Category Archives: Oil Industry

Wave of oil money hits local Calif. climate candidates

By Adam Aton, E&E News reporter Climatewire: Monday, March 2, 2020
Oil pump jacks are seen next to a strawberry field in Oxnard, Calif. Photo credit: Lucy Nicholson/REUTERS/Newscom
Oil pump jacks are seen next to a strawberry field in Oxnard, Calif., where climate change is a top issue in a race for the Ventura County Board of Supervisors. Lucy Nicholson/Reuters/Newscom

OXNARD, Calif. — The oil industry has turned an epicenter of climate change into one of its first 2020 battlegrounds.

And the election it’s targeting isn’t for president, Congress or even the California Statehouse. It’s more local than that.

Ventura County, California’s fastest-warming county and one of its top oil producers, is voting tomorrow for three of the five seats on its county Board of Supervisors.

With the power to deny oil permits, a majority on the board would give climate hawks a powerful weapon to use against one of the region’s heavyweight players. Greens have notched some wins recently — but now the industry is fighting back.

One oil company, California Resources Corp., a spinoff from Occidental Petroleum Corp., already has spent more than $800,000 — more than the opposing candidates have raised combined.

That has reshaped an election where 50-cent mailers are normally big-ticket items. This year, the oil-aligned candidates even have had ads air on cable news.

“They’ve spent so much money. I mean, we’re a little town. I see my face on CNN and MSNBC talking about what a corrupt politician I am,” said Oxnard Mayor Pro Tem Carmen Ramírez, who’s running for the county board with environmentalist backing.

The contest is an early test, too, for the forces already shaping the Democratic presidential primary, as well as races for Congress and the reelection campaign of President Trump. On one side are activists trying to mobilize voters with environmental issues. On the other side is money.

The outcome could be a harbinger for elections across the nation where energy and environment issues play big. California alone has several House seats where Democrats in 2018 leveraged climate and clean energy promises to knock off once-dominant Republicans.

Ventura Supervisor Kelly Long won in 2016 with the help of about $175,000 from the oil industry, flipping the seat Republican. She has more than double that oil money this time, as does Jess Herrera, a longshoreman and port commissioner who is also getting a six-figure oil money boost for his county board campaign.

Greens are using the big spending to try to galvanize their own voters and volunteers. It’s a tactic that could have more power in a political environment shaped by Trump. Unlike the 2016 race, activists say climate and campaign finance have mixed into a potent message this time around.

The election has turned into a referendum on Big Oil, said RL Miller, founder of Climate Hawks Vote and a candidate for the Democratic National Committee.

“It was hard [last time] to get a lot of Democrats to really care, other than on purely tribal, partisan [grounds],” said Miller, who lives in Ventura County.

“Now, the Dem messaging is really explicitly about a Big Oil, dark money super [political action committee]: Don’t let outside oil money buy this election.”

Ramírez’s campaign has countered the oil effort with ads on Spanish radio, press conferences with Democratic leaders and handwritten postcards to voters. The campaign has sent about 6,000 in the last month, said her campaign manager, Robert O’Riley.

He added that Ramírez’s supporters were animated by the other side’s spending.

“It really backfired at them,” he said. “That’s a real, true grassroots effort that we have. … You dump a million dollars, and we gather in homes and buildings and write postcards to people.”

A California Resources spokesperson said the oil company is trying to defend jobs in the 20 fields it operates in the county.

“Recent policies of the County Board of Supervisors have hampered the ability of businesses in several industries, including ours, to invest locally and resulted in losses of good-paying jobs and local tax revenues,” the company’s communications director Rich Venn said in a statement.

“We support committees and candidates who understand the importance of sensible regulations that foster reliable and affordable in-state energy production and its economic, environmental and social value to our communities,” Venn added.

One oil and gas worker said the industry has operated in the area for a century without major problems — an assertion that others dispute. He added that all people in the industry care about the environment because they have to drink the water and breathe the air, too.

“I’m not going to harm myself for a paycheck,” said the worker, who only gave his name as Adam V. to protect himself from retaliation.

