Pennsylvania shale gas region --A study released today in the journal PLOS One shows a rise in hospitalization rates that researchers say correspond to an increase in the number of shale gas wells in Northeast Pennsylvania. The report used information from the Department of Environmental Protection along with data from the Pennsylvania Healthcare Cost Containment Council between 2007 to 2011 in Bradford, Susquehanna and Wayne counties. Bradford and Susquehanna counties experienced a drilling boom during that time period, as well as an increase in the number of patients admitted to hospital. Wayne county remains free of gas wells due to the de-facto moratorium on drilling in the Delaware River Basin. Wayne county’s hospitalization rates actually decreased in keeping with nationwide trends. Wayne county, which has similar demographics as Bradford and Susquehanna counties, served as the control for the study. Prior to 2007, hospitalization rates were trending down in all three counties. The most notable impact the researchers found was the association of well density and well proximity with cardiovascular admissions. The report’s authors say this could be related to air pollution associated with gas drilling. The study also reports an association between gas drilling activity and patients admitted for neurological illnesses and skin conditions.
Hospitalizations increase near fracking sites, study shows - Medical Xpress - People living in areas of Pennsylvania where hydraulic fracturing is booming are suffering increasing rates of hospitalization, a new study says. The study is one of a small but growing number suggesting that the practice could be affecting human health. It appears this week in the scientific journal PLOS ONE. Scientists examining records from two counties in northeastern Pennsylvania found a 27 percent increase in hospitalization rates for cardiology-related complaints such as stroke in areas where wells were most dense. They also found significantly increased hospitalizations for neurological illnesses and skin ailments. The increases corresponded with a meteoric rise in hydraulic fracturing, or fracking, between 2007 and 2011. A third county where fracking did not take place saw no such rises. Before 2007, overall hospitalization rates in all three counties had been trending downward. The study, which looked at 198,000 hospitalization records, was done by researchers from the University of Pennsylvania, Columbia University's Mailman School for Public Health, and Columbia's Lamont-Doherty Earth Observatory. Lead author Reynold Panettieri, a professor of pulmonary medicine at UPenn, said the study did not prove that fracking itself was causing the illnesses, but the said hat it was suggestive. One factor, he said, could be tremendous increases in diesel exhaust and noise from big trucks; these, he said, could translate into disrupted sleep, stress and rising hypertension. Panettieri said the rise in hospitalizations was striking because it took place in such a short time. An increasing number of studies has linked fracking in Pennsylvania and elsewhere with groundwater contamination, but no one has yet proved health effects resulted. The UPenn researchers say they hope to track this in the future.
Hospitalization rates jump near 'fracking' sites - -- People who live near "fracking" sites may be at increased risk for hospitalization for heart problems, neurological disorders and other conditions, new research suggests. Hydraulic fracturing -- widely referred to as fracking -- has increased dramatically in the United States over the past decade, raising concerns about water and air pollution.Pennsylvania is a hotspot for fracked wells, the researchers said. In this study, hospitalization rates in three northeastern counties in Pennsylvania were tallied.Two of the counties -- Bradford and Susquehanna -- had a significant increase in fracked wells between 2007 and 2011. No fracking was allowed in the third county -- Wayne -- due to its proximity to the Delaware River watershed.The researchers looked at the top 25 specific medical categories for more than 198,000 hospitalizations among residents of the three counties between 2007 and 2011. They found that rates of hospitalizations for heart and neurological problems were much higher among people who lived closer to active fracked wells. Specifically, people living in areas of Bradford and Susquehanna counties with a fracked well density of more than 0.79 wells per square kilometer were 27 percent more likely to be hospitalized for heart problems than people in Wayne County.Hospitalization rates for cancer, urologic problems and skin conditions were also higher among people who lived closer to active fracked wells.
Activists say fracking wastewater too toxic for sewage plants - – Toxic fracking wastewater shouldn’t be treated at facilities that can’t handle its hazards, Congressman Matt Cartwright (D-Pa.), clean water and public health advocates, and more than 30,000 Americans said today, a day before the public comment period closes for a proposed federal rule to prohibit fracking waste shipments to sewage treatment plants. “It’s crazy that highly toxic, radioactive wastewater can still be treated at the same place as dirty bath water, then released into the rivers and lakes we drink from,” said Rachel Richardson, director of Environment America’s Stop Drilling program. “Preventing this practice is a critical step toward protecting our water and our health from the dangers of fracking.” Fracking, or hydraulic fracturing, is the process by which large volumes of water along with sand and toxic chemicals are injected underground to extract shale gas. Much of this fracking fluid mixture returns to the surface as toxic wastewater, often with radioactive elements. Municipal water treatment plants, which treat waste and then release it into drinking water supplies, aren’t suited to treat such hazards. The mixture of bromides in wastewater and the chlorine used at sewage treatments plants also can produce a toxin linked to bladder cancer, miscarriages and still-births. The issue received attention in Pennsylvania in 2011, when fracking chemicals were detected in western rivers, and officials ordered 15 treatment plants to stop accepting and treating fracking waste. While no known municipal treatment plants now accept fracking waste, federal rules still allow it, and the option could become more attractive to drillers as standards tighten on other waste disposal methods.
High Levels of Radium Found in PA Stream Near Drinking Water Supply -- Pittsburgh’s Action News 4 reported yesterday that high levels of radiation—up to 60 times higher than the maximum allowed in drinking water—were found in Ten Mile Creek, which flows into the Monongahela River in Greene County, Pennsylvania. Ken Dufalla of the Izaak Walton League conservation group has been taking samples from 10 Mile Creek for years, frequently finding high levels of total dissolved solids, according to Action News 4. “I wouldn’t touch it. As you can see, I try to keep my hands off it all I can because I don’t know what’s in this water,” Dufalla told the Pittsburgh news station. Dufalla pressured the Pennsylvania’s Department of Environmental Protection (DEP) to do comprehensive testing. The DEC results showed levels of radium 226 and radium 228 totaling 327 picocuries per liter at one location, and 301 picocuries per liter of radium 226 at another location—meaning both samples had 60 times the U.S. Environmental Protection Agency drinking water standard of 5 picocuries per liter. Ten Mile Creek feeds into the Mon River near Fredericktown and less than a mile down river is a water treatment plant, which has regulators and residents very concerned. Action News 4 interviewed John Stolz, a biologist at Duquesne University, who says radium can be hazardous.“The reality is, if it’s getting into the water that is being used as a source of drinking water, then it is a problem,” Stolz said, since standard filtering process does not easily get rid of radium.
One Congressman’s Fight To Keep Fracking Waste Out Of Drinking Water - Wastewater from fracking has been linked to drinking water contamination, and earthquakes. But obviously oil and gas companies can’t dump fracking water into our public water treatment system, right? Wrong. In fact, that ability is the subject of a current Environmental Protection Agency (EPA) proposal. The Effluent Limitations Guidelines and Standards for Oil and Gas Extraction would ban fracking wastewater from being treated at publicly owned water treatment plants. The comment period for the proposal ends Friday. “It’s crazy that highly toxic, radioactive wastewater can be treated like bathwater,” Rachel Richardson, the director of Environment America’s Stop Drilling program, said on a call Thursday. Richardson and her group have collected 30,000 signatures showing support for making the proposal into a rule under the Clean Water Act. Congressman Matt Cartwright (D-PA) joined the call Thursday, offering his support to the EPA proposal and pledging to reintroduce legislation that will close environmental loopholes for oil and gas companies. “The rule proposed by the EPA is not going to comprehensibly protect us,” Cartwright said. “It is finally time to treat the oil and gas industries as we do every other industry.” Under the so-called “Halliburton Rule” — the Resource Conservation and Recovery Act — oil and gas companies are exempt from multiple environmental protection regulations, including the Safe Drinking Water Act, Clean Water Act, and Clean Air Act. Cartwright’s legislation is part of a larger package, known as the “frack pack” that seeks to close loopholes in environmental regulation of oil and gas activities. H.R. 1175 would allow the EPA to require states to permit fracking runoff and other effluents. The EPA is currently prohibited from requiring that type of oversight.
Special Report: Dangers of old wells - Abandoned wells can leak natural gas, oil and brine. Some of those hazards can be a nuisance; others can be very serious, as these examples illustrate: Pennsylvania’s Department of Environmental Protection identified several incidents since the late 1990s where pressure changes caused by the hydraulic fracturing of new wells caused gas and fluids to leak from abandoned wells.
- • McKean County, late 1990s: Natural gas vented from an abandoned well at a rate of more than 100,000 cubic feet per day after hydraulic fracturing operations at a nearby well.
- • East Vandergrift, Westmoreland County, 2008: After hydraulic fracturing at a conventional gas well, a large amount of natural gas seeped into the ground from a buried abandoned well that remained unidentified. The gas came within 8 feet of a home.
- • French Lick Creek, Tioga County, 2012: A hunting cabin’s water well overflowed and gas bubbles were found in a nearby stream in an area where several wells were being drilled and fracked.
- • Greene County, 2014: About 1,000 gallons of oily material — similar to a type of clay used in well plugging and drilling — was pushed out of an abandoned well while a new well was being fracked. The material flowed into a stream that supplied a cattle farm.
