Heinberg – Our Fossil Fuel Economy – times they are a’changin’

Repost from Pacific Standard, PS Magazine
[Editor: this is a serious primer on our fossil-fuel-driven economy and the global climate crisis by Richard Heinberg of the Post Carbon Institute.  It’s well worth your time to study, and a keeper for reference.  Significant quote: “While America’s current gross oil production numbers appear rosy, from an energy accounting perspective the figures are frightening: Energy profit margins are declining fast.”  – RS]

The Gross Society: We’re Entering an Age of Energy Impoverishment

By Richard Heinberg   •    April 18, 2014
gross-society-1

Tar sands development in Northern Alberta, Canada. (Photo: Christopher Kolaczan/Shutterstock)
It’s hard to overstate just how serious a threat our energy crisis is to every aspect of our current way of life. But the problem is hidden from view by oil and natural gas production numbers that look and feel just fine.

In his most recent State of the Union address, President Obama touted “more oil produced at home than we buy from the rest of the world—the first time that’s happened in nearly 20 years.” It’s true: U.S. crude oil production has increased from about five million barrels per day to nearly 7.75 mb/d over the past five years (we still import over 7.5 mb/d).  And American natural gas production is at an all-time high.

But there’s a problem. We’re focusing too much on gross numbers. (The definition of gross I have in mind is “exclusive of deductions,” as in gross profits versus net profits., though other definitions apply here, too.) While these gross numbers appear splendid, when you look at net, things go pear-shaped, as the British say.

Our economy is 100 percent dependent on energy: With more and cheaper energy, the economy booms; With less and costlier energy, the economy wilts. When the electricity grid goes down or the gasoline pumps run dry, the economy simply stops in its tracks.

But the situation is actually a bit more complicated, because it takes energy to get energy. It takes diesel fuel to drill oil wells; It takes electricity to build solar panels. The energy that’s left over—once we’ve fueled the production of energy—makes possible all the things people want and need to do. It’s net energy, not gross energy, that does society’s work.

Before the advent of fossil fuels, agriculture was our main energy source, and the average net gain from the work of energy production was minimal. Farmers grew food for people—who did a lot of manual work in those days—and also for horses and oxen, whose muscles provided motive power for farm machinery and for land transport via carts and carriages. Because margins were small, most people had to toil in the fields in order to produce enough surplus to enable a small minority to live in towns and specialize in arts and crafts (including statecraft and soldiery).

In contrast, the early years of the fossil fuel era saw astounding energy profits. Wildcat oil drillers could invest a few thousand dollars in equipment and drilling leases and, if they struck black gold, become millionaires almost overnight. (For a taste of what that was like, watch the classic 1940 film Boom Town, with Clark Gable and Claudette Colbert.)

Huge energy returns on both energy and financial investments in drilling made the fossil fuel revolution the biggest event in economic history. Suddenly society was awash with surplus energy. Cheap energy plus a little invention yielded mechanization. Farming became an increasingly mechanized (i.e., fossil-fueled) occupation, which meant fewer field laborers were needed. People left farms and moved to cities, where they got jobs on powered assembly lines manufacturing an explosively expanding array of consumer goods, including labor-saving (i.e., energy-consuming) home machinery like electric vacuum cleaners and clothes washers. Household machines helped free women to participate in the work force. The middle class mushroomed. Little Henry and Henrietta, whose grandparents spent their lives plowing, harvesting, cooking, and cleaning, could now contemplate careers as biologists, sculptors, heart specialists, bankers, concert violinists, professors of medieval French literature—whatever! Human ambition and aspiration appeared to know no bounds.

Unfortunately, there are a couple of problems with fossil fuels: They are finite in quantity and of variable quality. We have extracted them using the low-hanging fruit principle, going after the highest quality, cheapest-to-produce oil, coal, and natural gas first, and leaving the lower quality, more expensive, and harder-to-extract fuels for later. Now, it’s later.

oil-graphic

It’s helpful to visualize this best-first principle by way of a diagram of what geologists call the resource pyramid. Extractive industries typically start at the top of the pyramid and work their way down. This was the case historically when coal miners at the beginning of the industrial revolution exploited only the very best coal seams, and it’s also true today as tight oil drillers in places like North Dakota concentrate their efforts in core areas where per-well production rates are highest.

We’ll never run out of any fossil fuel, in the sense of extracting every last molecule of coal, oil, or gas. Long before we get to that point, we will confront the dreaded double line in the diagram, labeled “energy in equals energy out.” At that stage, it will cost as much energy to find, pump, transport, and process a barrel of oil as the oil’s refined products will yield when burned in even the most perfectly efficient engine.

As we approach the energy break-even point, we can expect the requirement for ever-higher levels of investment in exploration and production on the part of the petroleum industry; We can therefore anticipate higher prices for finished fuels. Incidentally, we can also expect more environmental risk and damage from the process of fuel “production” (i.e., extraction and processing), because we will be drilling deeper and going to the ends of the Earth to find the last remaining deposits, and we will be burning ever-dirtier fuels.

That’s exactly what is happening right now.

WHILE AMERICA’S CURRENT GROSS oil production numbers appear rosy, from an energy accounting perspective the figures are frightening: Energy profit margins are declining fast.

