Category Archives: Oil drilling

Trump to allow new oil drilling in NorCal – targets include Mt. Diablo State Park near Walnut Creek

Repost from the San Francisco Chronicle
[Editor:  See also a Center for Biological Diversity press release.  – R.S.]

New oil drilling in the Bay Area? Trump admin opens possibility

By Kurtis Alexander May 9, 2019 
The San Ardo, Ca. oil field in Central California which is located between King City and Paso Robles, as seen on Wed. May 6, 2015. Photo: Michael Macor / The Chronicle 2015

The Trump administration brought its pro-drilling agenda to Northern California on Thursday, disclosing a plan to make more land available for oil and gas development, including parts of the Santa Cruz Mountains and East Bay hills.

Documents released by the U.S. Bureau of Land Management show the agency is looking to nearly double the amount of federal property and mineral deposits in its Central Coast region that can be leased by fossil fuel companies compared to what was proposed by the previous administration.

Roughly 725,000 acres across 11 counties will be opened up for new leasing, according to the bureau’s preferred plan, including areas in or around Mount Diablo State Park near Walnut Creek and Butano State Park near Pescadero.

Industry experts say such spots, far beyond the major oil and gas fields in San Benito, Monterey and Fresno counties, are unlikely to attract interest from oil companies because of public outcry or engineering logistics — or because they don’t find petroleum. But environmentalists aren’t so sure.

“Many of these areas have drilling and active gas wells (nearby), so yes, there’s a real risk that these places will be developed,” said Clare Lakewood, a senior attorney at the Center for Biological Diversity.

The federal government’s new plan comes as part of an environmental report addressing a court ruling five years ago that essentially halted new drilling leases in California until the impacts of fracking were fully evaluated.

The Center for Biological Diversity and the Sierra Club had brought suit against the Bureau of Land management in 2013, alleging the agency had not sufficiently analyzed fracking’s toll.

Fracking is a method of extracting oil in rock with high-pressure water and chemicals. The practice has become an increasingly popular way to get at previously inaccessible mineral deposits, but it can tear up the landscape, pollute groundwater and trigger earthquakes.

While environmental groups say fracking’s impacts have become increasingly evident since the lawsuit, the Bureau of Land Management report outlines ways in which it says the technology can be safely deployed.

The fossil fuel industry praised the agency Thursday for moving forward with a plan that embraces fracking and advances the extraction of oil and gas.

“We’re pleased that after five years, the process worked and the federal government has reaffirmed that hydraulic fracturing is a safe method of production in California,” said Kara Greene, spokeswoman for the trade group Western States Petroleum Association.

The Bureau of Land Management’s new report comes in contrast to the agency’s initial environmental report, prepared under President Barack Obama and released in early 2017. That document proposed leasing about 400,000 acres in the Central Coast region for oil and gas development.

“For the BLM, the oil and gas program needs to align with new secretarial orders,” said agency spokeswoman Serena Baker, referring to the Trump administration’s aggressive push to expand energy production.

In the bureau’s Central Coast region, drilling operations are currently limited to Fresno, Monterey, San Benito, Alameda, Contra Costa and Santa Clara counties.

Industry experts say that while leases may be offered in additional parts of the region, which include the counties of Merced, San Joaquin, San Mateo, Santa Cruz and Stanislaus, it’s not likely.

“Drilling for oil is so expensive in California, it’s hard for me to believe that anyone is doing it,” said Amy Myers Jaffe, formerly with the UC Davis Institute of Transportation Studies and now a senior fellow at the nonprofit Council on Foreign Relations in New York. “There’s only going to be new drilling if there’s someone who has property nearby and they want to extend what they’re doing on the federal pocket next door.”

The Bureau of Land Management estimates that 37 new oil and gas wells will be drilled as a result of the new plan, a small fraction of the few thousand existing wells in the region.

Most of California’s oil operations are on state and private property, with California regulators dictating if and where new drilling proceeds. Like the Trump administration, officials in Sacramento have been supportive of fossil fuel extraction.

Environmental groups have pressed the state to limit or halt new drilling, citing not only the local problems but the contribution of fossil fuels to global warming.

“There are hundreds of organizations that have been coming together for years” to pressure California officials, said Monica Embrey, a spokeswoman for the Sierra Club. She’s hoping the Newsom administration will finally act.

The Bureau of Land Management’s new report is scheduled to be published Friday in the Federal Register, at which time a 30-day public comment period begins. The governor has 60 days to weigh in. After input is gathered, the agency will review any concerns and decide how to move forward.

Last month, the bureau released a similar document for Southern and Central California, clearing the way for new oil and gas development on more than 1 million acres of federal land and mineral deposits.

Kurtis Alexander is a San Francisco Chronicle staff writer.
Share...