In 1985, natural gas leaked into a Ross Department Store in Los Angeles and caused an explosion that injured two dozen people. The gas seeped into the building through a geological fault and an abandoned well. A U.S. Geological Survey report in 1988 found that brine leaking from abandoned wells had polluted an aquifer near West Point, Kentucky. The aquifer supplied drinking water to 50,000 people and Fort Knox. Several water wells were closed.
Pipeline foes dominate Oneonta hearing -- About 125 people attended a Federal Energy Regulatory Commission scoping review at the Foothills Performing Arts Center on Thursday to consider the potential environmental impacts from the proposed Northeast Energy Direct pipeline. A similar meeting took place in Schoharie. The scoping process was still underway at 9 p.m. with about 35 people speaking. Overall, the meeting proceeded in an orderly fashion, but most who spoke were opposed to the natural gas transmission system by Tennessee Gas Co., whose parent company is Kinder Morgan. The proposed project includes a compressor station sited on Franklin farmland. FERC representative Paul Friedman opened the meeting saying public concerns that have been previously identified include impact on land use, groundwater, air quality and noise from the compression station. Additional data is being sought to fill in the data gaps before a draft environmental impact study is issued. Among those who spoke against the project was Franklin Supervisor Jeffrey Taggart who said his concerns include emissions from the compressor station. It might be better to have no such structure and adjust the size of the pipeline, he said. Sidney resident Colleen McKinney said in her objections to the recently FERC-approved Constitution pipeline, “I’ve learned that FERC does not care about us. It is in the business of approving pipelines,” with their budget paid for by the oil and gas industry. She speculated they have no incentive to deny the permit, while residents assume health and safety risks.
Shale Gas Supply Held Hostage by Oil to Drop by Most in a Year - After four years of record supply, America’s natural gas output is showing signs of weakness as producers retreat amid tumbling oil prices. Gas production from the seven largest U.S. shale basins will fall 0.6 percent to 45.1 billion cubic feet a day in August from a month earlier, the biggest drop since March 2014, the U.S. Energy Information Administration said Monday in its monthly Drilling Productivity report. EIA estimates have shown supply declines since June. The government’s forecasts signal the collapse in crude oil prices, which have plunged by about half over the past year, is reverberating in the natural gas market. As drillers shut wells in liquids-rich deposits from North Dakota to Texas, they’re also curtailing gas output from those reservoirs. That may prevent further price declines for gas, which has slid almost a third over the same period. “Gas is being held captive by oil,” Aaron Calder, senior market analyst at Gelber & Associates in Houston, said by phone Monday. Natural gas for August delivery fell 2.4 cents, or 0.8 percent, to settle at $2.84 per million British thermal units on the New York Mercantile Exchange after reaching $2.934, the highest intraday price since June 17. U.S. benchmark West Texas Intermediate crude rose 1.6 percent to $53.04 a barrel. The forecast drop in August gas output was led by the Eagle Ford shale, the biggest oil reservoir in the U.S., EIA data show. Gas supply there will slide 1.7 percent, while output from the Utica deposit in the U.S. Northeast, where propane and ethane help to subsidize gas drilling, is poised to climb 0.8 percent.
Flare from pumping station raises residents' temperatures - The sight of a flame burning at a natural gas pumping station in West Cornwall Township raised concerns among area residents on Monday. Burn-off of propane is a normal part of a maintenance process underway on the Mariner East 1 Pipeline, owned by Sunoco Logistics, and should not raise safety concerns, said a company spokesman said Tuesday. The Mariner East 1 pipeline is a 300-mile pipeline that crosses the southern portion of Lebanon County, including South Annville, South Londonderry, West Cornwall, South Lebanon and Heidelberg townships. It is undergoing major modifications to convert it from an east-to-west fuel and heating oil pipeline to a west-to-east liquid natural gas pipeline. The company notified West Cornwall Township last week that as part of that project, it would be doing repairs along the length of the pipeline that would include emptying it of propane and flushing it with nitrogen gas. The company advised the township that a release of high-pressurized nitrogen could create a loud noise, which some have compared to an airplane lifting off. A story about the maintenance project also was published by the Daily News last Tuesday, which reported no flame would be used. On Monday, however, Cornwall police received reports from residents seeing flares rising high in the sky from remote vantage points around the pumping station along Route 322, just east of Butler Road.
The FrackHouse Effect: How Fracking is Slow Cooking the Planet -- Fracking is the world’s fastest growing climate changer. Fracking for natural gas is notoriously leaky process – from producing wells that vent methane to transport via pipelines that must be vented to distribution in leaky gas pipes. Each molecule of methane allows the sun’s radiation to enter and heat the biosphere transparently, but blocks the re-radiation of that heat, in the infrared spectrum, out of the biosphere, thus trapping the heat in like a blanket: the Greenhouse Effect: We know that old gas pipes leak, before they explode, we know that LNG tankers have to vent methane or they blow up, and we know that fracked gas wells vent methane – a lot more than the EPA ever imagined or the frackers are willing to admit.If you want to keep the planet from being cooked with clean abundant natural gas, you have to ban fracking. Studies of 30,000 Barnett Shale wells shows the EPA has vastly underestimated methane emissions. 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.
Aircraft to start hunt for Atlantic oil off East Coast – An aerial hunt for oil and natural gas reserves in the Atlantic Ocean is poised to launch, a first step in the plan to lease waters off Georgia, North Carolina, South Carolina and Virginia to drilling. But controversial seismic cannons, considered the best method to find where the oil and gas is, won’t be unleashed off the coast until at least next year. Jim White, president of the geophysical company ARKeX, said Tuesday he’s received his permit to start the aerial search. The development will represent the first oil and gas survey in decades for the Atlantic Ocean off the East Coast, which has been kept off limits to drilling since the 1980s. White’s company uses the aircraft to measure variations in the Earth’s gravitational field. Known as full tensor gravity gradiometry, it evaluates density of the subsurface and identifies areas that could hold oil and natural gas reserves. Little is known about how much oil and gas is off the East Coast. White told the House energy subcommittee that his findings can help companies decide where to target seismic exploration for oil and gas in the Atlantic. Those seismic surveys are on hold while the U.S. Fish and Wildlife Service weighs the risks to endangered whales and other marine life.
Oil spill cleanup continues in southwestern Illinois - The cleanup continues in southwestern Illinois after a weekend oil spill dumped more than 4,000 gallons of crude into a creek. Houston-based Plains All-American Pipeline says it has deployed 2,700 booms in response to a Friday pipeline break at a pump station about 40 miles east of St. Louis near Highland. The company said it contained “a portion” of the 4,200-gallon spill on site before it reached Little Silver Creek, which feeds into Silver Lake. The lake is a municipal drinking water source for Highland and the nearby town of Grantfork. A May breach at a Plains All-American pipeline near Santa Barbara led to California’s largest coastal oil spill in 25 years. An estimated 21,000 gallons reached the Pacific Ocean, with tar balls washing up on beaches 100 miles away.
Here We Go Again: Fracking Industry Mangles More Facts -- A new set of peer-reviewed scientific papers pointing to 50 percent higher than estimated regional methane emissions from oil and gas operations in Texas were published this week. And like clockwork, the oil and gas industry’s public relations machine, Energy In Depth (EID), proclaimed that rising emissions are actually falling, and that the industry’s meager voluntary efforts are responsible. This is, of course, wrong on both counts. In fact, it’s a willful misrepresentation of the findings. First, the assertion that emissions are going down is flat wrong. The U.S. Environmental Protection Agency’s (EPA) latest inventory released in April reports that in 2013 the oil and gas industry released more than 7.3 million metric tons of methane into the atmosphere from their operations—a three percent increase over 2012—making it the largest industrial source of methane pollution. So much for those voluntary efforts. But EID also fumbles the two main findings of the studies: First, that traditional emissions inventories underrepresent the magnitude of the methane problem by 50 percent or more; and second, that this undercount is primarily due to relatively small but widely distributed number of sources across the region’s oil and gas supply chain, coming from leaks and equipment malfunctions not currently accounted for in the emission inventories everyone has been pointing to. In short, the Barnett papers tell us there’s a pervasive but manageable pollution problem occurring across the entire supply chain that requires a comprehensive, systematic monitoring effort and effective repair regime to address it.
Use of fracking technology planned for groundwater cleanup - — A company plans to use fracking technology on a small scale to help clean up groundwater pollution at its soybean extraction plant in Lincoln following the state’s preliminary approval for the work. Archer Daniels Midland Co. plans to inject emulsified iron and vegetable solutions under high pressure into the ground to help remove lingering contaminants, including carbon tetrachloride, that have been there for decades, the Lincoln Journal Star ( http://bit.ly/1e25Lb9 ) reported. The hazardous chemicals were once commonly used as a grain fumigant to kill insects during the 1950s and 1960s. Company officials believe the contamination was there before it bought the grain elevator complex in 1966. Supervisor Tom Buell, of the state agency’s voluntary cleanup program and Superfund unit, said there’s no public health risk associated with the groundwater contamination. “The pathways are controlled,” he said. “Currently, nobody’s drinking the water, and we’re very confident nobody is exposed to contaminated soil or vapors.”