Oil industry decline

A homeless camp in Oxnard, Calif. Photo credit: Adam Aton/E&E News
A homeless camp in Oxnard is situated between a power plant and a Superfund site. Adam Aton/E&E News

Ventura County’s oil sector has been in decline for decades. In 2016 the county produced 7.7 million barrels of oil, a fraction of the 46 million it produced in 1958. Some wells operate under decades-old permits.

That industrial legacy is still visible in the offshore oil pads looming over Oxnard’s beaches and the pumpjacks churning among strawberry fields.

The U.S. Geological Survey last year reported contaminants like methane in the groundwater around Oxnard’s oil fields. The county board has set a moratorium on new wells around potable water sources pending further study. Supervisors also are considering a new setback requirement for oil projects, which could significantly restrict the areas where companies could drill.

Kim Marra Stephenson, the candidate challenging Long, says Ventura County needs to prepare for a decline in the oil industry similar to the downturn of coal.

She cited reporting by the Los Angeles Times and Center for Public Integrity that found that California Resources has 7,600 idle wells, with the average idle well producing nothing for 14 years. The company’s share price has tumbled, and the report estimated it faces $1 billion in cleanup costs on top of $5 billion in other debt maturing by 2022.

“They’re trying to hang on by a thread here in Ventura County. When they go bankrupt, I’m very, very concerned about who’s going to foot that [cleanup] bill and what’s going to happen to our workers,” Stephenson said.

“I’m not saying ban everything right now, but we’ve got to make this transition because it could be falling on us even if we don’t choose it.”

Ventura is also the fastest-warming county in the lower 48 states, according to an analysis by The Washington Post. Its temperatures have risen by an average of 2.6 degrees Celsius. Worldwide averages are closer to 1 C of warming.

The rise in extreme heat hits hard in this heavily Latino area, where many people work on farms. The county also has seen a run of destructive wildfires, including the 2017-2018 Thomas Fire, one of the largest in state history.

That has made climate change a bread-and-butter issue for voters here, who might miss work if conditions are too smoky to work in the fields, said Lucas Zucker, policy and communications director for the Central Coast Alliance United for a Sustainable Economy.

Mobilizing those Latino voters is a long-term project, he said. Organizers have to contend with people who move often, fear intimidation or have felt ignored by the government.

Zucker contrasted that approach to the tactics of California Resources, whose advertisements have attacked trips that Ramírez took to foreign countries — rather than boosting its own image as an oil company.

“For them, it’s kind of a slash-and-burn model,” he said. “They’re not even trying to build long-term support for industry. It’s really just about attack, attack, attack. … Whatever it takes to win the election, then we’ll figure everything else out later.”

Do you have a story to tell about living in a refinery community?

Major Public Health Community Meeting on Oil and Gas Rulemaking, March 9

Sunflower Alliance, February 22, 2020

The State of California is sponsoring a series of statewide meetings where members of the public can testify about the ways the oil industry affects our health and that of our communities.  One of these meetings is being held in Oakland (see when and where below).  We highly encourage everyone with a story to tell about oil industry impacts on you, your family and your neighborhood to come and testify.  We will have two minutes to speak our hearts and minds.

​​The meeting is sponsored by the Geologic Energy Management Division (CalGEM, formerly DOGGR) of the state’s Department of Conservation.  Although CalGEM specifically regulates oil and gas production (oil drilling), it will share public testimony from this meeting with other state regulatory agencies.

The new rulemaking that results will be based on this important public input, and will consider the best available science and data to inform new and strengthened ​protective state requirements.​

The Sunflower Alliance is making arrangements for free transportation from Rodeo and Richmond to the hearing.  If you need a ride, please let us know at action@sunflower-alliance.com .

See this Facebook post for a recording of the first public hearing in Bakersfield meeting on February 19.

A little more background:

AB345 (currently heading toward the state senate) and the Governor’s own plans require Public Health Rulemaking around the urgent call for 2,500-foot setbacks from oil and gas extraction sites.  The first step is this series of pre-rulemaking community meetings to gather public input.

When you testify about Bay Area oil industry impacts, please be sure to start with a strong statement of solidarity with those folks who are living near oil drilling sites, and express your support for setbacks and AB345.