Each year, a greater percentage of U.S. oil production comes from unconventional sources—primarily tight oil and deepwater oil.Compared to conventional oil from most onshore, vertical wells, these sources demand much higher capital investment per barrel produced. Tight oil wells typically require directional drilling and fracking, which take lots of money and energy (not to mention water); Initial production rates per well are modest, and production from each tends to decline quickly. Therefore, more wells have to be drilled just to maintain a constant rate of flow. This has been called the “Red Queen” syndrome, after a passage in Lewis Carroll’s Through the Looking Glass.

In Carroll’s story, the fictional Red Queen runs at top speed but never gets anywhere. “It takes all the running you can do, to keep in the same place,” she explains to Alice. Similarly, it will soon take all the drilling the industry can do just to keep production in the fracking fields steady. But the plateau won’t last; As the best drilling areas become saturated with wells and companies are forced toward the periphery of fuel-bearing geological formations, costs will rise and production will fall. When, exactly, will the decline begin? Probably before the end of this decade.

Deepwater production is expensive, too. It involves operating in miles of ocean water on giant drilling and production rigs. Deepwater drilling is also both environmentally and financially risky, as BP—and the rest of us—discovered in the Gulf of Mexico in 2010.

America is turning increasingly to unconventional oil because conventional sources of petroleum are drying up—fast. The United States is where the oil business started and, in the past century-and-a-half, more oil wells have been drilled here than in the rest of the world’s countries put together. In terms of our resource pyramid diagram, the U.S. has drilled through the top “conventional resources” triangle and down to the thick dotted line labeled “price/technology limit.” At this point, new technology is required to extract more oil, and this comes at a higher financial cost not just to the industry, but ultimately to society as a whole. Yet society cannot afford oil that’s arbitrarily expensive: The “price/technology limit” is moveable up to a point, but we may be reaching the frontiers of affordability.

gross-society-2Trans-Alaska Oil Pipeline. (Photo: Alberto Loyo/Shutterstock)

Lower energy profits from unconventional oil inevitably show up in the financials of oil companies. Between 1998 and 2005, the industry invested $1.5 trillion in exploration and production, and this investment yielded 8.6 million barrels per day in additional world oil production. But between 2005 and 2013, the industry spent $4 trillion on exploration and production, yet this more-than-doubled investment produced only 4 mb/d in added production.

It gets worse: All net new production during the 2005-13 period came from unconventional sources; of the $4 trillion spent, it took $350 billion to achieve a bump in production. Subtracting unconventionals from the total, world oil production actually fell by about a million barrels a day during these years. That means the oil industry spent over $3.5 trillion to achieve a decline in overall conventional production.

Last year was one of the worst ever for new discoveries, and companies are cutting exploration budgets. “It is becoming increasingly difficult to find new oil and gas, and in particular new oil,” Tim Dodson, the exploration chief of Statoil, the world’s top conventional explorer, recently told Reuters. “The discoveries tend to be somewhat smaller, more complex, more remote, so it is very difficult to see a reversal of that trend…. The industry at large will probably struggle going forward with reserve replacement.”

The costs of oil exploration and production are currently rising at about 10.9 percent per year, according to Steve Kopits of the energy analytics firm Douglas-Westwood. This is squeezing the industry’s profit margins, since it’s getting ever harder to pass these costs on to consumers.

In 2010, The Economist magazine discussed rising costs of energy production, musing that “the direction of change seems clear. If the world were a giant company, its return on capital would be falling.”

Tim Morgan, formerly of the London-based brokerage Tullett Prebon (whose customers consist primarily of investment banks), explored the average Energy Return on Energy Investment (EROEI) of global energy sources in one of his company’s Strategy Insights reports, noting: “For 2020, our projected EROEI (of 11.5:1) [would] mean that the share of GDP absorbed by energy costs would have escalated to about 9.6 percent from around 6.7 percent today. Our projections further suggest that energy costs could absorb almost 15 percent of GDP (at an EROEI of 7.7:1) by 2030…. [T]he critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel.”

From an energy accounting perspective, the situation is in one respect actually worst in North America—which is deeply ironic: It’s here that production has grown most in the past five years, and it’s here that the industry is most boastful of its achievements. Yet the average energy profit ratio for U.S. oil production has fallen from 100:1 to 10:1, and the downward trend is accelerating as more and more oil comes from unconventional sources.

These profit ratios might be spectacular in the financial world, but in energy terms this is alarming. Everything we do in industrial societies—education, health care, research, manufacturing, transportation—requires energy. Unless our investment of energy in producing more energy yields an average profit ratio of roughly 10:1 or more, it may not be possible to maintain an industrial (as opposed to an agrarian) mode of societal organization over the long run.

gross-society-3A barrier stops oil coming ashore on June 5, 2010, in Grand Isle, Louisiana, after the Deepwater Horizon oil spill. (Photo: Katherine Welles/Shutterstock)

NONE OF THE UNCONVENTIONAL sources that the petroleum industry is turning toward (tight oil, tar sands, deepwater) would have been developed absent the context of high oil prices, which deliver more revenue to oil companies; it’s those revenues that fund ever-bigger investments in technology. But older industrial economies like the U.S. and European Union tend to stall out if oil costs too much, and that reduces energy demand; This “demand destruction” safety valve has (so far) set a limit on global petroleum prices. Yet for the major oil companies, prices are currently not high enough to pay for the development of new projects in the Arctic or in ultra-deepwater; this is another reason the majors are cutting back on exploration investments.