Did the Oil and Gas Boom Spur Men to Drop Out of High School? - The oil and gas boom helped lift the American economy with a surge of cheaper fuel, massive business investment and the creation of tens of thousands of jobs. It also spurred more American men to drop out of high school, according to a newly released research paper by Elizabeth Cascio, an economics professor at Dartmouth College, and Ayushi Narayan, a recent graduate of the school. “Over the past decade, the advent of horizontal drilling and hydraulic fracturing has (quite literally) fueled a structural transformation of local economies across diverse swaths of the United States–from Pennsylvania to North Dakota–increasing local incomes and helping to set the U.S. on a path toward energy independence,” the authors said. “We have also demonstrated that it has had the additional consequence of generating higher high school dropout rates among teenagers, particularly the young males whose employment prospects it has more greatly affected.” Simply, the oil and gas boom, and the technology behind it, created a lot of jobs for men. But those jobs don’t typically require a college education or even a high school diploma. Or, in the clever words of the paper’s title, “Who Needs a Fracking Education?” Drawing on government data and distinguishing areas with and without shale oil and gas deposits, the authors find that the high-school dropout rate among males and females would have narrowed by 11% from 2000 to 2013 in the absence of fracking. Instead, it remained constant. “The lion’s share of the dropout effect is thus driven by the schooling decisions of local teens,”
N.D. oil output up slightly even as fewer rigs are active in the Bakken - North Dakota’s oil output recovered slightly in May, rising again to 1.2 million barrels per day, a level that the state’s top oil regulator believes is sustainable even as oil prices have dipped again. “The industry is going to find it pretty easy to stick at the 1.2 million barrels per day mark,” Lynn Helms, North Dakota’s top oil regulator said Friday as he released May production figures. ” … People are hoping that prices increase and we go can go back into a growth mode, but we are capable of sustaining production for a couple of years.” The number of rigs drilling for North Dakota oil fell to 73 this month, the lowest number since November 2006, and down 67 percent from the peak in 2012. More than 14,000 drilling jobs have been lost, he added. Even so, oil production in May climbed nearly 3 percent over April, though it was still 26,000 barrels per day short of the record set in December. Natural gas output set a record in May as more wells connected to pipelines. On a conference call with reporters, Helms said several factors are sustaining production even as oil companies slashed drilling budgets. Some drillers, including Slawson Cos. of Wichita, and Houston-based Occidental Petroleum, have at times idled all their rigs, he added.
ND cracks down on illegal water sales in the Bakken - The North Dakota State Water Commission is cracking down on illegal industrial water sales in the Bakken oil fields where massive volumes of water are required for drilling operations, reports the Forum News Service. Last year, penalties for illegal water sales amounted to $1.6 million, fees imposed by agreements made between the Commission and the parties cited for violations. One such group includes the Lignite Volunteer Fire Department, which seized the opportunity to turn on its spigots and began selling its water to drilling crews. Over the course of a few years, the department collected over $650,000 from the sales. The State Water Commission, however, blew the whistle, and upon investigating the activity determined that the fire department lacked a permit to sell the water and issued a fine equal to the profits of the water sold. The increased enforcement of water sale violations began in 2012 when the Commission began imposing penalties in an effort to deter potential violators and to scale back the collected illegal profits. The Commission’s Director of Water Appropriations Jon Patch told the FNS, “We did kind of a swarm of them early on in 2012 and 2013. They’ve kind of tapered off, and it’s business as usual.” This year fines for water violations have dropped significantly compared to last year, with penalties to date totaling only about $25,000. Patch added, “I think the word has gotten out about the need for a permit. We take violations seriously. If we find out about it, it’s a pretty serious matter.”
Firm objects to delay in drilling on land sacred to Indians — A Louisiana company seeking to drill for natural gas on Montana land held sacred by some American Indians objected to a 75-day review period sought by a federal panel considering the proposal. After decades of bureaucratic delays, Solenex LLC of Baton Rouge hoped to begin drilling this summer on its more than 9-square-mile federal energy lease in the Badger-Two Medicine area next to Glacier National Park. That timetable appears increasingly unlikely. The Advisory Council on Historic Preservation has said it needs until Sept. 21 to issue its recommendations on whether drilling would degrade the area’s significance to the Blackfoot tribes of Canada and Montana. Also pending is a decision in a 2013 lawsuit from Solenex that seeks to lift the suspension.
Hillary Clinton Says She Would Phase Out Fossil Fuel Drilling On Public Lands — Just Not Yet -- At a town hall event in New Hampshire, Elaine Colligan, a 350.org Action Fellow, asked Clinton “will you commit to banning fossil fuel extraction on public lands in this country … yes or no will you ban this?” Clinton struck a moderate tone — not committing to an immediate halt to fossil fuel extraction on public lands, but voicing support for phasing it out over time. “The answer is not until we got the alternatives in place, and that may not be a satisfactory answer to you but I think I would have to take the responsible answer,” she said. “I am 100 percent in favor of accelerating the development of solar, wind, advanced biofuels, energy efficiency, everything we can do. And I would hope that we could get to the point that you made which is looking at the public lands and cutting back over time, phasing out the extraction of fossil fuels.” Most people support accelerating the development of renewable fuels. The key to the climate crisis is the deployment of those low-carbon fuels that already exist, are already cheap, and can already help shift the world away from climate disaster. The reason she could not commit to a ban, Clinton said, is that fossil fuels are still required to provide electricity and fuel transportation. “We still have to run the economy, we still have to turn on the lights, we still have to make sure that businesses operate,” she continued. “So I want to do as much as I can as quickly as I can to make this energy transition. But I could not responsibly say to you that I could automatically stop the source of fossil fuels right away without having a substitute in order to keep the economy going, to keep people employed, to keep the lights on.” The largest source of greenhouse gas emissions in the United States comes from coal produced from public lands.
Buffett may benefit as train lobby bids to weaken safety rule – Billionaire investor Warren Buffett is set to be a chief beneficiary of a bid by Senate Republicans to weaken new regulations to improve train safety in the $2.8 billion crude-by-rail industry, a key cog in the development of the vast North American shale oil fields. A series of oil train accidents, including the July 2013 explosion of a train carrying crude in Lac-Megantic, Quebec, that killed 47 people, led U.S. and Canadian regulators to announce sweeping safety rules in May. Among other things, U.S. oil trains are required to install new electronically controlled pneumatic (ECP) brakes. But in late June, the Republican-controlled Senate Commerce Committee approved a measure to drop that requirement, and order years of new research to confirm the safety benefits of ECP brakes. On Wednesday, the panel will decide whether to send the measure to the full Senate, setting the stage for a fight with Democrats who say the repeal would delay the use of feature that can help avoid catastrophic derailments and minimize the consequences of accidents that do occur. The looming debate pits Democrats, federal regulators, safety advocates and environmentalists against the crude-by-rail industry, which claims that installing the brakes would slap an unnecessary $3 billion cost on railroads, oil refiners and other owners of rolling stock, and potentially jeopardize safety.
Crude oil train derails in rural northeastern Montana — An oil train derailed Thursday in rural northeastern Montana, prompting the evacuation of some homes and leaving at least two of the cars leaking crude, authorities said. There were no immediate reports of injury or fire, but of the 21 cars that derailed only two remained upright, Roosevelt County Sheriff Jason Frederick said. Burlington Northern Santa Fe spokesman Michael Trevino said the train was pulling 106 loaded crude oil cars when it derailed near Culbertson near the North Dakota border just after 6 p.m. MDT. Police, fire and other emergency responders were at the site of the derailment, which forced the closure of federal Highway 2, the region’s main artery. Frederick told The Associated Press that crews are not going too close to the leaking cars until a BNSF hazardous materials team, enroute from Texas, reaches the scene. But he said that there was no immediate threat to public safety.
3 rail cars leaking crude after oil train derails in Montana — More than 20 cars on an oil train derailed in rural northeastern Montana, and at least three of them were leaking crude, leading some homes to be evacuated, authorities said. There were no immediate reports of injury or fire, but of the 21 cars that derailed Thursday evening, only two remained upright, Roosevelt County Sheriff Jason Frederick said. Authorities had earlier reported just two cars were leaking, but Burlington Northern Santa Fe spokesman Matt Jones updated the number to three in a statement Friday morning. The oil had been contained, and railroad employees were on the scene, Jones said. The train was pulling 106 loaded crude oil cars when it derailed close to Culbertson near the North Dakota border just after 6 p.m. MDT Thursday. The cars typically haul about 30,000 gallons of oil apiece. Police, fire and other emergency responders were at the site of the derailment, which forced the closure of U.S. Highway 2, the region’s main artery. The sheriff didn’t know how many homes were evacuated but described area as a rural setting with ranch homes spread apart. The derailment came about six hours after rail traffic started moving again following another BNSF derailment further west near Fort Kipp on Tuesday, the Billings Gazette reported. Rail officials declined to specify if the train was hauling crude from North Dakota’s Bakken oil patch, where growing numbers of shipments have raised safety concerns. Trains hauling crude from the Bakken region have been involved in multiple derailments in recent years, some causing fires.
35,000 Gallons of Oil Spills After Montana Train Derailment -- Three tank cars continued to leak crude oil on Friday in rural, northeastern Montana in the wake of a 21-car derailment that downed a power line, closed a major highway and forced the evacuation of a town. Emergency workers responding to the Thursday evening derailment said cleanup of the leaking crude could not begin until the arrival of a Texas-based Burlington Northern Santa Fe hazardous materials team. The wreck is the latest in a string of derailments this year exposing the still-unchecked dangers that crude-oil trains pose to people and the environment, and how unprepared communities are to deal with the threat.A train carrying oil derailed in northeast Montana Thursday. http://t.co/CpsIhqvox9 pic.twitter.com/wtRm9rA7AV“This derailment is only the latest reminder that the dangers of transporting crude by rail are magnified by the lack of equipment and training available to local emergency workers,” said Jared Margolis, an attorney at the Center for Biological Diversity who focuses on the impacts of energy development on endangered species. “Communities should not be forced to wait for industry hazmat teams to travel across the country while leaking oil contaminates our water and soil.” The accident involving the 106-car train came just hours after another derailment had shut down rail traffic through the area. The accident comes on the heels of six other major oil train derailments just this year, including several explosive spills.