If you can’t attend:

Written comments can be sent via email
to CalGEMRegulations@conservation.ca.gov
or by postal mail to—
Department of Conservation
801 K Street, MS 24-02
Sacramento, CA 95814
ATTN: Public Health near Oil Gas Rule-making

WHEN

Monday, March 9, 1-3 PM —Doors open at 12:30.  A rally outside is tentatively scheduled for noon.

WHERE

​Greenlining Institute
360 14th St., Oakland (near 12th St. BART)

Flood of Oil Is Coming, Complicating Efforts to Fight Global Warming

A surge of oil production is coming, whether the world needs it or not.

A Norwegian oil platform in the North Sea. Norway’s production has declined for two decades, but its development of the Johan Sverdrup deepwater field should reverse the trend.
A Norwegian oil platform in the North Sea. Norway’s production has declined for two decades, but its development of the Johan Sverdrup deepwater field should reverse the trend. Credit…Nerijus Adomaitis/Reuters
The New York Times, by Clifford Krauss, Nov. 3, 2019

HOUSTON — The flood of crude will arrive even as concerns about climate change are growing and worldwide oil demand is slowing. And it is not coming from the usual producers, but from Brazil, Canada, Norway and Guyana — countries that are either not known for oil or whose production has been lackluster in recent years.

This looming new supply may be a key reason Saudi Arabia’s giant oil producer, Aramco, pushed ahead on Sunday with plans for what could be the world’s largest initial stock offering ever.

Together, the four countries stand to add nearly a million barrels a day to the market in 2020 and nearly a million more in 2021, on top of the current world crude output of 80 million barrels a day. That boost in production, along with global efforts to lower emissions, will almost certainly push oil prices down.

Lower prices could prove damaging for Aramco and many other oil companies, reducing profits and limiting new exploration and drilling, while also reshaping the politics of the nations that rely on oil income.

The new rise in production is likely to bring economic relief to consumers at the gas pump and to importing nations like China, India and Japan. But cheaper oil may complicate efforts to combat global warming and wean consumers and industries off their dependence on fossil fuels, because lower gasoline prices could, for example, slow the adoption of electric vehicles.

Canada, Norway, Brazil and Guyana are all relatively stable at a time of turbulence for traditional producers like Venezuela and Libya and tensions between Saudi Arabia and Iran. Their oil riches should undercut efforts by the Organization of the Petroleum Exporting Countries and Russia to support prices with cuts in production and give American and other Western policymakers an added cushion in case there are renewed attacks on oil tankers or processing facilities in the Persian Gulf.

Driving New Production

Daniel Yergin, the energy historian who wrote “The Prize: The Epic Quest for Oil, Power and Money,” compared the impact of the new production to the advent of the shale oil boom in Texas and North Dakota a decade ago.

“Since all four of these countries are largely insulated from traditional geopolitical turmoil, they will add to global energy security,” Mr. Yergin said. But he also predicted that as with shale, the incremental supply gain, combined with a sluggish world economy, could drive prices lower.

There is already a glut on the world market, even with exports from Venezuela and Iran sharply curtailed by American sanctions. Should their production come back, that glut would only expand.

Years of moderate gasoline prices have already increased the popularity of bigger cars and sports utility vehicles in the United States, and the probability of more oil on the market is bound to weigh on prices at the pump over the next few years.

The oil-supply outlook is a sharp departure from the early 2000s, when prices soared as producers strained to keep up with ballooning demand in China and some analysts warned that the world was running out of oil.

Then came the rise of hydraulic fracturing and drilling through tight shale fields, which converted the United States from a needy importer into a powerful exporter. The increase in American production, along with a choppy global economy, shaved oil prices from well over $100 a barrel before the 2007-9 recession to about $56 on Friday for the American benchmark crude.

Those low prices have forced OPEC and Russia to lower production in recent years, and this year many financially struggling American oil companies have slashed their exploration and production investments to pay down their debts and protect their dividends.

An Era of Cheaper Oil

The new oil will accelerate those trends, energy experts say, even if only for a few years as production declines in older fields in other places.