For everyone else, though, oil prices are plenty high. Soaring fuel prices wallop airlines, the tourism industry, and farmers. Even real estate prices can be impacted: As gasoline gets more expensive, the lure of distant suburbs for prospective homebuyers wanes. It’s more than mere coincidence that the U.S. housing bubble burst in 2008 just as oil prices hit their all-time high.

Rising gasoline prices (since 2005) have led to a reduction in the average number of miles traveled by U.S. vehicles annually, a trend toward less driving by young people, and efforts on the part of the auto industry to produce more fuel-efficient vehicles.Altogether, American oil consumption is today roughly 20 percent below what it would have been if growth trends in the previous decades had continued.

To people concerned about climate change, much of this sounds like good news. Oil companies’ spending is up but profits are down. Gasoline is more expensive and consumption has declined.

There’s just one catch: None of this is happening as a result of long-range, comprehensive planning. And it will take a lot of effort to minimize the human impact of a societal shift from relative energy abundance to relative energy scarcity. In fact, there is virtually no discussion occurring among officials about the larger economic implications of declining energy returns on investment. Indeed, rather than soberly assessing the situation and its imminent economic challenges, our policymakers are stuck in a state of public relations-induced euphoria, high on temporarily spiking gross U.S. oil and gas production numbers.

The obvious solution to declining fossil fuel returns on investment is to transition to alternative energy sources as quickly as possible. We’ll have to do this anyway to address the climate crisis. But from an energy accounting point of view, this may not offer much help. Renewable energy sources like solar and wind have characteristics very different from those of fossil fuels: The former are intermittent, while the latter are available on demand. Solar and wind can’t affordably power airliners or 18-wheel trucks. Moreover, many renewable energy sources have a relatively low energy profit ratio.

One of the indicators of low or declining energy returns on energy investment is a greater requirement for human labor in the production process. In an economy suffering from high unemployment, this may seem like a boon. Indeed, here is an article that touts solar energy as a job creator, employing more people than the coal and oil industries put together (even though it produces far less energy for society).

Yes, jobs are good. But what would happen if we went all the way back to the average energy returns-on-investment of agrarian times? There would certainly be plenty of work to be done. But we would be living in a society very different from the one we are accustomed to, one in which most people are full-time energy producers and society is able to support relatively few specialists in other activities. Granted, that’s probably an exaggeration of our real prospects: At least some renewable energy sources can give us higher returns than were common in the last agrarian era. However, they won’t power a rerun of Dallas. This will be a simpler, slower, and poorer economy.

gross-society-4Transporting crude by rail. (Photo: Steven Frame/Shutterstock)

IF OUR ECONOMY RUNS on energy, and our energy prospects are gloomy, how is it that the economy is recovering?

The simplest answer is that it’s not—except as measured by a few misleading gross statistics. Every month the Bureau of Labor Statistics releases figures for new jobs created, and the numbers look relatively good at first glance (113,000 net new jobs for January 2014). But most of these new jobs pay less than those that were lost in recent years. And unemployment statistics don’t include people who’ve given up looking for work. Labor force participation rates are at their lowest level in 35 years.

All told, according to a recent Gallup poll, more Americans say they are worse off today than they were a year ago (as opposed to those who say their situation has improved).

Claims of economic recovery fixate primarily on one number: Gross Domestic Product, or GDP. That number is going up—albeit at an anemic pace in comparison with rates common in the 20thcentury; hence, the economy is said to be growing. But what does this really mean? When GDP rises, that indicates more money is flowing through the economy. Typically, a higher GDP equates to greater consumption of goods and services, and therefore more jobs. What’s not to like about that?

First, there are ways of making GDP grow that don’t actually improve lives. Economist Herman Daly calls this “uneconomic growth.” For example, if we spend money on rebuilding after a natural disaster, or on prisons or armaments or cancer treatment, GDP rises. But who wants more natural disasters, crime, wars, or cancer? Historically, the burning of ever more fossil fuels was closely tied to GDP expansion, but now we face the prospect of devastating climate change if we continue increasing our burn rate. To the extent GDP growth is based on fossilfuel consumption, when GDP goes up we’re actually worse off because of it. Altogether, Gross Domestic Product does a really bad job of capturing how our economy is doing on a net basis.

Second, a growing money supply (which is implied by GDP growth) depends upon the expansion of credit. Another way to say this is: A rising GDP (in any country with a floating exchange rate) entails increasing levels of outstanding debt. Historical statistics bear this out. But is any society able to expand its debt endlessly?

If there were indeed limits to a country’s ability to perpetually grow GDP by increasing its total debt (government plus private), a warning sign would likely come in the form of a trend toward diminishing GDP returns on each new unit of credit created. That’s exactly what we’ve been seeing in the U.S. in recent years. Back in the 1960s, each dollar of increase in total U.S. debt was reflected in nearly a dollar of rise in GDP. By 2000, each new dollar of debt corresponded with GDP growth of only $0.20. The trend line will reach zero in about 2016.

Meanwhile, it seems that Americans have taken on about as much household debt as they can manage, as rates of consumer borrowing have been stuck in neutral since the start of the Great Recession. To keep debt growing (and the economy expanding, if only statistically), the Federal Reserve has artificially kept interest rates low by creating up to $85 billion per month through a mere adjustment of its ledgers (yes, it can do that); it uses the money to buy Treasury bills (U.S. government debt) from Wall Street banks. When interest rates are low, people find it easier to buy houses and cars (hence the recent rise in house prices and the auto industry’s rebound); it also makes it cheaper for the government to borrow—and, in case you haven’t noticed, the federal government has borrowed a lot lately.