Panel probes California oil spill that blackened beaches - The nation’s top pipeline regulator is lagging in meeting congressional requirements imposed several years ago but it is planning to increase staff for safety inspections, its interim director says. The federal Pipeline and Hazardous Materials Safety Administration has been facing new questions about its effectiveness after a May 19 break near Santa Barbara created the largest coastal oil spill in California in 25 years. Interim Executive Director Stacy Cummings said in testimony submitted to the House Energy and Power Subcommittee that a 2011 law included 42 requirements for the agency, and 26 of the reforms have been completed. “While we are pleased to report that we have completed more than half of the mandates, we understand that there is still much more work to be done,” she told the committee, according to remarks posted on the committee’s website. “Some of them are a heavy lift,” she added. Following the California spill, the committee asked why the agency is behind on changes ordered by Congress several years ago, and it planned to examine at a hearing in Washington on Tuesday whether the failure to meet those requirements compromised safety, especially in light of the California break.
Oily Patches Found Off Australia’s Coast Prompt Concern For Great Barrier Reef -- Oil was spotted off the coast of Queensland, Australia on Friday, sparking fears that a spill might threaten the Great Barrier Reef. A fisherman reported a sheen of about 1 kilometer (about .6 miles) Friday afternoon (Australia time), the Guardian reported. Officials took to helicopters and water vessels to search for the spill, and while they couldn’t locate the slick, they did spot oily patches of water south of Townsville, Queensland. In addition, officials found “oily residue” on the boat of the fisherman who reported the spill. “We can confirm some patches of oily water have been sighted in the water south of Townsville,” an official told the Brisbane Times. The oil spots were about 3 feet in diameter, but officials didn’t say the size of the area covered by the patches. Officials are planning to take aircraft out again Saturday morning to search for evidence of a spill in the ocean, islands, and coastline. It’s not yet known where the oily patches have come from or whether they’ll impact the Great Barrier Reef. But the reef — which is the world’s largest coral reef system and its “biggest single structure made by living organisms” — is facing multiple environmental threats, major oil spill or none. Last year, scientists warned the Australian Senate that the reef was in the worst state it’s been in since record keeping began, due in part to coastal development and dredging. The dredging has been occurring as Australia expands its ship ports along its coast, development which entails dredging — or digging up — the sea bed. The waste produced by the dredging has been smothering coral reefs.
Canadian Pipeline Spills 1.3 Million Gallons Of Bitumen, Produced Water, And Sand -- An pipeline spill in Alberta, Canada has leaked some 1,320,000 gallons, or 31,000 barrels, of emulsion — a mixture of bitumen, produced water, and sand — south of Fort McMurray, a hub for Canada’s tar sands mining and refining industry. The leak, which was discovered Wednesday afternoon, is the largest pipeline spill in the province in 35 years, when a 54,000 barrel oil spill became Canada’s worst-ever pipeline incident. Nexen Energy, the pipeline operator, and the Alberta Energy Regulator, have not yet identified the cause of the leak, which has been contained. At this point there are no reports of injuries to wildlife or contamination of nearby bodies of water. The spill covered some 170,000 square feet, of four acres, mostly along the path of the pipeline. Bitumen is a combination of viscous tar sands crude oil and liquid chemicals like benzene that dilute the crude so it can be piped to refineries. Produced water is water used during the process of oil or gas extraction that can contain hydraulic fracturing chemical additives and naturally occurring substances and is not suitable for irrigation or drinking. It must be stored in tanks or pits before being treated and disposed. In a statement about the spill, Greenpeace communications officer Peter Louwe said the leak is “a good reminder that Alberta has a long way to go to address its pipeline problems, and that communities have good reasons to fear having more built.”
Nexen Pipeline Spills 5 Million Litres Of Emulsion Near Fort McMurray: - A pipeline at Nexen's Long Lake oilsands project in northeastern Alberta has failed, spilling an estimated five million litres of bitumen, produced water and sand. The company, which was taken over by China's CNOOC Ltd. in 2013, said the affected area is about 16,000 square metres, mostly along the pipeline's route. The company and the Alberta Energy Regulator say it's too soon to say what might have caused the leak AER spokesman Peter Murchland said it's been contained. "They've effectively stopped the source of the release, so that's good news," he said. Nexen said the spill was discovered Wednesday afternoon. The company is investigating how long the pipeline was leaking before it was shut off, spokesman Kyle Glennie said in an email. A portion of the Long Lake operations has been shut down, but Nexen did not disclose production figures. So far, there has been no reported harm to the public or wildlife. The regulator is requiring Nexen to implement a wildlife protection plan in the area. The emulsion has not flowed into a body of water, but it did spill into muskeg, the AER said.
Nexen pipeline leak in Alberta spills 5 million litres - One of the largest leaks in Alberta history has spilled about five million litres of emulsion from a Nexen Energy pipeline at the company's Long Lake oilsands facility south of Fort McMurray. The leak was discovered Wednesday afternoon. Nexen said in a statement its emergency response plan has been activated and personnel were onsite. The leak has been stabilized, the company said. The spill covered an area of about 16,000 square metres, mostly within the pipeline corridor, the company said. Emulsion is a mixture of bitumen, water and sand. The pipeline that leaked is called a "feeder" and runs from a wellhead to the processing plant. "All necessary steps and precautions have been taken, and Nexen will continue to utilize all its resources to protect the health and safety of our employees, contractors, the public and the environment, and to contain and clean up the spill," the company said in the statement issued Thursday. Peter Murchland, public affairs manager for the Alberta Energy Regulator, said officials were notified late Wednesday and had staff onsite Thursday to work with Nexen. "My understanding is that the pipeline and pad site had been isolated and shut-in earlier today, effectively stopping the source of the release," Murchland said Nexen has contained the leak and started cleaning up the area, he said. There was no word on how long that might take.
View from above: The Nexen pipeline spill in Alberta | CTV News: A broken pipeline in Alberta has leaked the equivalent of two Olympic-sized swimming pools of bitumen, water and sand into the Alberta wilderness. The 5-million-litre spill occurred in a remote area near Nexen’s Long Lake operations. It happened about 15 kilometres from the community of Anzac, and has affected about 16,000 square metres along the pipeline route. This is Alberta’s fourth large spill in recent years. A 2.7-million-litre spill occurred northeast of Peace River in March, three million litres escaped near Rainbow Lake in 2012 and 4.5 million litres leaked in 2011 near Little Buffalo. A road had to be built and special mats were laid over the ground Friday so that a clean-up crew could reach the site and start vacuuming up the mess. Ron Bailey, senior vice-president of Canadian operations for Nexen, apologized. He said the problem was discovered Wednesday afternoon by a contractor after the pipeline’s fail-safe systems failed to alert technicians. He said the hole in the double-walled pipeline, built in 2014, may be very small. The pipeline connects a well to an upgrader and has a capacity of 20,000 barrels a day.
‘We sincerely apologize': Nexen’s ‘failsafe’ system didn’t detect massive northern Alberta pipeline spill -n Oil and gas company Nexen’s automatic detection system didn’t detect a ruptured pipeline that resulted in a massive bitumen emulsion spill this week, senior vice-president Ron Bailey told reporters in Calgary Friday morning. “There’s failsafe systems that were designed to actually detect” pipeline failures such as the rupture through the double-walled pipeline that resulted in the spill, Bailey said. “This is a modern pipeline. We have pipeline integrity equipment, in fact some very good equipment,” he said. “Our investigation is looking at exactly why that wasn’t alerting us earlier.” Nexen still doesn’t know what caused the pipeline rupture — or even when the rupture occurred, Bailey said. The investigation will also try to determine “why we’ve ended up with a breach of both layers of the pipe.” The leak, which the company discovered on Wednesday afternoon, spilled an estimated 5,000 cubic metres of emulsion – about 5 million litres of bitumen, sand and wastewater – over a 16,000-square-metre area about 36 kilometres southeast of Fort McMurray. Alberta’s Energy Regulator is investigating the spill and issued environmental protection orders late Friday afternoon. The order asks Nexen to “contain the spill, identify affected parties and notify them, and conduct testing in the area for hydrocarbons and chlorides; develop a water body management plan, wildlife mitigation plan and detailed delineation and remediation plan; develop daily public reports and publish them to the Nexen website; and submit a final report to the AER within 30 days of the completion of all work required in compliance with the Order.”
