Repost from Post Carbon Institute [Editor: Significant quote: “Tight oil (shale oil) and shale gas production is found to be unsustainable in the medium- and longer-term at the rates forecast by the EIA, which are extremely optimistic.” – RS]
DRILLING DEEPER: A Reality Check On U.S. Government Forecasts for A Lasting Tight Oil & Shale Gas Boom
By David Hughes, October 27, 2014
Drilling Deeper reviews the twelve shale plays that account for 82% of the tight oil production and 88% of the shale gas production in the U.S. Department of Energy’s Energy Information Administration (EIA) reference case forecasts through 2040. It utilizes all available production data for the plays analyzed, and assesses historical production, well- and field-decline rates, available drilling locations, and well-quality trends for each play, as well as counties within plays. Projections of future production rates are then made based on forecast drilling rates (and, by implication, capital expenditures). Tight oil (shale oil) and shale gas production is found to be unsustainable in the medium- and longer-term at the rates forecast by the EIA, which are extremely optimistic.
This report finds that tight oil production from major plays will peak before 2020. Barring major new discoveries on the scale of the Bakken or Eagle Ford, production will be far below the EIA’s forecast by 2040. Tight oil production from the two top plays, the Bakken and Eagle Ford, will underperform the EIA’s reference case oil recovery by 28% from 2013 to 2040, and more of this production will be front-loaded than the EIA estimates. By 2040, production rates from the Bakken and Eagle Ford will be less than a tenth of that projected by the EIA. Tight oil production forecast by the EIA from plays other than the Bakken and Eagle Ford is in most cases highly optimistic and unlikely to be realized at the medium- and long-term rates projected.
Shale gas production from the top seven plays will also likely peak before 2020. Barring major new discoveries on the scale of the Marcellus, production will be far below the EIA’s forecast by 2040. Shale gas production from the top seven plays will underperform the EIA’s reference case forecast by 39% from 2014 to 2040, and more of this production will be front-loaded than the EIA estimates. By 2040, production rates from these plays will be about one-third that of the EIA forecast. Production from shale gas plays other than the top seven will need to be four times that estimated by the EIA in order to meet its reference case forecast.
Over the short term, U.S. production of both shale gas and tight oil is projected to be robust-but a thorough review of production data from the major plays indicates that this will not be sustainable in the long term. These findings have clear implications for medium and long term supply, and hence current domestic and foreign policy discussions, which generally assume decades of U.S. oil and gas abundance.
More trains carrying crude oil to East Coast refineries mean a greater risk of accidents. Derailments in Pennsylvania and throughout the country are a signal to some that an accident could be disastrous.
Why is more crude oil moving through Pennsylvania?
North America is now the biggest producer of crude oil in the world, partly as a result of fracking in North Dakota and other Western states. Without pipelines to move the oil, much of it has been pushed onto the rails. In 2013, U.S. railroads carried more than 40 times what they carried in 2008. Refineries processing much of the crude from the Bakken formation in the West are in the Philadelphia area.
Are these trains dangerous?
As crude-by-rail traffic increased, so did its accidents. Some lawmakers and public safety groups are concerned that as production surges, people near railroad tracks are exposed to more danger. And some believe the crude boom has outpaced the necessary regulations to ensure safety.
There have been at least 12 significant derailments involving crude since May 2013 in North America. Some involved explosions, evacuations, environmental damage and injuries. The most devastating was in Lac-Mégantic, Quebec, in July 2013, when 47 people died after a train carrying crude exploded. Since January, Pennsylvania has had derailments involving crude in Philadelphia, Vandergrift and McKeesport. There were no injuries in any of the accidents.
How much crude oil do these trains carry?
Right now Norfolk Southern and CSX, the major railroads in the state, move as many as eight trains of crude oil a day combined through the state.
Dubbed “virtual pipelines,” these trains can have more than 100 tank cars and can carry millions of gallons of crude.
Is Bakken crude more volatile than other types of oil?