The Fed’s Quantitative Easing (QE) program props up the banks, the auto companies, the housing market, and the Treasury. But, with overall consumer spending still anemic, the trillions of dollars the Fed has created have generally not been loaned out to households and small businesses; they’ve simply pooled up in the big banks.Fed policy has thus generated a stock market bubble, as well as a bubble of investments in emerging markets, and these can only continue to inflate for as long as QE persists.

gross-society-5Oil drilling derrick. (Photo: James Jones Jr/Shutterstock)

The obvious way to keep these bubbles from growing and eventually bursting (with attendant financial toxicity spilling over into the rest of the economy) is to stop QE. But doing that will undermine the “recovery,” such as it is, and might even send the economy careening into depression. The Fed’s solution to this “damned if you do, damned if you don’t” quandary is to taper QE, reducing it gradually over time. This doesn’t really solve anything; it’s just a way to delay and pretend.

With money as with energy, we are doing extremely well at keeping up appearances by characterizing our situation with a few cherry-picked numbers. But behind the jolly statistics lurks a menacing reality.  Collectively, we’re like a dietician who has adopted the attitude of the more you weigh, the healthier you are! How gross would that be?

THE WORLD IS CHANGING. Cheap, high-EROEI energy and genuine economic growth are disappearing. Rather than recognizing that fact, we hide it from ourselves with misleading figures. All that this accomplishes is to make it harder to adapt to our new reality.

The irony is, if we recognized the trends and did a little planning, there could be an upside to all of this. We’ve become over-specialized anyway. We teach our kids to operate machines so sophisticated that almost no one can build one from scratch, but not how to cook, sew, repair broken tools, or grow food. We seem to grow increasingly less happy every year. We’re overcrowded, and continuing population growth is only making matters worse. Why not encourage family planning instead? Studies suggest we could dial back on consumption and be more satisfied with our lives.

What would the world look and feel like if we deliberately and intelligently nudged the brakes on material consumption, reduced our energy throughput, and relearned some general skills? Quite a few people have already done the relevant experiment.

Take a virtual tour of Dancing Rabbit ecovillage in northeast Missouri. or Lakabe in northern Spain. But you don’t have to move to an ecovillage to join in the fun; there are thousands of transition initiatives worldwide running essentially the same experiment in ordinary towns and cities, just not so intensively.

All of these efforts have a couple of things in common: First, they entail a lot of hard work and (according to what I hear) yield considerable satisfaction. Second, they are self-organized and self-directed, not funded or overseen by government.

The latter point is crucial—not because government is inherently wicked, but because it’s just not likely to be of much help in present circumstances. That’s because our political system is currently too broken to grasp the nature of the problems facing us.

Quite simply, we must learn to be successfully and happily poorer. For people in wealthy industrialized countries, this requires a major adjustment in thinking. When it comes to energy, we have deluded ourselves into believing that gross is the same as net. That’s because in the early days of fossil fuels, it very nearly was. But now we have to go back to thinking the way people did when energy profit margins were smaller. We must learn to operate within budgets and limits.

This means decentralization, simplification, and localization. Becoming less reliant on long-term debt, paying as we go. It means living closer to the ground, learning general skills, and keeping a hand in basic productive activities like growing food.

Think of our future as the Lean Society.

We can make this transition successfully, if not happily, if enough of us embrace Lean Society thinking and habits. But things likely won’t go well at all if we continue to hide reality from ourselves with gross numbers that delay our adaptation to accelerating, inevitable trends.

Richard Heinberg
Richard is a senior fellow of the Post Carbon Institute and is widely regarded as one of the world’s foremost Peak Oil educators. He is the author of 11 books, including Snake Oil: How Fracking’s False Promise of Plenty Imperils Our Future and The End of Growth: Adapting to Our New Economic Reality.

Bakken rail network is one big traffic snarl – crushing delays for AMTRAK

Repost from MOTHERBOARD
[Editor: The author of this article, Michael Byrne, lives within sight of a major rail throughway, and offers first-hand observations about the “crushing delays” on passenger rail service.  – RS]

The Oil Boom Is Putting the Squeeze on America’s Passenger Rail Network

Written by Michael Byrne  |  April 19, 2014
OilTrain(Motherboard)
Image: BNSF oil train/Roy Luck

I’ve boasted about my front yard proximity to the northern United States’ dominant freight rail line on Motherboard before. It’s just right there, across a patch of grass and down an embankment: the Northern Transcon, pushing miles and miles of connected freight carriages to and from the Pacific Northwest’s port cities. It’s a real-time view of America’s goods economy as it breathes in and out. That economy, as revealed by my Transcon neighbor, is currently hyperventilating, and the flow of traffic is often nearly continuous, at least within the boundaries of single track (single lane) line.

The flood of trains traveling over the Northern Transcon in the year 2014 has a lot to do with oil. The line, the property of the BNSF railroad, connects with the Bakken formation oil fields in North Dakota, where the railroad has been dumping money lately in a race to upgrade and expand its local capacity/network: a North Dakota oil boom has brought with it a North Dakota rail boom. Oil trains, now buffered at each end by an empty box car for safety, exit the Bakken zone heading for Great Lakes ports and refineries to the east and, to the west, the export terminals around Seattle and Portland. It’s reasonable to say that the oil boom would only be possible with the railroad.