Canada’s Nexen says crews working around the clock at spill site – Canada’s Nexen Energy said on Friday its crews in northern Alberta were working “around the clock” to clean up an oil sands pipeline leak that is one of North America’s largest-ever oil-related spills on land. The subsidiary of China’s CNOOC Ltd said it detected the spill at its Long Lake facility on Wednesday afternoon. The pipeline leaked 31,500 barrels of emulsion, a mixture of bitumen, water and sand. The spill covered 16,000 square meters and the Alberta Energy Regulator (AER) said the leak did not contaminate any water bodies. Even so, the incident is another blow for the environmental record of the oil sands industry, already under fire from environmental groups for its carbon-intensive production process. The regulator has sent investigators to Long Lake to try and determine the cause of the pipeline failure. Environment Canada’s Enforcement Branch said it had opened a file on the incident, and was in the early stages of gathering information. Nexen shut down the pipeline at its 72,000 barrel per day Long Lake facility, about 36 kilometers (22 miles) south east of the oil sands hub of Fort McMurray, and isolated it as part of the clean up operation. The company will hold a news conference in Calgary at 1100 a.m. MT (1700 GMT) to discuss the leak. Alberta Premier Rachel Notley, who on Friday finalized a Canadian energy strategy with other provincial leaders after a series of meetings this week, is also due to hold a press conference later on Friday.
Alberta faces growing backlog of abandoned oil and gas wells - As Alberta's energy companies struggle through a prolonged bout of low prices, more and more are walking away from their oil and gas wells, leaving a little-known industry group to clean up the mess. Alberta's Orphan Well Association is now responsible for 704 wells, up from 164 last year, according to Pat Payne, the association's manager. "Industry is not doing as well, and it's due to the low commodity prices, low price of oil, low price of gas and declining production," Payne said. "Declining reservoirs [are] catching some of the companies and they're not able to survive." When a company walks away from a well, it is capped off, but thousands of metres of tubing remain underground and can still transport remaining oil or gas to the surface. "There is often some level of contamination with these older sites, and the costs really escalate quickly," said Jason Unger of Edmonton's Environmental Law Centre. He wrote a 2013 report arguing for a faster pace in reclaiming abandoned wells. "The longer sites sit abandoned and unreclaimed, there is ongoing risk." he said in an interview. Unger's report notes that, over time, abandoned wells become more prone to failures that can lead to ground and surface water contamination, and threats to plants and animals in the area. The report also points to the economic costs of leaving a site abandoned for years.
Oil output from U.S. shale plays seen down for fourth month - EIA - Oil production from U.S. shale in August is expected to fall by the most since at least 2007, according to the U.S. agency tasked with tracking oil output, the latest sign a price rout will shrink the nation’s crude output. Oil production from the largest U.S. shale plays will plunge in August for a fourth consecutive month, forecasts from the U.S. Energy Information Administration showed on Monday. Output was expected to decline by 91,000 barrels per day, 12 percent over July’s forecast production decline, to 5.4 million bpd, the lowest level since November for the seven shale plays tracked in EIA’s productivity report. Energy firms fired thousands of workers and cut back on new drilling after U.S. crude futures collapsed 60 percent from over $107 a barrel in June 2014 to near $42 in March on oversupply concerns and lackluster world demand. Despite the cuts, however, U.S. production averaged 9.6 million bpd during the week ended July 3 for a seventh week in a row, its highest level since the early 1970s, according to the most recent government data. Several energy firms decided to return to the well pad during May and June when prices averaged $60 a barrel after rebounding off the March lows. The firms have not publicly changed those new drilling plans even though crude prices fell last week and were now trading around $52 a barrel.
EIA Confirms: Oil Production Peaked -- U.S. oil production has peaked…at least for now. That is the conclusion from a new government report that concludes that U.S. oil production is on the decline. After questions surrounding the resilience of U.S. shale and when low oil prices would finally cut into production, the EIA says the month of April was the turning point. In its Short-Term Energy Outlook released on July 7, the EIA acknowledged that U.S. oil production peaked in April, hitting 9.7 million barrels per day (mb/d), the highest levelsince 1971. In May, production fell by 50,000 barrels per day, and EIA says that it will continue to decline through the early part of next year. Still, the declines won’t be huge, according to the agency’s forecast – production will average 9.5 mb/d in 2015 and 9.3 mb/d in 2016. The EIA figures move a little closer to what some critics have been saying for some time. Data from states like North Dakota and Texas had pointed to slowing production for months while EIA posted weekly gains in production figures for the nation as a whole. Along with several consecutive weeks of inventory drawdowns, EIA figures started to look a little suspect. The latest report is sort of an acknowledgement that those figures were a little optimistic. Nevertheless, as the EIA affirms peak production in the second quarter of 2015, the fall in output over the next few quarters should bring supply and demand back into balance, or at least close to it. Supply exceeded demand by more than 2.5 mb/d in the second quarter of this year, but that gap will narrow to 1.6 mb/d in the third quarter and just 500,000 barrels per day in 2016.
U.S. refiners' golden era fading as LatAm export boom stalls (Reuters) – Big U.S. oil refiners along the Gulf of Mexico, which have led an almost charmed life for the past five years, may have to brace themselves for leaner times in the months ahead. A boom in domestic shale production yielded a gusher of high-quality oil available at discounted prices thanks to an longstanding ban on U.S. crude exports. Refiners made billions by turning half of that extra supply into products such as gasoline and diesel that could be freely exported to countries including Brazil and Colombia. More recently, while drillers reel from the collapse in crude prices, refiners such as Valero Energy Corp and Phillips 66 are still riding high on healthy margins, savoring an OPEC-induced surplus of crude while low pump prices revive domestic demand. But that business may start losing some of its luster in the coming months, according to a Reuters analysis of refining capacity and export data. Key customers in Latin America, where about half of U.S. fuel exports go, are poised to import less as they finish refinery projects while an expected contraction in regional economic activity saps demand. Some 300,000 barrels per day of new capacity will come online in Latin America later this year, according to Reuters calculations. That is equivalent to the combined imports by Brazil and Ecuador, two of the biggest buyers of U.S. fuel, in the first four months of the year.
How the plunging price of oil has set off a new global contest - He’d spent years touting his vision that America would one day dominate one of the world’s most powerful markets. And when Harold Hamm, a pioneer in discovering vast reserves of shale oil under American soil, took the stage in front of several hundred oil luminaries, he never acknowledged that the narrative was in doubt. “For the next 50 years, we can expect to reap the benefits of the shale revolution,” Hamm said one day this spring. “It’s the biggest thing that ever happened to America.” But away from the stage, the U.S. oil industry — and Hamm — was in crisis. In the previous six months, Hamm, founder of oil giant Continental Resources, had lost $6.5 billion, more than one-third of his net worth. The industry that Hamm had helped create was facing its greatest test in a frantic race to stay profitable as rival Saudi Arabia worked to drive down oil prices and, according to some analysts, undermine America’s oil industry at the most important moment in its history. Behind the low price of a gallon of gas at the pump this summer lies a competition worth trillions of dollars and which is capable of swinging the geopolitical balance of power. On one side are Hamm, a famous wildcatter, and other American oilmen who rode the discovery of hydraulic fracturing to tens of billions of dollars of wealth and a promise of, in Hamm’s words, ending the “disastrous” days of Saudi Arabian control. On the other are the Saudis and their allies in the Organization of the Petroleum Exporting Countries, which are trying to stem rising U.S. oil power and maintain their 40 years of dominance.
Shale Industry May Need A Complete Rethink To Survive -- Shale reservoirs have become an important part of North American oil and gas supply and their development has begun a new era of oil and gas production worldwide. Advances in well drilling and completion technologies supported the rapid development of shale resources which contributed to the almost overwhelming success of U.S. shale in recent years. Globally, Argentina’s Neuquén Basin and China’s Sichuan Basin are the two front-runners to emulate the successes of the United States, with Poland, Algeria, Australia, Colombia, Russia, and Mexico still in earlier phases of exploration and evaluation, while Saudi Arabia also has plans for domestic shale investment and development. Many more countries have yet to fully review their potential shale strategy and policies. Global oil consumption, according to BP’s Statistical Review 2015, has been rising annually at a compound growth rate of 1 percent during the last 10 years – despite several years of slow global economic growth, a trend that is forecasted to continue. Despite this low oil price situation, the U.S. shale boom will likely not end anytime soon as the industry is adapting to find a new equilibrium. Companies are looking for more financial protection, as their hedging positions end, potentially reconsidering their asset portfolio, with some considering extensive consolidation, mergers and acquisitions.If the shale industry is to survive, it must become even more competitive through better efficiency and massively reduced costs.