“This could spell disaster for every producer and producing country,” said Raoul LeBlanc, a vice president at IHS Markit, an energy consultancy, especially if the United States and Iran come to some sort of nuclear deal.

Like the shale boom, the coming supply surge is a sudden change in dynamics. Guyana currently produces no oil at all. Norwegian and Brazilian production has long been in decline. And in Canada, concerns about climate change, resistance to new pipelines and high production costs have curtailed investments in oil-sands fields for five consecutive years.

Production of more oil comes at a time when there is growing acknowledgment by governments and energy investors that not all the hydrocarbons in the ground can be tapped if climate change is to be controlled. But exploration decisions, made years ago, have a momentum that can be hard to stop.

A drilling ship operated by Noble Energy for Exxon Mobil off Guyana. The South American country’s entry into the ranks of oil producers follows a string of major discoveries. Credit…Christopher Gregory for The New York Times

“Legacy decisions keep going,” said John Browne, BP’s former chief executive. “Things happen in different directions because decisions are made at different times.”

The added production in Norway comes despite the country’s embrace of the 2016 Paris climate agreement, which committed nations to cut greenhouse-gas emissions. Its sovereign wealth fund has cut investments in some oil companies, and its national oil company, Equinor, has pledged to increase its investments in wind power.

Equinor, which recently changed its name from Statoil to emphasize its partial pivot to renewable energy, nevertheless defends the new field on its company website, asserting, “The Paris Agreement is quite clear that there will still be a need for oil.”

Norway’s rebound from 19 years of decline began a few weeks ago as Equinor began production in its Johan Sverdrup deepwater field. The field will eventually produce 440,000 barrels a day, increasing the country’s output from 1.3 million barrels a day to 1.6 million next year and 1.8 million in 2021.

In Brazil, after years of scandal and delays, new offshore production platforms are coming online. Production has climbed over the last year by 300,000 barrels a day, and the country is expected to add as much as 460,000 more barrels a day by the end of 2021. In the coming days, Brazil is scheduled to hold a major auction in which some of the largest oil companies will bid for drilling rights in offshore areas with as much as 15 billion barrels of reserves.

In Canada, the 1,000-mile Line 3 pipeline that will take oil from the Alberta fields to Wisconsin, is near completion and awaiting final permitting. Energy experts say that could increase Canadian production by a half million barrels a day, or about 10 percent.

And the most striking change will be in Guyana, a tiny South American country where Exxon Mobil has made a string of major discoveries over the last four years. Production will reach 120,000 barrels a day early next year, rising to at least 750,000 barrels by 2025, and more is expected after that.

Guyana potentially has the most complicated future of the four countries. Its ethnically divided politics are sometimes turbulent, and Venezuela claims a large portion of its territory. But with the oil fields miles offshore, drilling is largely protected. In addition, Venezuela is mired in a political and economic crisis and unlikely to challenge a Chinese state company which has an oil investment in Guyana, along with Exxon Mobil and Hess.

Energy experts say the new production from the four nations will more than satisfy all the growth in global demand expected over the next two years, which is well below the growth rates of recent years before economic expansion in China, Europe and Latin America slowed.

At the same time, new pipelines in Texas are expected to increase United States exports to 3.3 million barrels a day next year, from the current 2.8 million.

That adds up to a vast surplus unless there is a resurgence of global economic growth to stimulate demand, or a prolonged conflict in the Middle East or other disruption to supply.

“To support prices, OPEC is going to have to extend and probably deepen their production cuts for a while,” said David L. Goldwyn, a top State Department energy diplomat during the Obama administration. “Getting the prices up to the point where Aramco can launch its I.P.O. is a big Saudi priority.”

The new barrels on the world market will also put pressure on companies producing in the United States, where profit margins for shale production are slim at current price levels and stock prices are falling.

“If I was in the business I would be scared to death,” said Philip K. Verleger, an energy economist who has served in both Democratic and Republican administrations. “The industry is going to face capital starvation.”