In the late-’90s BNSF reopened a third route connecting the Midwest (including the now booming oil fields) and the Northwest, the once-mothballed Stampede Pass over the Cascade Mountains. Overall, the railway’s been booming like crazy since then. 2014 should be a record for the railroad, thanks largely to crude oil shipments. But, after this past winter, the Bakken fields’ associated rail network is one big traffic snarl, and the railway is pouring money and manpower into the region to untangle it: 500 locomotives, 5,000 railcars, 300 new crew members. Of course, the company’s interest is in getting oil out of the region, but a cruel side effect of the jam is crushing delays within the United States’ passenger rail system.

Those systems, dominated by state-pseudo-owned railway Amtrak, typically run on tracks owned by freight railways—leasing trackage rights—except in a few special areas, like California, the Northeast Corridor, and parts of Michigan and New York state. Elsewhere, particularly across the country’s midsection, passenger trains are at the mercy of private freight-hauling corporations. If you’ve ever made a cross-country rail trek, you are most likely already aware that on-time performance just isn’t a relevant concept. Last month, the Empire Builder, the Amtrak route that travels from Chicago to Portland and Seattle via BNSF’s Northern Transcon, was on-schedule 17.4 percent of the time.

We’re not talking about minutes either. The westbound Empire Builder is scheduled to pass through here at eight in the morning; usually, it shows up mid-afternoon, if not eveningtime. Finally, at the beginning of this month, Amtrak took the rare step of admitting defeat. It changed the schedule, padding an extra three hours onto the eastbound train schedule and an hour on the westbound (which is still hardcore wishful thinking or a total delusion). The pleasure of spending nine hours at a lonesome Midwestern rail station in the dead of winter for a late train is a distinctly American feeling (or Siberian, perhaps), putting the shitty microwaved cafe car food and overpriced Heineken into perspective, if the train isn’t out of both already.

Perhaps even more pressing is the situation in Minneapolis, as BNSF delays hit the Twin Cities’ local commuter line, the Northstar. Freight delays have put not only the entire existence of the (relatively new) service in jeopardy, but a forthcoming light-rail line as well. As is typical, the BNSF response is petulance. From a recent Minneapolis StarTribute editorial: “As BNSF Vice President Bob Lease points out, the conflict with commuter rail is almost unavoidable; the system is built for freight, which tolerates a degree of delay that commuters cannot abide.”

Unfortunately, as much of a shrug as Lease’s comment is, he has a point. Passenger rail service shouldn’t have to rely on freight rail companies being nice. Passenger rail needs public investment—new, faster tracks—and it needs the teeth to punish its corporate landlords for 17.4 percent on-time performance, when that performance is nigh entirely at the whims of said landlord.

National energy boom blurs political battle lines

Repost from The Associated Press, The Big Story

National energy boom blurs political battle lines

By NICHOLAS RICCARDI — Apr. 19, 2014
Energy Politics
FILE – This March 25, 2014 file photo shows perforating tools, used to create fractures in the rock, lowered into one of six wells during a roughly two-week hydraulic fracturing operation at an Encana Corp. well pad near Mead, Colo. The energy boom is scrambling national politics. Democrats are split between environmentalists and business and labor groups. Some deeply-conservative areas are allying with conservationists against fracking, the technique largely responsible for the surge.  (AP Photo/Brennan Linsley, File)

DENVER (AP) — The U.S. energy boom is blurring the traditional political battle lines across the country.

Democrats are split between environmentalists and business and labor groups, with the proposed Canada-to-Texas oil pipeline a major wedge.

Some deeply conservative areas are allying with conservationists against fracking, the drilling technique that’s largely responsible for the boom.

The divide is most visible among Democrats in the nation’s capital, where 11 Democratic senators wrote President Barack Obama this month urging him to approve the Keystone XL pipeline, which is opposed by many environmental groups and billionaire activist Tom Steyer. The State Department said Friday that it was extending indefinitely the amount of time that federal agencies have to review the project, likely delaying a pipeline decision until after the November elections.

Several senators from energy-producing such as Louisiana and Alaska have distanced themselves from the Obama administration, while environmental groups complain the president has been too permissive of fracking.

There is even more confusion among Democrats in the states as drilling rigs multiply and approach schools and parks.

California Gov. Jerry Brown was shouted down at a recent state convention by party activists angry about his support for fracking. New York Gov. Andrew Cuomo has kept fracking in his state in limbo for three years while his administration studies health and safety issues. In Colorado, Gov. John Hickenlooper has drawn environmentalists’ ire for defending the energy industry, and a ballot battle to regulate fracking is putting U.S. Sen. Mark Udall in a tough situation.

But the issue cuts across party lines.

Even in deeply Republican Texas, some communities have restricted fracking. In December, Dallas voted to effectively ban fracking within city limits.

“You’re looking at a similar boom as we had in tech in 1996,” said Joe Brettell, a GOP strategist in Washington who works with energy companies. “The technology has caught up with the aspirations, and that changes the political dynamics fundamentally.”

Those technological advances have made it possible for energy companies to tap deep and once-untouchable deposits of natural gas and oil. They include refinements in hydraulic fracturing, or fracking, which is the injection of chemicals into the ground to coax buried fossil fuels to the surface.

The U.S. is now the world’s largest natural gas producer and is expected to surpass Saudi Arabia soon as the world’s greatest oil producer, becoming a net exporter of energy by 2025.

The boom has brought drilling rigs into long-settled neighborhoods, raising fears of water contamination, unsafe traffic and air pollution, and outraging residents.