More Job Losses Coming To U.S. Shale -- With the recently concluded nuclear deal between Iran and the P5+1 countries, oil prices have already started heading downward on sentiments that Iran’s crude oil supply would further contribute to the already rising global supply glut. The economic crisis in Greece, OPEC’s high production levels and China’s market turmoil have created more pressure on oil prices, making a price rebound look highly unlikely in the near future. So, with the prices of both Brent and WTI moving towards $50 per barrel, the short to medium-term outlook for oil remains mostly bearish. This is bad news for the U.S. shale sector which is already dealing with rising debt and the ever-increasing risk of default. A recent Bloomberg report stated that U.S. driller’s debts stood at $235 billion at the end of first quarter of 2015, which is quite worrying. Does this mean that the U.S. oil sector is likely to witness a lot more layoffs than we have seen so far? Surprisingly, a recent IHS study had revealed that the U.S. shale sector has been boosting job creation in addition to supporting around 1.7 million jobs in U.S. But with rising negative sentiment pertaining to oil prices, is U.S. the shale sector prepared to face one of its biggest tests yet? Will the industry be able to sustain another long period of low oil prices or will it once again resort to trimming its workforce? Low oil prices will most likely result in more job losses…
The Multi-Trillion Dollar Oil Market Swindle --In the past, I documented the overstatements by both the IEA and EIA in 2014 & 2015 in terms of supply, inventory and understatements of demand. Others also noticed these distortions and, whether intentional or not, they exist and they are very large in dollar terms. These distortions, which are affecting price through media hype and/or direct/indirect price manipulation, are quite possibly the largest in financial history. Putting numbers behind it, with worldwide production running some 95 million barrels per day, and assuming $55 per barrel for oil, the market for crude oil is about $5.2 billion per day. Each $10/Barrel change is worth nearly $1 billion/day or $365 Billion/year for the worldwide crude oil market. Add the worldwide equity market caps of oil and oil related equities and debt you have a scandal that is in the trillions; a number that cannot be ignored. The EIA has created the appearance of an imbalance of supply by some 500 million barrels or $2.5 trillion in the last 5 quarters alone. This has easily swung oil by at least $20/barrel if not more. I have maintained that oil should have corrected to around $70 in the fall of 2014, tied to U.S. production increases which at the time represented the price at which drillers would continue to add to supply. That price tied to cost reductions has probably been reduced to $60ish currently. But today, with the consensus oversupply widely quoted in the media as some 2 million barrels per day worldwide, it’s clear that if the numbers are correct below, the perceived oversupply wouldn’t exist at all. Suffice it to say prices would be at least at the point where production would need to be added, perhaps around $60-$70 per barrel, if not higher.
Crude Extends Gains After API Reports Large Drop In Inventories -- After a brief respite of 2 weeks of inventory builds, API just reported a major 7.3 million barrel inventory draw (far bigger than the 1.2mm barrel expected) and the biggest since July 2014...WTI Crude has jumped back above $53 on the news... Charts: Bloomberg
DOE Confirms Larger Than Expected Crude Inventory Draw, Production Drops Most In 2 Months --Confirming API's report of a significant inventory draw, DOE just reported that, after 2 weeks of builds, US crude inventories fell 4.346 million barrels last week. Crude production also fell 0.44% - the most in 2 months. Crude initially drooped but is rising now... Significant draw... And production fell the most in 2 months... But Crude prices are dropping modestly after this draw... Charts: Bloomberg
WTI Tumbles Back To A $50 Handle On Iran, Default, And Cushing Build Fears -- Having surged on Tuesday when the Iran "deal" was confirmed and tumbled yesterday despite inventory draws and production decreases, WTI crude is re-slumping back to a $50 handlethis morning as traders cite more Iran concerns (flattening the curve) and a Genscape report that indicates inventory builds at Cushing once again...It appears the algos have been turned upside down...
Crude Oil Price Slips on Iran Deal, Not Lower Inventory - The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories decreased by 4.3 million barrels last week, maintaining a total U.S. commercial crude inventory of 461.4 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 7.3 million barrels in the week ending July 3. For the same period, Platts analysts estimated a decrease of 1.8 million barrels in crude inventories. Total gasoline inventories increased by 100,000 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 9.6 million barrels a day for the past four weeks, up by 6.5% compared with the same period a year ago. The potential addition of a million barrels of Iranian crude to the world’s oil markets only had a negative effect on the price of crude for a few hours on Tuesday. Crude closed higher much to most people’s surprise. There are a couple of reasons this should not have happened. First of all, if sanctions against Iran are lifted, that is not expected to happen until December. Second, most industry watchers believe Iran has 30 million to 40 million barrels of oil in floating storage sailing in circles in the Persian Gulf. Those would be available as soon as sanctions are lifted. Both actions should depress crude prices.
U.S. oil drillers cut rigs as crude prices collapse – Baker Hughes -- U.S. energy firms cut seven oil rigs this week after adding rigs for the last two weeks as U.S. crude prices fell nearly 15 percent this month in the biggest slump since December, data showed on Friday, a sign some drillers were waiting for higher prices before returning to the well pad. That was the 30th weekly oil rig decline in the past 31 weeks, bringing the total down to 638, the lowest since the last week in June, oil services company Baker Hughes Inc said in its closely followed report. U.S. crude oil futures continued to decline this week, falling about 4.2 percent as prices continued to recede from a recent high over $62 in early May. Production declines in the largest U.S. shale plays were set to deepen in August, the U.S. Energy Information Administration said earlier this week in its drilling productivity report. While the EIA expected declines from the Bakken and Eagle Ford, the agency forecasted production growth from the Permian month or month of some 5,000 barrels per day. The increase in rig counts comes as Iran has started to ship oil to Asia that it had been storing offshore for months after Tehran and other world powers reached an agreement about the nation’s nuclear program, clearing the way for an easing of international sanctions.
BHI: US rig count falls 6 units to 857 - -- The US drilling rig count fell 6 units to reach 857 during the week ended July 17, essentially cancelling out the last 3 weeks’ worth of gains, according to data from Baker Hughes Inc.The losses came from rigs drilling on land and in inland waters. Land rigs were down 3 units to 824, while those drilling in inland waters also fell 3 units to reach 2 rigs working. During the week, rigs targeting oil fell 7 units to 638. Gas-directed rigs, meanwhile, were up 1 unit to 218. Rigs considered unclassified were unchanged at 1 rig working. Rigs engaged in horizontal drilling fell 4 units to 650. Directional drilling rigs lost 4 units to 84. Rigs drilling offshore and in the Gulf of Mexico were both unchanged this week, both maintaining counts of 31. Canada’s rig count continued its upward climb, jumping 23 units to 192. Its count has now risen in 8 of the last 10 weeks. This week’s gain was spurred by a rebound in gas-directed rigs, which were up 16 units to 94. Oil-directed rigs, meanwhile, were up 7 units to 98 rigs working. Canada’s overall count is still down 189 year-over-year.Among the major oil- and gas-producing states, Louisiana lost 3 units to reach 69 rigs working. Texas, North Dakota, and Pennsylvania each were down 2 rigs, reaching respective totals of 366, 68, and 43. Oklahoma, at 105, and California, at 11, were each down 1 unit. Unchanged from a week ago were Wyoming, 21; Ohio, 19; West Virginia, 18; Utah, 7; and Arkansas, 4. Four states gained a single rig this week: New Mexico, 50; Colorado, 39; Alaska, 11; and Kansas, 11. At 98 units, there were 4 fewer rigs drilling in the Eagle Ford this week, while the Marcellus area lost 3 units to 59.
U.S. oil drillers cut rigs as crude prices collapse - U.S. energy firms cut seven oil rigs this week after adding rigs for the last two weeks as U.S. crude prices fell nearly 15 percent this month in the biggest slump since December, data showed on Friday, a sign some drillers were waiting for higher prices before returning to the well pad. That was the 30th weekly oil rig decline in the past 31 weeks, bringing the total down to 638, the lowest since the last week in June, oil services company Baker Hughes Inc said in its closely followed report. U.S. crude oil futures continued to decline this week, falling about 4.2 percent as prices continued to recede from a recent high over $62 in early May. Production declines in the largest U.S. shale plays were set to deepen in August, the U.S. Energy Information Administration said earlier this week in its drilling productivity report. While the EIA expected declines from the Bakken and Eagle Ford, the agency forecasted production growth from the Permian month or month of some 5,000 barrels per day. The increase in rig counts comes as Iran has started to ship oil to Asia that it had been storing offshore for months after Tehran and other world powers reached an agreement about the nation's nuclear program, clearing the way for an easing of international sanctions
Crude gives up gains as US oil rig count falls --Crude oil prices briefly rose but gave up gains after a weekly count of U.S. oil rigs fell, capping two weeks of increases. Front-month U.S. crude futures closed down 2 cents, at $50.89 a barrel. It is down more than 4 percent this week and 15 percent in July. The August contract expires on July 21. Brent crude was slightly higher at $57 a barrel, but off more than 3 percent for the week and about 10 percent for the month. Brent's August contract expired on Thursday. Oilfield services firmBaker Hughes reported U.S. drillers took seven oil rigs out of fields last week, bringing the total to 638, compared with 1,554 active rigs at this time last year. The prior two weeks' gains were the first in more than seven months. Oil came under pressure in choppy trading Friday, heading for a third week of losses and feeling pressure from a stronger dollar and expectations of increased exports from Iran.
OilPrice Intelligence Report: $50 Oil Looming For The Markets: The bear market for oil continues. The historic deal with Iran has sparked a lot of speculation about how much Iranian oil will come back to the market, and how quickly. The estimates run the gamut, as we explained in Tuesday’s Newsletter, but suffice it to say Iran could bring somewhere near 1 million barrels of crude per day back online within a year. December 2015 is the earliest date that sanctions will come off. In the meantime, Iran has around 40 million barrels of oil sitting in storage that could be sold off much more quickly. As the markets try to digest Iran’s potential, oil prices have sunk. WTI dropped on July 16, falling dangerously close to the psychologically important threshold of $50 per barrel, flirting with the possibility of sub-$50 oil for the first time in several months. The ongoing slump in oil prices continues to hit the largest oil companies. ConocoPhillips announced its decision to further slash capital expenditures on deep-water drilling and instead divert more of its resources to boost its dividend by one cent to 74 cents per share. The company decided to cancel its contract with the Ensco DS-9 drillship, which ConocoPhillips had planned on using to drill a deep-water well in the Gulf of Mexico later this year. Cancelling a contract is not cheap however. ConocoPhillips must pay the owner of the ship, Ensco, termination fees equal to about two years’ worth of daily renting of the rig. That could come out to around $550,000 per day, for two years, plus other fees that Ensco might incur from the contract cancellation. The problem for the oil majors is still the cost of production. Much has been made about the efficiency gains that oil companies are making, locking in lower costs for services and equipment, which lowers the breakeven cost for oil projects. But the larger savings are occurring in the shale patch, where most of the oil majors have relatively little exposure. For the largest companies, it is still a lot more expensive to produce oil than it was in years past.