American oil executives express concern that drilling will fade in North Dakota, Oklahoma, Louisiana and Colorado as oil prices drop to as low as $50 a barrel in the next few years. Small companies are expected to merge, while others go bankrupt.

Scott D. Sheffield, chief executive of the Texas-based producer Pioneer Natural Resources, said he expected the growth of United States oil production to ease from 1.2 million barrels a day this year to 500,000 barrels next year and perhaps 400,000 barrels in 2021. Those increases are modest compared with the average increase of a million barrels a day every year from 2010 to 2018.

But Mr. Sheffield said he was optimistic, in part because new supplies coming to market could be offset by production declines in older fields in Mexico and elsewhere after 2021.

“There are no more big, giant new projects except Guyana,” he said. “We just have to be patient for a couple of more years.”


A version of this article appears in print on , Section A, Page 1 of the New York edition with the headline: Needed or Not, Oil Production Is Set to Surge.

NYTimes on oil train disasters since Lac-Mégantic: “Deadly Cargo Still Rides the Rails”

Rail Industry Publication Attacks New York Times Over Lac-Mégantic Oil Train Tragedy

DeSmog, By Justin Mikulka, August 26, 2019 (Read time: 7 mins)
Lac-Megantic oil train fire
Train burning in Lac-Mégantic, Quebec. Credit: Transportation Safety Board of Canada, via CC BY-NC-ND 2.0

Six years after the oil train derailment and explosion in Lac-Mégantic, Quebec — which claimed 47 lives and destroyed the downtown of this small lakeside town — The New York Times reviewed what progress has been made since the disaster, with a headline that noted “Deadly Cargo Still Rides the Rails.”

However, Railway Age, the leading rail industry publication, attacked The Times’ coverage in an incredibly flawed critique. The title of finance editor David Nahass’s take-down is “Clickbait Journalism at The New York Times.”

In reality, both stories miss the mark on oil train safety.

The New York Times makes a major error in the industry’s favor regarding rail safety, as well as serious omissions about the risks of moving flammable cargo by rail.

Nevertheless, Nahass claims that The New York Times “sadly exhumes and retreads the memories of those lost and the pain of those who suffered trauma in order to generate readership.”

Distorting Reality

Nahass did get one thing correct in his story, which comes across like rail industry propaganda: “The perception of progress on the rail safety front is not universally perceived.” It isn’t universally perceived because, for the transport of flammable materials by rail, progress hasn’t happened. Instead, the Trump administration is in the process of rolling back the few meaningful regulations that had been put in place in the U.S. since the 2013 disaster.

To support his claim, Nahass points to three areas that he says have seen improvements in rail safety: tank car design, positive train control (PTC), and train speed guidelines.

Nahass cites the new tank car designs, DOT-117R and DOT-117J, as an industry action to improve oil train safety. But that claim is based on the premise that these rail cars do not rupture during accidents. Three accidents involving the DOT-117R tank cars have occurred in recent years, two with oil trains and one with an ethanol train.

As DeSmog has reported, all three were major disasters.

In June of 2018, an oil train derailed in Doon, Iowa. Fourteen of the DOT-117R tank cars ruptured, spilling 230,000 gallons of oil into a flooded river. In February, another oil train of DOT-117R tank cars derailed in Canada, resulting in another major oil spill. In April, an ethanol train with DOT-117R tank cars derailed and exploded in Texas, leading to the local evacuation of a residential area and causing a large fire that burned a stable and killed three horses.

Three crashes with the new “safe” tank cars. Three major failures. Railway Age’s failure to mention these accidents can only be described as “an editorial issue” of the type Nahass accuses The New York Times as being guilty of.

The one glaring error in favor of the rail industry from the Times’ coverage is that the “effectiveness [of DOT-117 tank cars] in a real-world disaster remains to be seen.” Considering all three accidents involving these rail cars resulted in fires, spills, and evacuations, this statement is a huge error. The rail industry’s top trade magazine should have been thanking The Times instead of attacking them.

As for the claim that speed limits have improved rail safety, that claim, too, is without merit. Every major oil train accident after the Lac-Mégantic disaster has happened below the speed limits. DOT-117 tank cars appear unable to withstand derailments at low speeds, as evidenced by them failing in three out of three accidents.