Pollster Steven Greenberg said Cuomo provides little notice before his public appearances because anti-fracking protesters will crash his events. Republicans blame the governor for stymieing growth. New York voters split evenly on fracking, with Democrats only modestly more likely to oppose it than Republicans.

“No matter what he decides, he’s going to have half the people upset with him,” Greenberg said. “From a purely political point of view, it’s hard to argue with his strategy — punt.”

In California, Brown has a long record of backing environmental causes, but he’s drawn the wrath of some environmentalists for supporting fracking. One group cited the $2 million that oil and gas companies have given the governor’s causes and campaigns since 2006. Democrats in the Legislature have proposed a freeze on fracking but are not optimistic Brown will support it.

The Democratic split is sharpest in Colorado.

Hickenlooper, a former oil geologist, has been a staunch supporter of fracking; at one point he said he drank fracking fluid, albeit a version without most of the hazardous chemicals. His administration has fought suburban cities that have banned fracking, insisting that only the state can regulate energy exploration.

In response, activists are pushing 10 separate ballot measures to curb fracking. One measure would let cities and counties ban it. The effort has the support of Colorado Rep. Jared Polis, a wealthy Democrat. At the state party’s recent convention, he gave a rousing speech nominating Hickenlooper for a second term but acknowledged “none of us … are going to agree on every single issue.”

Some Colorado Democrats worry that the ballot push is bringing energy groups who generally support Republicans into the state. One pro-fracking group has spent $1 million in TV ads.

Jon Haubert, a spokesman for the group, said leaders in both parties think the measures are economically dangerous. “We look at that and say this seems to be an extreme opinion,” he said, referring to the initiatives.

The ballot measures will force Democratic candidates to choose among environmentalists, labor groups and Colorado’s business community, whose political and financial support is vital to Democrats in the swing state.

Udall embodies this dilemma. He’s an environmentalist in a tight re-election campaign with Republican Rep. Cory Gardner, who represents an oil-and-gas rich, mostly rural congressional district.

In an interview, Udall declined to say if cities should have the right to ban fracking. “I’m not a lawyer,” he said.

Hickenlooper has put in place several landmark regulations — requiring that drilling occur a set distance from homes and schools and limiting methane emissions from energy exploration. But that has not assuaged activists such as Laura Fronckwiecz, a former financial worker who got involved in an effort to ban fracking in her moderate suburb of Broomfield after a drilling well was planned near her children’s elementary school.

A Democrat, she’s aghast at her party’s reluctance to embrace the cause. “Ten years ago, I’d say it was a progressive cause they’d get behind,” Fronckwiecz, 41, said, “but much has changed, and the politics of oil and gas are not what you’d expect.”

Fronckwiecz says she has Republicans and Libertarians in her coalition, as do activists pushing to limit fracking in energy-friendly Texas. While the GOP-dominated Legislature in Texas has rejected efforts to limit drilling, activists have earned small victories in towns and cities that have limited drilling, and one big win, the Dallas vote.

Sharon Wilson, Texas organizer for the environmental group Earthworks, says she gets a warm reception from conservatives and Libertarians. “When they come into your community and start fracking,” she said, “it does not matter what your political affiliation is.”

Maine: “We don’t know if the train is carrying potatoes, lumber – or crude.”

Repost from SeacoastOnline.com

Maine ill-prepared for accident on rail lines

 State faces planning ‘gap’ if faced with a Quebec-type crude disaster
By Marina Villeneuve, Maine Center for Public Interest Reporting
April 17, 2014 8:46 AM
First of two parts. The rail line runs as far south as South Berwick in Maine.
Top Photo
Trains that have carried crude oil have passed through the middle of Jackman — just as they had through Lac-Megantic, Quebec. Jeff Pouland Photography/NFS

Less than a year ago, a runaway train carrying crude oil derailed in Lac-Mégantic, a small Quebec town ten miles from the Maine border.

Thousands of gallons of the highly flammable crude oil spilled from ruptured tank cars, setting off fireballs in the town’s center that killed 47 people and destroyed 30 buildings. Some bodies were likely vaporized and never identified.

In Maine, trains carrying the same crude oil have been passing through dozens of communities, many as close to homes, businesses and people as in Lac-Mégantic.

Railroads carried 4.2 million barrels of crude oil – enough to fill 267 Olympic-size swimming pools – through Maine last year, up from 25,319 barrels in 2011, according to state Department of Environmental Protection (DEP) data. No crude oil shipments by rail have passed through Maine since last fall, according to state records, but industry experts say if shipping by rail becomes cheaper than other forms of transport, that could change.

Laura Smyth works at a propane company located behind a gas station in Jackman and not far from the railroad tracks. She said that when townspeople hear a train whistle, it remains them about what happened in Lac-Mégantic.

They don’t know if the train is carrying potatoes, lumber – or crude.

“We always say, ‘It could have happened here!’” said Smyth.

And if it did happen in Jackman or Portland or any of the towns along the rail, is Maine prepared to fight a crude oil fire, save lives and protect the environment?

A investigation by Maine Center for Public Interest Reporting reveals the burden for planning and responding to a Lac-Mégantic level catastrophe will fall on state and local emergency services, which may not have all the information, training or material they could need.

The potential for a crude oil incident in Maine like the one in Lac-Mégantic has prompted three state emergency groups to make the issue a key topic at the April 22-23 statewide Emergency Management Conference in Augusta.