    Oil trains make comeback as pipeline bottlenecks worsen

    Repost from the Toronto Star (orig. in the Wall Street Journal)

    Crude-by-rail has rebounded across U.S. as production has outstripped pipeline capacity

    2 Feb 2019, By Rebecca Elliott and Paul Ziobro, The Wall Street Journal
    Much of the recent oil train growth is due to record shipments from Canada, where pipeline expansion projects have stalled. | MATTHEW BROWN THE ASSOCIATED PRESS FILE PHOTO

    The use of trains to carry crude is surging after dropping in recent years amid concerns about safety, as drillers in parts of North America produce more oil than area pipelines can accommodate.

    An average of 718,000 barrels of crude a day traversed America’s railways as of October, the latest data available, an 88% increase from a year earlier, according to the U.S. Energy Information Administration. That compares with a peak average of about 1.1 million barrels in October 2014.

    Much of the recent oil train growth is due to record shipments from Canada, where pipeline expansion projects, including Keystone XL and Trans Mountain, have stalled amid environmental opposition and legal delays. Crude-by-rail shipments also have ticked up from North Dakota’s Bakken region and the Permian Basin of West Texas and New Mexico, according to energy-monitoring firm Genscape Inc.

    The crude-by-rail comeback is expected to last through late this year in the Permian, and longer in North Dakota and Canada, as companies struggle to lay new pipe as quickly as drillers are getting oil out of the ground.

    Shipping oil by train is more expensive than sending it through a pipeline, so producers often avoid making longterm commitments to rail companies. It costs about $20 a barrel to send oil by rail from Canada to the U.S. Gulf Coast, compared with about $12.50 by pipeline, according to energy investment bank Tudor Pickering Holt & Co.

    But pipeline projects typically lag behind growth in oil and gas production, and the gap has lengthened in many parts of the country in recent years as local activism has made it increasingly difficult to complete projects. Meantime, North American oil production topped 15.6 million barrels daily in August, a 17% annual increase, according to the EIA.

    Bottlenecks have grown particularly severe in Canada. Heavy crude there was selling locally for more than $50 a barrel below U.S. benchmark prices last fall, reflecting producers’ inability to get it to market due to pipeline problems. U.S. oil prices have since fallen about 24%, closing at $54.23 a barrel on Wednesday.

    The congestion in Canada spurred companies including Houston-based ConocoPhillips and Calgary-based Cenovus Energy Inc. to ink rail deals.

    “The intention is to bridge us over to the next major pipeline expansion, so a few years,” ConocoPhillips finance chief Don Wallette, Jr. said last fall.

    Cenovus’s three-year agreements will allow it to transport about 100,000 barrels of oil daily to the U.S. Gulf Coast, where refiners mix it with lighter crudes to produce fuel.

    In October, about half of the oil the U.S. imported by rail from its northern neighbor went to the Gulf Coast, EIA data show, helping to offset a 30% decline in crude purchases from Venezuela over the past two years. Roughly a quarter went to the Midwest, while smaller amounts went to the East and West coasts.

    Derailments, notably one in Lac-Mégantic, Quebec, that killed 47 people in 2013, have raised concerns about the safety of transporting oil by trains on a large scale. That prompted federal regulators to impose tougher safety requirements for railcars, though opposition remains in some communities.

    The heightened demand for oil train transportation has benefited railroads including Union Pacific Corp., whose petroleum shipments rose 30% last year to 228,470 carloads as the company handled more crude oil. But Chief Executive Lance Fritz said the Omaha, Neb.-based railroad isn’t investing heavily to support crude-by-rail shipping because the demand could evaporate once major pipeline projects come online. “We’re careful to make these commitments because it’s a short-lived phenomenon,” Mr. Fritz said in a recent interview. “It’s just not going to be around for long-term returns.”

    Since shipping oil by rail is generally more expensive, pipelines remain a more attractive option when available, analysts say. “People would love to have the optionality to move onto crude by rail whenever they want to, but nobody wants to be signing a check for it,” RBN Energy analyst John Zanner said.

    Mr. Zanner said because of limited supply of railcars and other infrastructure he doesn’t expect oil train shipments from Canada to increase significantly as a result of U.S. sanctions on Venezuela’s state-owned oil company.

    Oil companies often use trains on an ad hoc basis, and rail provides geographic and financial alternatives for producers wary of committing to new pipes. Pipeline companies typically won’t proceed with a project unless drillers sign multiyear contracts guaranteeing payment regardless of whether they have oil to ship.

    Whiting Petroleum Corp. is weighing those trade-offs in North Dakota, where it is evaluating whether to support an additional pipeline or rely on costlier, but more flexible, crude-by-rail transportation. Crude production in the state, once the heart of oil-train transportation, has swelled about 38% since the Dakota Access Pipeline opened in 2017, federal data show, testing the limits of existing pipelines.

    In November, oil sold in Minnesota fetched as much as $19 a barrel less than it would have at the main U.S. trading hub in Cushing, Okla., reflecting the bottleneck, according to price reporting agency S&P Global Platts. “You’re always balancing between getting the infrastructure in place versus flexibility,” said Peter Hagist, a senior vice president for Whiting.