North Dakota Bakken crude is potentially more volatile, corrosive and flammable than other kinds of crude oil. Investigations found that the Bakken crude that exploded in Quebec was classified as a less dangerous type of oil. In February, the U.S. Department of Transportation issued an emergency order requiring testing of all Bakken crude to determine its explosive nature.
Are other types of crude oil dangerous?
Other types of crude from the U.S. and Canada also could pose a threat. All crude oil is flammable and can cause environmental damage, Christopher Hart, acting National Transportation Safety Board Chairman, told the Associated Press in June.
What’s wrong with the rail cars?
Sometimes referred to as the “Ford Pinto of railcars,” the DOT-111 tank cars used to ship crude have been known to be a safety hazard for decades, according to federal safety investigators. Designed in the 1960s, they are prone to puncture and “catastrophic loss of hazardous materials” when trains derail, according to the NTSB.
The derailments have caused an outcry by state and federal officials and safety groups demanding that the cars be taken off the tracks. Canada has already ordered railroads to stop using them by 2017, but U.S. regulators have been slow to act. The U.S. DOT did advise railroads in May to stop using the cars to carry crude oil. The White House is reviewing new standards for tank cars, but it could take months before rules are in place.
How are trains carrying crude oil regulated?
Two federal entities regulate railroads carrying crude: The Federal Railroad Administration (FRA) and the Pipeline and Hazardous Materials Safety Administration (PHMSA). The FRA has about 400 inspectors who sometimes work with state inspectors. In Pennsylvania, the state’s Public Utility Commission does spot inspections of tracks and rail equipment.
Emergency planning is largely left up to counties. A state agency oversees 67 Local Emergency Planning Committees, which can request general information from railroads about hazardous materials coming through their counties. That information is not public.
Can you find out when crude oil trains come through your neighborhood?
Officially, no. Railroads are not required to share information about hazardous materials under federal law. Norfolk Southern and CSX, for example, said they don’t give out that information, citing possible security incidents and competition.
In May, the DOT said it no longer viewed information on crude oil from the Bakken as security sensitive. The agency told railroads with trains carrying more than 1 million barrels of Bakken crude to give the information to states. At least six states, including Washington, California and Virginia, made the information available. Pennsylvania didn’t. The Pennsylvania Emergency Management Agency refused to release the information to PublicSource. The agency denied our Right-to-Know request, calling the information “confidential” and “proprietary.”
Bakken and other crude oils are believed to be shipped through Pittsburgh and other Pennsylvania cities on a regular basis on their way to Philadelphia refineries. A spokeswoman for the Pennsylvania Public Utility Commission told PublicSource that Bakken crude is shipped through Pittsburgh.
What has been done to improve safety?
U.S. regulators asked railroads to comply with a number of voluntary actions. The railroads agreed to slow crude trains to no more than 40 mph in high-risk urban areas. (However, a train that derailed in Lynchburg, Va., in April was traveling at just 24 mph.)
Recent proposed rules for crude oil, including new standards for tank cars, drew comments from the public representing more than 100,000 people.
In March, CSX agreed to give PEMA access to its real-time monitoring system that tracks crude’s movement through the state. Cory Angell, the agency’s spokesman, said it is working with Norfolk Southern on a similar agreement.
Are first responders prepared for a significant derailment in Pennsylvania?
Daniel Boyles, the emergency services coordinator for Blair County, told PublicSource he thinks railroads are doing everything in their power to prevent accidents. However, he said, first responders need more training. Trains carrying Bakken crude roll through his county twice a week, he said.
Emergency officials in Beaver, Allegheny and Dauphin counties said that awareness has increased and railroads have given emergency responders more training.
A PEMA spokesman said the state is prepared in the case of a major derailment. He added that Pennsylvania will soon use a DOT grant to train county hazmat teams and first responders.
Who doesn’t think first responders are prepared?