Shell expects oil price recovery to take several years (Reuters) – Royal Dutch Shell expects oil prices to recover gradually over the next five years, with progress slowed by persistent global oversupply and receding Chinese demand growth. The Anglo-Dutch energy giant is betting on crude rising to $90 a barrel by 2020, a key assumption in its move to buy rival BG Group for $70 billion to help transform it into a leading player in the costly deepwater oil production and liquefied natural gas (LNG) markets. “We are not banking on an oil price recovery overnight. It will take several years but we do believe fundamentals will return,” Andy Brown, Shell’s upstream international director, who oversees the company’s oil and gas production outside North America, told Reuters in an interview. “Until such time, we, like other companies, will have to make sure we stay robust,” he said, referring to deep spending cuts taken by oil companies in recent months in the face of a near-halving of oil prices since June last year. A rise in global supplies, mainly due to a sharp increase in output from U.S. shale, has weighed on oil prices. In the nearer term, Shell expects Brent crude oil to show only a modest recovery from today’s $58 a barrel, with 2016 prices forecast to average $67 a barrel and $75 a barrel in 2017, based on the company’s BG offer. Oil companies rarely reveal the price forecasts that underpin their future strategies. The chief executive of Shell’s rival BP , Bob Dudley, said recently he expected oil prices to remain low for “a couple of years most certainly.”
Investors Get Caught in Oil’s Slippery Wake - WSJ: Falling oil prices are hitting investors who bought energy shares this year. The value of shares sold by U.S. and Canadian exploration-and-production companies this year in 47 follow-on offerings sit $1.41 billion shy of the $15.87 billion investors paid for them, according to a Wall Street Journal analysis of Dealogic data. The pullback “has really taken the Street by surprise,” said William Herbert, co-head of securities at Houston investment bank Simmons & Co. International. After pushing above $60 a barrel over the past two months, U.S. crude has dropped 16% since hitting its settlement high for the year on June 10. On Wednesday, it closed at $51.41, down 3.1% on the day, on the New York Mercantile Exchange. “There are a decent number of institutional investors that are in a state of shock,” Mr. Herbert said. Investors said the decline is muting demand for further share sales, potentially limiting the options available to energy firms that need to raise fresh cash. Companies in the second quarter sold less than half of the stock, by dollar volume, than they did in the first quarter, when investors bought more than $11.5 billion of shares, a quarterly record for follow-on offerings for North American energy companies. Follow-on offerings are issuance of new stock subsequent to a company’s initial share offering.
The Global Impact of Lower Oil Prices - iMFdirect -- Remember when oil was the big story? Yeah, us too. And we’re still thinking through the issues and what they mean for oil importers and exporters, as well as the global economy. This week IMF economists released a new paper, and we interviewed the lead author in this podcast, that delves into the benefits of lower oil prices for consumers and for the global economy.
Heat rises on Britain to change shale gas laws after projects blocked: (Reuters) – Pressure is mounting on Britain’s pro-shale government to make changes to the planning system after local politicians rejected two projects that could have become Britain’s first shale gas producing wells. Prime Minister David Cameron, who has promised to go “all out for shale”, said he respected the planning process but still wanted shale gas to go ahead. His quest to replicate at least a small slice of the United States’ success in bringing down energy prices with the help of shale gas is now looking bleaker than ever. In order to save his dream, Cameron has to reform the planning system to give the government the final say in approving new projects, legal experts and industry representatives said. Discussions have already taken place between the government and shale gas developers in which industry representatives have urged politicians to adjust policies, industry sources said. A small group of local government politicians in a town near Blackpool on England’s northwest coast stunned the energy industry late last month when they refused planning permission for a Cuadrilla Resources shale gas project, ignoring legal and technical advice.“This is clearly a very important decision and a major setback for the shale industry,”
Greece says it receives three bids for deep sea oil, gas drilling - Greece said on Tuesday that it had received three bids for deep sea oil and gas drilling in the west of the country and south of the island of Crete, the latest phase of an ambitious attempt to develop untapped oil potential. The names of the bidders will not be disclosed until tender documents are unsealed, the Energy Ministry said. Greece, which clinched a deal with its international creditors on Monday to avoid bankruptcy, has made several fruitless attempts over the last 50 years to find big oil and gas reserves. Its debt crisis prompted the country to step up those efforts to boost revenue. It invited investors last year to bid for test drilling in 20 offshore blocks stretching over more than 200,000 square kilometers in the Ionian Sea and south of Crete. In March this year the new left-wing government extended the deadline for the submission of bids by two months to July 14 in an effort to attract more interest in the tender. In April it invited Chinese oil firms to bid for the tender and has also said that it expected Russian companies to show interest. The fact that three bids were submitted was a “positive step, taking into account difficult conditions presently prevailing in the oil and gas market,” the Energy Ministry said. “It is assessed as a positive step in the country’s attempts to utilize its subsea wealth,” it said.
Saudi Arabia borrows $4bn as oil price reality hits home - FT.com: Saudi Arabia has borrowed $4bn from local markets in the past year, selling its first bonds for eight years as part of efforts to sustain high levels of public spending as oil prices slump. Fahad al-Mubarak, the governor of the Saudi Arabian Monetary Agency, said the government would use a combination of bonds and reserves to maintain spending and cover a deficit that would be larger than expected. “We expect to see an increase in borrowing,” he said, according to a report in the economic daily Al-Eqtisadiah newspaper over the weekend. Analysts have estimated a deficit of about $130bn this year. The government, which had not tapped bond markets since 2007, has been dipping into its large foreign reserves, which peaked at $737bn last August, to sustain spending on wages, special projects and the Saudi-led air war on Yemen. It has drawn down $65bn since oil prices fell. Bonus payouts for state employees and the military made by the new king, Salman bin Abdulaziz Al Saud, have placed further pressure on state coffers. “Reality is hitting home, and necessity is also hitting home,” said John Sfakianakis, director for the Gulf region at Ashmore, a fund manager. Saudi Arabia needs an oil price of $105 a barrel to meet planned spending requirements, but the average price for the year is estimated at $58 a barrel, he said. “If the government continues business as usual and draws down like this it will deplete reserves faster than expected, by the end of 2018 or early 2019,” added Mr Sfakianakis. The issuance of domestic bonds should ease the rate of drawdown on Sama’s overseas assets, which declined to $672bn in May. The domestic bond programme marks a shift in strategy as the sustained slump in oil prices takes its toll on Saudi finances.
Iran nuclear talks: 'Historic' agreement struck - BBC News: World powers have reached a deal with Iran on limiting Iranian nuclear activity in return for the lifting of international economic sanctions. US President Barack Obama said that with the deal, "every pathway to a nuclear weapon is cut off" for Iran. His Iranian counterpart, Hassan Rouhani, said it opened a "new chapter" in Iran's relations with the world. Negotiations between Iran and six world powers - the US, UK, France, China, Russia and Germany - began in 2006. The so-called P5+1 want Iran to scale back its sensitive nuclear activities to ensure that it cannot build a nuclear weapon. Iran, which wants crippling international sanctions lifted, has always insisted that its nuclear work is peaceful.There has been stiff resistance to a deal from conservatives both in Iran and the US. The US Congress has 60 days in which to consider the deal, though Mr Obama said he would veto any attempt to block it. The Republican Speaker of the US House of Representatives, John Boehner, said the deal would only only "embolden" Tehran. "Instead of stopping the spread of nuclear weapons in the Middle East, this deal is likely to fuel a nuclear arms race around the world," he added. Israel's government has also warned against an agreement. Prime Minister Benjamin Netanyahu said it was a "stunning historic mistake" that would provide Iran with "hundreds of billions of dollars with which it can fuel its terror machine and its expansion and aggression throughout the Middle East and across the globe". He said he did not regard Israel as being bound by this agreement. "We will always defend ourselves," he added.
Iran and major powers reach nuclear deal: After years of talks, Iran and six major powers clinched a historic nuclear deal Tuesday, sending oil prices lower. The agreement will see some sanctions on Tehran eased in exchange for restrictions to its nuclear program. In a tweet, Iranian President Hassan Rouhani said the deal showed that "constructive engagement works." Oil prices came under pressure following the news, in anticipation of Iran bringing more oil onto the market and forcing prices down. However, experts suggest this could be a couple of years off as Iran will need to invest in infrastructure to come back online. Brent crude fell 2 percent on the news, but pared losses to trade around $57.63 a barrel at 1 p.m. London time. Negotiations between Iran and the U.S., Britain, France, Germany, Russia and China finally came to a head in Vienna this week, as Tehran came under pressure to curb its nuclear program in return for relief from economic sanctions that have crippled its economy. In the so-called Joint Comprehensive Plan of Action (JCPOA), the world powers put restrictions on Iran's ability to enrich uranium. Iran is allowed could carry out "specific research and development (R&D) activities for the first 8 years" of the deal, with further enrichment activities possible afterwards, "for exclusively peaceful purposes," according to a copy of the JCPOA posted on the Russian government's Facebook page. Tehran is also not permitted to stockpile large amounts of enriched uranium. The International Atomic Energy Agency (IAEA) will be the watchdog that monitors Iran's nuclear activities.