“We’ve been fortunate, but being fortunate doesn’t mean we’re prepared,” said Robert Gardner, a technological hazards coordinator at Maine Emergency Management Agency.

He pointed to another nearby crude oil incident, in New Brunswick, Canada, when on Jan. 7, eight cars carrying crude oil and propane derailed and generated a massive fire and cloud of orange smoke. “We need to learn what others have experienced so we can be better prepared,” Gardner said.

Federal regulators and industry observers say recent fiery derailments across the continent have revealed a glaring lack of emergency preparedness requirements.

Unlike the marine barges, pipelines and fixed facilities that have transported and stored crude oil for years, U.S. railroads are not federally required to have comprehensive plans in case of a worst-case oil disaster.

“It’s a big gap,” said David Willaeur, of emergency management firm IEM and the former planning director for the Greater Portland Council of Governments.

“Now we have crude oil coming by in mile-long unit trains through remote areas along the U.S., and shipped to refineries on the coast … the oil-response plans need to have a land-based component to them.”

This gap has exacerbated the challenge of planning for oil disasters in rural states like Maine, where:

* State, county and local officials do not know the oil-spill response plans and capabilities of any railroad companies in Maine because the rail firms are not required to share or coordinate such information.

* The first people on scene at a rural oil incident will be declining numbers of volunteer firefighters who are hours from the highly-trained response teams and special kind of equipment, materials and gear needed to handle oil fires. Of 59 communities along rail lines, five have no fire department and 27 rely on solely volunteers.

* Like in all other states, no Maine officials are provided with any information about hazardous materials transported by rail through communities. Last month, Maine Emergency Management Agency (MEMA) asked Pan Am Railways for a list of the top 25 most hazardous goods shipped through Maine in 2013 and is awaiting a response, said agency director Bruce Fitzgerald.

The need to improve emergency response planning for crude oil rail disasters came up at an April 9 U.S. Senate Appropriations subcommittee hearing on railway safety, where both Sen. Susan Collins, a ranking member of the subcommittee, and Rangeley Fire Chief Tim Pellerin spoke on the need to better train and prepare rural firefighters.

“It’s also important to recognize that much of that rail network exists in rural America, and that presents unique challenges to small communities that often lack the resources to effectively respond to hazardous material emergencies,” Sen. Collins, a Republican, said at the hearing.

Feds don’t require railroad emergency plans

Do railways transporting crude oil through Maine have adequate response plans in case a catastrophe happens? Thanks to a federal loophole, no one – including the state of Maine – knows.

Two railroads have carried crude oil from the Bakken shale region of North Dakota into Maine: Pan Am Railways and Montreal, Maine and Atlantic Railway, the carrier that operated tank cars that derailed and ruptured at Lac-Mégantic.

Pan Am Railways Executive Vice President Cynthia Scarano did not respond to repeated interview requests over the course of two months. MMA Railways filed for bankruptcy last August, when it also stopped shipping crude oil. The New York-based firm Fortress Investment Group is in the process of purchasing its assets.

MMA Railways didn’t have sufficient resources to respond to Lac-Mégantic – and it would have been just as unprepared if it had happened in the U.S, according to the National Safety Transportation Board’s (NTSB) Jan. 23 letter to the Federal Rail Administration.

There are no federal rules for how railroads should prepare for any emergency involving hazardous materials, including crude oil, said Willaeur.

“It’s all voluntary, and there’s no standard for what they need to do,” said Willaeur, who has conducted studies of hazardous materials transport in states, including Maine. “So you have a pretty wide range of responses between railroads.”

The country’s seven Class 1 railroads, which have annual revenues of $250 million or more, have system-wide plans that include handling emergencies in local communities and sensitive geographic areas, according to Willaeur.

“On the other end, you have railroads that may have only a rudimentary plan in place,” he said, noting there are 550 smaller railroads known as short-line and regional railroads. Maine is one of four continental states with no Class 1 carrier.

When it comes to oil spills – as opposed to emergency planning — railroads must write basic response plans, but they don’t need to be shared with state agencies or sent to the Federal Rail Administration.

These basic plans don’t include training drills and exercises, assigning a qualified individual to man the response or plans for a worst-case discharge – which can result in up to three million gallons spilled.

“[O]il spill response planning requirements for rail transportation of oil/petroleum products are practically nonexistent compared with other modes of transportation,” NTSB Chairman Deborah Hersman wrote to the federal Pipeline and Hazardous Materials Safety Administration on Jan. 21.

Railroads only have to file comprehensive plans if they haul a tank car with a 42,000-gallon capacity – and no tank cars currently in use can hold that much.

This means no shippers have to tell the government, or anybody, what they’d do in case of a disaster, even if they’re hauling ten, average size-tank cars carrying a total 300,000 gallons of crude oil. The rule was developed when crude oil wasn’t being shipped in trains that carry only crude and can haul millions of gallons at once.

This current regulatory scheme “circumvents the need for railroads to comply with spill response planning mandates of the Clean Water Act,” Hersman wrote to the hazardous materials agency.

Comprehensive plans must only be submitted to the Federal Rail Administration, which is not required to review and approve them, Hersman wrote.

“It’s a pitiful pretense of regulation,” said rail security consultant Fred Millar, who worked for the liberal activist group Friends of the Earth for 18 years. “Railroads have gotten themselves exempted from the same kind of response planning and right-to-know laws that apply to everyone else.”