The sheer audacity of Nahass claiming that the rail industry deserves credit for positive train control (PTC), a system for monitoring and controlling train movements, as a safety measure is stunning.

As documented on DeSmog, PTC was first recommended as a safety measure almost 50 years ago. The industry has fought against this critical safety technology for the ensuing five decades, has ignored a 2008 Congressional mandate to implement the technology by 2015, and continues to delay rolling out this proven safety measure. A top rail lobbyist was even given an award for his work in delaying its implementation.

Nahass says, “Avoidable death is a tragedy no one should have to bear.” Hundreds of people have died because the rail industry has been fighting PTC, which includes well-funded lobbying efforts. Avoidable deaths are not a tragedy for the rail industry but a by-product of successful lobbying and higher profits.

Meanwhile, neither The New York Times nor Railway Age mentions how new regulations to require modern braking systems on trains, which still use 19th century technology were repealed under the Trump administration.

Lac-Mégantic Was ‘a Corporate Crime Scene’

Shortly after the 2013 Lac-Mégantic disaster, Martin Lukacs, columnist for The Guardian, wrote a prophetic statement: “The explosion in Lac-Mégantic is not merely a tragedy. It is a corporate crime scene.”

At DeSmog — and in more detail in my book Bomb Trains: How Industry Greed and Regulatory Failure Put the Public at Risk— we have documented how this disaster was the result of lax regulation and corporate cost-cutting. Yet Nahass ignores all of that information when saying the accident was a result of three events, none of which were related to the root cause of the problems leading to the accident.

Even the Transportation Safety Board of Canada noted 18 factors that contributed to the deadly oil train accident. The fact that Nahass only listed three of these is another example of a blatant “editorial issue.”

Deregulation Caused Lac-Mégantic Deaths and Continues to Increase Risks

Nahass purports that the worst thing about The New York Times story was that “it highlights deregulation as a possible cause for the tragedy.” I have no doubt deregulation was the root cause of the Lac-Mégantic tragedy.

The accident could have been avoided if a back-up braking system had been engaged. But this system wasn’t used because the rail company, Montreal, Maine, and Atlantic (MMA), wasn’t required to and instead explicitly instructed the train’s engineer not to engage it.

The train was also much heavier than allowed. MMA knew this but instructed the engineer to ignore that fact, a sign of weak regulatory oversight. Despite attempts to require two-persons crews, the train that destroyed downtown Lac-Mégantic was allowed to be operated with only a single crew member — another risk factor. No regulations required the oil in the tank cars to have been “stabilized,” removing its flammable vapors. At the time, modern braking systems were not mandatory for trains carrying flammable cargo, and while a rule changing that was put in place in 2015, the Trump administration has since repealed it.

That fateful night in Quebec in 2013, a train full of flammable material was parked on the top of a steep hill above a small town. It was left on the main tracks, with the engine running, and no safety measures were in place to address known causes of runaway trains — a problem that The Times correctly notes has gotten worse since 2013.

However, Railway Age defends deregulation as a way to improve safety, even after the recent deadly Boeing airline disastersthat also seem to have roots in industry deregulation.

At a November 2016 conference examining lessons from the Lac-Mégantic disaster, Brian Stevens, who at the time was National Rail Director for Unifor, Canada’s largest private sector union, clearly cited deregulation as the root cause of the accident.

Lac-Mégantic started in 1984. It was destined to happen,” said Stevens, referring to the start of a deregulatory era for rail that continues today in both the U.S. and Canada.

These days, the Trump administration is actively working to roll back recently passed federal rules governing the rail industry. The Federal Railroad Administration has explicitly stated a focus on removing regulations and letting rail companies volunteer to implement safety measures.

Even that freedom from regulation isn’t enough for the rail industry. Its main publication wants freedom from journalistic critique as well. The attack piece in Railway Age is not just an egregious editorial failure; it represents a basic moral failure of an industry that continues to put profit over safety.

Main Image: Train burning in Lac-Mégantic, Quebec. Credit: Transportation Safety Board of Canada, via CC BYNCND 2.0