Iran reaches nuclear deal with US and other major powers: ‘Today the world has breathed a huge sigh of relief’ - Major powers clinched a historic deal Tuesday aimed at ensuring Iran does not obtain the nuclear bomb, opening up Tehran’s stricken economy and potentially ending decades of bad blood with the West. Reached on day 18 of marathon talks in Vienna, the accord is aimed at resolving a 13-year standoff over Iran’s nuclear ambitions after repeated diplomatic failures and threats of military action. It was hailed by Iran and the European Union as a new chapter of hope for the world but branded a “historic mistake” by the Islamic republic’s arch-foe Israel. “I think this is a sign of hope for the entire world and we all know this is very much needed in this time,” EU foreign policy chief Federica Mogherini said at the start of a final meeting which formally approved the accord. “We are certain that today the world has breathed a huge sigh of relief,” Russian President Vladimir Putin said in a statement.
OilPrice Intelligence Report: What The Iran Deal Actually Means For Oil Markets -- After months of speculation and anticipation, Iran and the P5+1 nations finally reached a historic agreement on its nuclear program. The deal puts limits on Iran’s ability to develop nuclear weapons in exchange for sanctions relief (full text here). Here are a few of the key points:
• Iran commits to reduce its uranium stockpile and number of centrifuges
• Enrichment is banned at certain nuclear facilities
• The International Atomic Energy Agency (IAEA) will verify Iran’s compliance
• Sanctions on Iran related to its nuclear program will be removed, allowing for greater oil exports
• An arms embargo on Iran will gradually be lifted
Oil prices dropped a bit on July 14 following the announcement, but with the markets having already taken the deal into account over the past week, prices did not fall as much as one might think given the large volume of Iranian crude that could come online over the next year. WTI was trading flat at $52 per barrel as of mid-day trading and Brent fell by less than 1 percent to $57.47 per barrel. After the meltdown in prices over the past two weeks, which likely included some recognition of the Iran deal, the markets were relatively quiet following the announcement. How much oil can Iran bring online and how fast? Iranian Oil Minister Bijan Namdar Zanganeh thinks Iran can manage to bring an additional 500,000 barrels online right after sanctions are removed. That is probably a bit too optimistic, but Iran could likely bring somewhere between 500,000 barrels per day and 1 mb/d within a year or so. Iran’s Deputy Oil Minister said that the country is targeting oil exports at 2.3 mb/d day, up from 1.2 mb/d currently.
Iran needs time and favorable conditions to boost oil output (Reuters) – Iran has big ambitions to increase oil and gas production once sanctions are lifted but a substantial increase in exports is probably years away. The country has the world’s fourth-largest proved reserves of crude oil (behind Venezuela, Saudi Arabia and Canada) and the largest proved reserves of natural gas (ahead of Qatar and Russia), according to BP. It is the oldest major oil producer in the Middle East and output peaked at more than 6 million barrels per day (bpd) in 1974 (http://link.reuters.com/ryq25w ). But decades of revolution, war and sanctions have cut production of crude and condensates to just 3.6 million bpd in 2014 (“BP Statistical Review of World Energy” 2015). In contrast, Saudi Arabia, Iran’s main rival, has raised liquids output from 8.6 million bpd in 1974 to 11.5 million bpd in 2014. Sanctions imposed by the United States and the European Union amid concerns about Iran’s nuclear program have hit Iran’s production and exports particularly hard. Exports of crude and condensates have been cut from 2.6 million bpd in 2011 to 1.4 million bpd in 2014, according to the U.S. Energy Information Administration. Following the conclusion of the nuclear negotiations with the major powers, Iran hopes to raise oil production and exports significantly.
After Iran deal, U.S. companies face being left out in cold - Within hours of the announcement of an Iran nuclear deal early on Tuesday, lawyers around Washington were fielding calls from U.S. corporate clients eager to know what the 159-page deal would mean for their business prospects. In the near term, the answer for most of them is: not very much. U.S. companies face losing out to foreign competitors in Iran as they wait for signs that Tuesday’s historic nuclear agreement is sticking and that U.S. lawmakers are willing to loosen long-standing restrictions on trade and investment, according to corporate lawyers and company executives. Iran’s agreement with major world powers to curtail its nuclear program in exchange for the lifting of economic sanctions opens up the world’s fourth-largest oil reserves, second-largest natural gas reserves and an 80 million population to multinationals. But the strict, decades-old U.S. restrictions on doing business with Tehran, which predate the nuclear crisis and relate to other concerns such as terrorism support and human rights abuses, will remain in place. “U.S. persons and banks will still be generally prohibited from all dealings with Iranian companies, including investing in Iran, facilitating cleared country trade with Iran,” a senior U.S. administration official said at a briefing on Tuesday. The deal hammered out in Vienna does open some avenues for U.S. companies to expand in Iran. U.S. firms will now be allowed to sell or lease commercial passenger aircraft to Iran, as long as they procure licenses from the U.S. government, giving companies such as Boeing an opportunity.
Iran Nuke Deal Dooms Daesh Caliphate ? --Because Iran now has a greenlight to build a natural gas pipeline to Europe, right through the ISIS Caliphate. As reported here, the civil war in Syria started over competing natural gas pipelines– one from the Gulf states north through Syria, shown below: The others shown below in yellow from Iran through Iraq and Syria. The ISIS Caliphate blocks both those routes, as previously discussed. The Iranian pipeline goes through Kurdistan, who will be more than happy to eliminate the Caliphate to secure the right of way. With the Iranian gas line to Europe now back in play, this makes it more important for the Arabs to clear a right of way for their pipeline – right through Daesh’s Syrian Caliphate.
Obama & Iran Deal – Behind the Curtain - Whenever there is some political deal, it is NEVER what they present to the public with such magnanimous fanfare. There is always a hidden agenda. Here, Obama tells the American people this deal will prevent Iran from gaining nuclear weapons. Why the sudden change of heart? Surely, negotiations could have produced the same result five years ago. Ah – they will claim the sanctions worked. But is it suddenly the sanctions working or is there a darker inner truth? You have to clear the stench left behind by the lies. This sudden deal with Iran is actually Part II of an attempt to cut off Russia and isolate it. This is part of Obama’s New Cold War against Russia. Part I was to prevent Syria from blocking a pipeline to be constructed through its territory to deliver Saudi gas to Europe to compete with Russia. Hence, we heard about the atrocities of the Syrian dictator and their people suddenly needed American troops to intervene, as did Iraq and Afghanistan. The entire Syrian folly was of course to overthrow the government to allow the pipeline to cut off Russia from selling gas to Europe. Cut off Russia’s energy market and you will starve the Bear.
Here Comes The Oil Glut: First Iranian Oil Tanker Sets Sail -- Amid what is being reported as worrying discrepancies between the U.S. and Iranian interpretations of what had been agreed, an Iranian supertanker with 2 million barrels of oil is on its way to Asia after sitting in Iranian waters for months, likely to be the first vessel holding floating excess stocks to sail after the nuclear deal. As David Sheppard (@OilSheppard) explains,
- Vessel is the Starla from Iran's NITC. Loaded at Iran's Kharg Island terminal just over a month ago before going dark
- Appeared labelled as sailing to Iraq's Basrah on June 8 - a smuggling tactic UK insurers have warned of in past
- Starla now listed as sailing to Singapore - which doesn't have a waiver from US to take any Iranian oil
- If this is Iran (tanker owned by NTIC) sending message would be very interesting.
- Tanker was in floating storage/off radar for month
- So interesting that Iran oil sailing to country that US does NOT allow to import Iran oil
Iran Is Hiding 51 Million Oil Barrels At Sea, Maritime Tracker Reports -- With yesterday's appearance what seems like the first Iran oil tanker to set sail post-nuke-deal,Haaretz reports that Iran has been hiding millions of barrels of oil it never reported to the United States or in the world oil market, according to a company that has developed sophisticated maritime tracking technology. With the world’s fourth-largest oil reserves, Iran denies it’s storing oil at sea, despite reports that surfaced in The New York Times as early as 2012; but Ami Daniel, Windward founder and cochairman, shows "the Iranians are taking huge, 280-meter-long ships and filling them with oil, to sit at sea and wait. Because the sanctions allow for production of only three million barrels a day, they began storing the remainder... oil tankers have been sitting in the Gulf for anywhere between three and six months, just waiting for orders." Searching for ships that do not want to be found... As Bloomberg explains, based in Tel Aviv, Windward was founded four years ago by two Israeli naval officers...The algorithms Windward developed were initially intended to tackle illegal fishing by analyzing and profiling normative patterns in sea traffic. The entrepreneurs discovered that their technology could also be used to monitor unusual behavior near, say, oil-drilling ports in Libya. These anomalies of maritime behavior, which occur daily, would have probably gone undetected in the past. Today, advanced satellite imaging and communications technology, coupled with analytical software developed by an Israeli startup called Windward, identifies potential illegal activity in real time.
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