Category Archives: Oil and gas industry

Oil and gas production in California – Extraordinary?

Repost from Legal Planet

Guest Bloggers Deborah Gordon and Frances Reuland: Is California Extraordinary? Its Oil Resources Certainly Are

Facts About California’s Oil and Greenhouse Gas Emissions

Despite ongoing federal rollbacks to environmental regulations, California has the right to set its own clean air standards because it is truly extraordinary. Truth be told, the compelling circumstances that first set in motion California’s vehicle emissions standards remain entirely valid. And there are four recent conditions, related to California’s oil supply, production, and refining, that bolster California’s case against the Administration’s threat to strip California of its clean car clout.

In 1967, then governor Ronald Reagan adopted statewide vehicle emissions regulations to address California’s severe air pollution. Shortly thereafter, when the federal Clean Air Act was adopted, California was granted a waiver to set its own tougher vehicle emissions standards. Over the decades, California has repeatedly ratcheted up these regulations to also include greenhouse gas (GHG) emissions. In order to maintain its waiver, California’s emissions standards must be deemed necessary to meet “compelling and extraordinary conditions.” Historically, these referred to the state’s unique meteorology, geography, population, and air pollution levels.

All of these still hold true: the sun shines strong, the weather is warm, mountains wall in emissions from cars and other sources, one in eight American drivers reside here, and the air is still very dirty.

But there are four more extraordinary circumstances, all relating to California’s oil resources, that need to be factored into the case for preserving and strengthening California’s clean car program.

These circumstances are bolstered by the fact that California’s gasoline and diesel markets are geographically isolated from other locations in the United States that produce refined products. As such, California is essentially self-sufficient, refining its own transport fuels. Little, if any, gasoline and diesel are obtained from outside the state to balance out supply with demand.

All of the oil California produces ends up in its own refineries, and this is not an environmentally-friendly affair, especially in a state that has taken the lead on clean air and climate change. According to the Oil Climate Index (OCI)—an open source tool (developed by Gordon and her partners at Stanford and the University of Calgary) that compares the climate impacts of global oils—extracting and refining oil in California is dirtier than anywhere else in the United States. Weakening California’s vehicle emissions standards will force Californians to consume more of the state’s dirty oil longer into the future. This will increase pollution levels and elevate risks to public welfare in the state with the nation’s worst air pollution—69 percent of counties had unhealthy air on 33 days last year.

California’s oil resources are extraordinarily strained

As Texas, North Dakota, New Mexico, and overall U.S. oil production rises, California production is in decline. Since 1985, California’s crude oil production has dropped steadily: the state now produces under 500,000 barrels per day, less than half of its output 30 years ago. California’s aging oil fields, unstable seismic geology, and tight environmental rules all work to limit oil production. Successfully running its oil refineries at their current capacity of 2 million barrels a day to meet Californians’ gasoline and diesel demands requires the state to feed the entirety of its domestic oil into its refineries and then import 70 percent more oil. If realized, Trump’s plan to weaken the state’s clean car standards would increase gasoline and diesel demand, exacerbating the state’s already-strained oil resources and further pressuring security of its energy supplies.

California’s oil resources are extraordinarily dirty

California’s oils have some of the largest carbon footprints worldwide. Producing, refining, and consuming a barrel of California oil emits more GHGs than other global barrels. For example, the state’s largest oilfield, Midway Sunset, is estimated to be more carbon intensive than Canada’s oil sands. California’s South Belridge and Wilmington fields are also among the highest-emitting in the nation. Trump’s plan would increase California’s GHG footprint, countering the state’s climate goals.

California’s oils are extraordinarily energy intensive

Aging oils in California require significant amounts of energy to extract and refine, much more than newer resources in North Dakota, the Gulf of Mexico, and elsewhere. Fossil fuels, like natural gas and diesel, provide these extra energy inputs. A barrel of California’s Midway Sunset oil, for example, uses one-third of its total energy just to extract and refine it into petroleum products like gasoline and jet fuel. Likewise, California’s complex refineries consume nearly five times more energy to turn the state’s oil into marketable products than simpler refineries. Much more manpower and money are spent bringing California oil to market than elsewhere in the country.

California’s oils are extraordinarily undocumented

Unlike other states and countries, California does not document its oil quality. The problem is that California’s oil resources are more dangerous to handle than most global oils. In 2011, for example, a California oil field worker was buried alive when the ground gave way as steam was being cycled through the oil field. California’s complex oil was documented long ago by the federal government, but recommendations for oil data transparency have gone unheeded for over a century. These large information gaps introduce new environmental risks for California.