    Share...

      Oil firms dig deep to battle Colo. anti-fracking initiatives

      Repost from The Coloradoan

      Significant funding gap in Colorado fracking fight

      By Jacy Marmaduke, August 18, 2016 11:17 a.m. MDT
      Anti-fracking protesters
      Anti-fracking protesters

      Committees fighting proposed Colorado ballot measures that would limit fracking have raked in about $15 million in donations this year, more than 35 times the contributions of groups backing the measures.

      About 90 percent of the anti-ballot measure donations have come from energy companies, including $10.5 million from Anadarko Petroleum Corporation and Noble Energy alone.

      “We’ve never seen a number like this from the opposition,” said Luis Toro, executive director of Colorado Ethics Watch, the state government watchdog group that released the numbers confirmed by the Coloradoan. “It shows that (businesses) are ready to spend a lot of money in the best interest of the company’s bottom line.”

      In contrast, individual donations of less than $1,000 have been the primary fuel for the pro-ballot measure efforts, bolstered by support from U.S. Rep. Jared Polis, his father and the executive director of the fundraising committees. The pro-ballot measure committees have received about $424,000 in donations this year.

      Petitioners submitted signatures for proposed ballot measures 75 and 78 on Aug. 8, the day they were due. The Secretary of State will declare the signatures sufficient or insufficient by Sept. 8. If the office confirms petitioners collected about 98,500 valid signatures for each measure, they’ll appear in the November election.

      Measure 75 would amend the state constitution to allow local control of oil and gas development, effectively overturning the Colorado Supreme Court’s denial of Fort Collins’ fracking moratorium and Longmont’s fracking ban.

      Measure 78 would amend the state constitution to increase setbacks for oil and gas development from 500 feet to 2,500 feet from occupied structures. The measure would also require a 2,500-foot setback from “areas of special concern,” a category that includes most water sources and riparian areas, parks, sports fields, playgrounds and public open spaces.

      The current setback of 500 feet is about the length of 1 1/2 football fields. The proposed setback of 2,500 feet is about a half-mile. It would apply only to new development — but the ballot measure includes reentry of existing wells in its definition of “new development.”

      Two committees are working on each side of the proposed ballot measures: Yes for Health and Safety Over Fracking and Yes for Local Control Over Oil and Gas are on the pro-ballot measure side. Protecting Colorado’s Environment, Economy and Energy Independence and Vote No on 75/78 are on the anti-ballot measure side.

      About 30 percent pro-ballot donations were in the form of services from organizations like Food and Water Watch and Greenpeace. Those services are assigned cash values for record-keeping purposes.

      “A successful ballot initiative usually costs at least a million dollars,” Toro said. “That might be an indication of where they’re headed.”

      The committees could see a cash infusion if they’re approved for the ballot, Toro added. Committee representatives weren’t available for comment.

      The anti-ballot measure committees have received about $15 million in donations this year, not including about $746,000 Protect Colorado had on-hand on Jan. 1. About 10 percent of those donations were in the form of services.

      “These measures are so extreme and such a threat to Colorado’s economy that we’ve got the commitments to spend $24 million to fight them,” Protect Colorado spokeswoman Karen Crummy said. “We’ve been very upfront about that from the beginning.”

      The anti-ballot measure committees have spent 20 times more than the pro-ballot measure groups as of Aug. 1 — $5 million versus about $250,000, according to data from the Secretary of State’s office. Also as of Aug. 1, the anti-ballot measure side had roughly $9.1 million to the opposition’s $43,000.

      Lists of top monetary donors for each side of the issue give you a good idea of how their fundraising has taken shape.

      Top monetary donors for pro-ballot measure committees:

      1. Patricia Olson (founder of both committees): $60,300
      2. J. Christopher Hormel (Boulder philanthropist): $60,000
      3. (tie) Lush Cosmetics: $25,000
      4. (tie) Jared Polis: $25,000
      5. (tie) Fracking Fund of the New World Foundation: $25,000
      6. (tie) Stephen Schutz (physicist, greeting card designer, Jared Polis’ father): $25,000

      Top donors make up 52 percent of 2016 contributions.

      Top monetary donors for anti-ballot measure committees

      1. Anadarko Petroleum Corporation: $5.5 million
      2. Noble Energy: $5 million
      3. PDC Energy: $750,000
      4. Synergy Resources Corporation: $650,000
      5. Bayswater Exploration and Production: $500,000
      6. Whiting Oil and Gas Corporation: $300,000

      Top donors make up 85 percent of 2016 contributions.

      The American Petroleum Institute, the national trade group representing the oil and gas industry, funded about $1.1 million worth of consulting and other services for Vote No on 75/78 but isn’t on this list because the donations were considered non-monetary.

      Share...