“No community is prepared for a worst-case event,” Deborah Hersman, former chairwoman of the National Transportation Safety Board, told a Senate subcommittee in April.
Under voluntary safety measures effective July 1, railroads will contribute $5 million for training for emergency responders. And they will develop a list of emergency-response resources in case of a derailment.
But federal safety officials have questioned whether voluntary actions are enough. Currently, railroads don’t have to provide comprehensive emergency plans for the crude oil being transported. That’s what’s needed, Hersman said.
In a Jan. 23 letter to federal regulators, she said that without comprehensive crude oil response plans “(rail) carriers have effectively placed the burden of remediating the environmental consequences of an accident on local communities along their routes.”
Which officials are talking about this in Pennsylvania?
Sen. Bob Casey, D-Pa., endorsed a bill he said would boost safety. The bill would include $3 million for track inspections and hire 20 new inspectors.
Philadelphia Mayor Michael Nutter backed a proposal to charge a federal freight fee to crude-oil producers and industrial consumers. The money would be used to improve tracks.
Christina Simeone, director of PennFuture’s energy center, said other states have shown leadership on the issue — but not Pennsylvania.
New York Gov. Andrew Cuomo commissioned a safety report for his state. The report laid out actions the state should take. Minnesota lawmakers allocated $6.4 million for more inspectors, specialized training for first responders and fixes for highway-rail grade crossings along crude routes.
Republican Gov. Tom Corbett has been silent about the safety issue, said Simeone, who commented that there is interest in “minimizing the issue” because of concerns about the refinery business in Philadelphia and gasoline prices in the region.
Pittsburgh Mayor Bill Peduto has not been part of the conversation. In a recent meeting with PublicSource, Peduto said that he is “aware of the reality of what is coming through.” In the case of an accident, Pittsburgh could call on the PA Region 13 Task Force, he said. The task force is an initiative that allows counties to pull resources from the entire region in case of an emergency.
Benicia OKs Sacramento request for more time to review crude oil rail shipment plans
By Tony Bizjak, Saturday, Jul. 12, 2014
Benicia has granted a request by Sacramento officials and others for extra time to review a plan by Valero Refining Co. to run two trains daily carrying crude oil through downtown Sacramento, Roseville, West Sacramento and Davis to its Bay Area refinery. The Sacramento Area Council of Governments, which represents local cities and counties, had requested extra time, saying they are concerned about the project’s safety risks. The new response deadline is Sept. 15, officials said.
Valero is asking the city of Benicia for an OK to begin receiving daily crude-by-rail shipments, including possibly the more volatile oil from the North Dakota Bakken fields. Federal officials issued a warning this year about that fuel after several train explosions, including one that killed 47 people in Canada.
The Valero plan, involving two 50-car trains a day through Sacramento, is among the first of what California officials say is an expected boom in crude-by-rail shipments through the state, prompted by the lower cost of North Dakota and Canadian crude.
The draft environmental report, issued last month by Benicia, included an analysis that says a derailment and spill might happen only once every 111 years. That analysis was authored by a University of Illinoisprofessor, Christopher Barkan, who formerly worked for the American Association of Railroads and does research supported by the association. Barkan, an expert on hazardous rail transport, said in an email that his work for Benicia was not influenced by his association with the railroad association.
Local officials say they plan to issue written responses to that assessment this summer. City of Davis official Mike Webb has challenged the report risk assessment, saying, “It only needs to happen once to be a real problem.”
Also on Friday, a coalition of activists who oppose rail shipments of crude oil called on the state Legislature or the governor to ban or place a moratorium on construction of any more crude rail terminals similar to the one Valero is proposing.
The state Office of Spill Prevention and Response announced it will conduct a series of public workshops later this month soliciting opinions on how it should expand its work to inland areas, including alongrail lines.The new state budget includes funding, from oil refinery fees, for the spill office to deal with the expected increase in crude oil shipments by rail. The agency will release information on its “legal and regulations” Web page on Friday.