California’s 30 million motor vehicles that far outnumber any other state are a major source of air pollution. Clean car rollbacks are a threat to the state’s environmental progress—and energy security. The state needs to fight hard to preserve its pioneering vehicle emissions standards on behalf of itself and several U.S. states and international provinces that have already adopted them. Beyond preserving the standards in place, state policymakers should also consider tightening their emissions standards if they are going to make real headway addressing climate change. In this historic fight, California can draw on its extraordinary status—namely its exceedingly dirty, depleting oils that are unusually energy intensive and fundamentally unknown.

Deborah Gordon is the director of the Energy and Climate Program at the Carnegie Endowment for International Peace and a senior fellow at the Watson Institute for International & Public Affairs at Brown University. Frances Reuland is Carnegie’s James C. Gaither Junior Fellow in the Energy and Climate Program.

    Canada Is Now A Land Of Oil Trains… wonder where it’s all going?

    Repost from Huffington Post Canada
    [Editor: …and this Canada news is relevant here in the U.S. because…?? Well, check out the map below.  – R.S.]

    Canada Is Now A Land Of Oil Trains

    This is happening even as Canadian crude sells at prices not seen in the oil markets since the 1990s.

    By Daniel Tencer, 11/21/2018 12:04 EST

    Crude oil and other petroleum products are transported in rail tanker cars on a Canadian Pacific Railway train near Medicine Hat, Alta., Sept. 10, 2018.
    Crude oil and other petroleum products are transported in rail tanker cars on a Canadian Pacific Railway train near Medicine Hat, Alta., Sept. 10, 2018. LARRY MACDOUGAL/CANADIAN PRESS

    Canada’s oil industry is facing record-low prices for its exports, a glaring lack of infrastructure to bring its product to market, and an uncertain long-term outlook.

    But none of that is stopping the oil patch from increasing production. And as one pipeline project after another fails to launch, the industry is relying more heavily than ever to ship its oil by rail.

    According to Statistics Canada, the volume of oil on Canada’s railroads has soared by 64.6 per cent in just the past year. And in the past seven years, the number of rail cars carrying oil across Canada has quadrupled.

    Oil-by-rail shipments in Canada reached a record high of nearly 20,000 rail cars in August this year. By volume, oil-by-rail is up by more than 64 per cent in the past year. HUFFPOST CANADA 

    The spike in oil trains began around 2011, a few years before the July, 2013, disaster in which a 74-car oil train derailed in Lac-Megantic, Que., killing 47 people.

    Besides the obvious risk to the environment and to human life, there is also the fact that oil producers are crowding out other industries that rely on rail.

    This leads to “higher costs and shipping delays for other industries,” Bank of Montreal senior economist Sal Guatieri wrote in a client note Tuesday.

    “Surging railway loadings of oil contrast with flat loadings for shipments of wheat, copper, machinery and many other products in recent years.”

    And if you think these oil trains don’t come through your neighbourhood, that they’re somehow limited to Alberta, take a look at this map of the oil rail network in Canada, provided by the Canadian Association of Petroleum Producers:

    A map of Canada’s oil-by-rail network and its connection to U.S. terminals. CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS  [click to enlarge]
    This massive expansion of oil-by-rail took place even as oil prices remained relatively weak, Canadian oil exports particularly so. This is especially true today; North American oil prices have dropped by some 31 per cent since a peak in early October, and closed at around US$53 on Tuesday.

    Canadian oil has been selling at an enormous discount to that, recently trading below $14 a barrel. The last time global oil prices were anywhere near that low would have been the late 1990s.

    But it’s not just Canada that seems to be desperate to get as much of its oil out of the ground right now as possible.

    “Saudi Arabia is pumping oil like never before, its output surging to a record 10.6 million barrels per day in October,” National Bank of Canada economist Krishen Rangasamy wrote in a client note Wednesday.

    “Iraq’s output is also on the rise as production from the Kirkuk region comes back online. Those are more than offsetting declines in sanction-hit Iran.”

    Not to mention, U.S. oil extraction has surged in recent years to the point it is now the world’s largest producer of crude.

    Meanwhile, traders are losing faith in oil’s prospects as the global economy shows signs of weakening.

    “The deceleration of world economic growth ─ as evidenced by ugly (third-quarter economic) results in places such as Japan and the Eurozone … has clearly hurt demand for oil,” Rangasamy wrote.

    Amidst all this, some executives in Canada’s oil patch have called for the Alberta government to use its existing powers to limit the amount of oil being pumped. So far, the province hasn’t indicated it plans to follow that advice.

    Hey, at least we get cheaper gas

    But there is one benefit to consumers from crude producers’ race to the bottom of the oil deposit: Lower fuel prices.

    “The free-fall on energy markets … helped force down pump prices across Canada by 2.1 cents a litre to $1.13, their lowest since October 2017,” analyst Dan McTeague of GasBuddy wrote this week.

    “As pump prices now stand 5.6 cents a litre lower than on this same day last year, much of the credit can be given to the unexpected and likely temporary decline in oil prices, which could be subject to an upturn once OPEC and Russia agree to production curbs beginning in December.”

      America Voted. The Climate Lost.

      Repost from The New Republic
      [Editor: Benicia wasn’t alone in this last election, suffering from the intrusion of Big Oil’s Big Money.  Oil companies ratcheted up their meddling in local politics all across the land.  This article highlights only a few: oil interests apparently spent $20 million in WA and $40 million in CO defeating key measures (carbon fee & fracking safety rules respectively).  – R.S.]

      Fossil fuel companies spent record amounts to oppose pro-climate ballot initiatives, and it paid off.

      By EMILY ATKIN, November 7, 2018

      The last two years in American politics have spelled trouble for the global climate, thanks largely to the Trump administration. And the next two years probably won’t be much better, given the results of Tuesday’s midterm elections.

      Voters failed to pass a historic ballot initiative in Washington state to create the first-ever carbon tax in the United States. They rejected a ballot measure to increase renewable energy in Arizona, and to limit fracking in Colorado. Some of Congress’ most outspoken climate deniers held onto their seats. Several candidates who ran on explicitly pro-climate agendas lost.

      Democrats did not quite get the blue wave they wanted, but it was even worse for environmentalists. There was no green wave whatsoever. That’s partially because of record political spending by the fossil fuel industry to oppose pro-climate initiatives, but also because of the Democratic Party’s failure as a whole to draw much attention to the issue.

      The midterm elections were always going to be consequential for climate change. The world’s governments only have about twelve years to implement policies that can limit global warming to 1.5 degrees Celsius. That’s the point at which catastrophic impacts begin, according to a recent report from an international consortium of scientists.

      The U.S., as the largest historical emitter of greenhouse gases, is essential to achieving that target. But for the last two years, the U.S. government has been ignoring the need to reduce emissions—and in many cases, actively working against it. Along with withdrawing from the Paris climate agreement, President Donald Trump has been attempting to repeal and weaken existing climate regulation, with the support of the Republican-controlled Congress.

      The midterms gave voters two opportunities to change America’s course on climate change. They could have elected a Congress that would no longer support Trump’s anti-climate agenda. And they could have approved strong statewide climate policies to counter the federal government’s inaction.

      Voters took the first opportunity, but only slightly. Democrats won the House of Representatives, making it near-impossible for Trump to pass any anti-climate legislation.

      But voters didn’t elect many candidates who ran on pro-climate agendas. Environmentalists had hoped that Florida, being on the front lines of climate change, would make history in that regard. But Democratic Senator Bill Nelson, a climate champion, was unseated by Governor Rick Scott, a Republican accused of banning the word climate from state government websites. And Democratic gubernatorial candidate Andrew Gillum, who pledged to act swiftly on climate, lost to a Republican who has dismissed the problem.

      Voters rejected almost every opportunity to enact strong state-level climate policies.The biggest failure by far was in Washington. Initiative 1631 would have made the state the first in the country to charge polluters for their emissions. The proceeds from the carbon fee could have provided Washington with “as much as $1 billion annually by 2023 to fund government programs related to climate change,” Fortune reported, and “potentially kickstart a national movement to staunch greenhouse gases.” The measure lost by 12 percentage points.

      The renewable energy ballot initiative in Arizona also presented a big opportunity to reduce emissions. Proposition 127 would have required electric companies in Arizona to get half of their power from renewable sources like solar and wind by 2030. (In a rare win for the environment on Tuesday, Nevada voters passed their own version of that initiative.) Proposition 112, Colorado’s ballot initiative to keep oil and gas drilling operations away from where people live, was far more about protecting public health than it was about limiting climate change. But the effect would have been to limit further fossil fuel extraction in the state.

      The oil and gas industry spent quite a lot of money opposing all of these pro-climate ballot initiatives. The campaign against Washington’s carbon fee “raised $20 million, 99 percent of which has come from oil and gas,” according to Vox. The carbon fee was thus one of the most expensive ballot initiative fights in Washington state history. The renewable energy fight in Arizona was also the most expensive in state history because of oil industry spending. The same was true for Colorado’s anti-fracking measure, as the oil and gas industry clearly spent nearly $40 million opposing it.

      While Tuesday’s results show the impact of massive political spending by the fossil fuel lobby, they also shine a light on Democrats’ failure to mobilize voters on the issue. The Democratic Party has failed to treat climate change with much, if any urgency this election season. According to The New York Times, the “vast majority” of the party’s candidates did not mention the problem “in digital or TV ads, in their campaign literature or on social media.” And the party’s leaders in Congress have given little indication that they intend to prioritize climate change in the future. Is it any wonder voters weren’t excited about solving the problem, either?


      Correction: A previous version of this story stated that Nevada voters rejected Question 6, a ballot initiative on renewable energy. The measure won. 

      Emily Atkin is a staff writer at The New Republic.