If requirements had been updated as crude shipments began skyrocketing, the federal rail regulators could have required MMA Railway to plan for a disaster on the scale of Lac-Mégantic, wrote Hersman to the regulators.

“DEP and to some extent local communities have taken on that responsibility to be prepared in the event of a spill,” said Maine Department of Environmental Protection’s response director Peter Blanchard.

Responding to rail incidents is challenging in Maine, where railroads traverse cities, rural communities and water bodies – many inaccessible by road, according to Blanchard.

DEP asked Pan Am Railways for copies of their response plans, but never heard back, according to Blanchard.

Blanchard said railroads have made “some effort” to help DEP in preparing for an oil spill, citing a collaboration with MMA Railway that yielded a vulnerability map of sensitive natural resources and remote access points along rail lines.

The DEP has 25 spill responders, with five always on-call at offices in Portland, Augusta, Bangor and Presque Isle. Their equipment includes oil skimmers and two 5,000-barrel oil recovery barges stationed in South Portland and Bucksport.

Volunteers may be first to crash

Recent train derailments involving crude oil and ethanol have raised a question for emergency planners: Who responds when incidents happen in the middle of nowhere?

“When they happen in remote areas, away from populated areas, you not only have fewer resources but volunteer fire departments that don’t necessarily have the capability to handle an incident of that size,” said Willaeur of emergency management firm IEM.

About 90 percent of Maine’s firefighters are volunteer, estimates the Maine Fire Services Institute’s Bill Guimond.

“Probably the biggest challenge facing a lot of departments is just resources on the initial response, especially in the rural communities,” Guimond said. “Firefighters are not always available, and a lot of communities are strapped with resources right now.”

Along rail lines that have carried crude oil, five cities have professional departments. Five small communities have no fire departments, 27 rely on an all-volunteer force and 22 rely on both volunteer and career firefighters.

“It’s certainly a different kind of response when you don’t have everybody right on-call all the time,” said MEMA’s Fitzgerald. “They have to get out of their job, they have to travel to get their equipment, they have to go and respond. Those communities rely almost entirely on mutual aid, because no one department up there is big enough to handle an event.”

If a rail catastrophe happens, local responders like firefighters would receive support from other towns through mutual aid agreements, 17 state-supervised hazardous material teams, spill responders, MEMA and, potentially, federal agencies and out-of-state and Canadian responders.

Since last July, hazardous material teams in Paris and Jonesboro have shut down because they lacked enough people to maintain staffing and training requirements. Rail communities like Jackman, Greenville and Vanceboro are up to two hours away from specially-trained teams in Orono, Skowhegan and Houlton.

Maine’s hazardous material teams train regularly for major oil fires, train rollovers and derailments, according to Mark Hyland, MEMA’s operations and response director. In the past decade, Maine railways have provided locomotives and tank cars to train firefighters and spill responders, according to Blanchard.

Some fire officials said though they appreciate the seminars, training efforts with railroads are not institutionalized, proving a problem for departments with high rates of turnover.

Waterville Fire Chief David LaFountain asked Pan Am Railways last year for specialized training in dealing with volatile Bakken crude oil, but he never heard back from the railroad.

In Maine, state and cities like South Portland have invested in the costly resources – like protective gear and specialized foam – needed for a fiery disaster even a fraction of Lac-Mégantic’s size.

In 2009, Maine Emergency Management Agency received a Homeland Security grant to buy three $80,000, 990-gallon foam trailers and placed them in South Portland, Searsport and Sweden. The Air National Guard at Bangor International Airport has 2,000 gallons of foam concentrate.

South Portland has 20,000 gallons of alcohol-resistant foam to smother petroleum fires. Fire chief Kevin Guimond said his team is ready to respond statewide, with 64 full-time firefighters and paramedics and 40 on-call firefighters.

But that big cache of foam is four hours away from communities along rail lines like Jackman and Vanceboro. Half of communities on the rail lines are two to four hours away, with 15 facing wait times of more than three hours.

Information hard to get Maine officials don’t know much about hazardous materials transported by rail, including what kinds go where, or when, how often, and how much they’re shipped. Railroads say sharing such information could jeopardize security.

“There’s a lack of rail transportation response plans because it’s hard to get the information,” said Willaeur. “Many local officials don’t have an idea of what’s going along rails or highway corridor.”

Though U.S. railroads don’t have to disclose any information about hazardous materials to communities, they are not prevented from doing so.

Voluntary industry standards encourage railroads to do so – upon request, and as long as first responders do not make such information public.

MEMA’s Fitzgerald wrote to Pan Am on Feb. 7 requesting a list of the top 25 most hazardous materials transported through Maine in 2013. He is still awaiting a response.

Currently, first responders can figure out what a derailed train car is hauling by reading the placard affixed to the side of a rail car, finding the crew member who has a paper document showing where hazardous materials are located on the train, or calling the railroads’ 1-800 number.

According to an 1817 Congressional act and the interstate commerce clause, railroads can’t refuse to ship anything, including hazardous goods, and only the federal government can restrict such movement, said MEMA’s Hyland.

“But you know, having said that, we’d like to know what’s coming through, just so we can prepare our communities and our regional response teams for what they’d see,” he said.

LaFountain said in his opinion, the rail yard in Waterville – a town where trains carrying crude pass through – is his city’s “most dangerous spot,” and he worries how his team could respond if there was a crude oil emergency.

“To be honest with you, when I saw what happened in Lac-Mégantic, the behavior of the product catching fire and having the ignition it had and the fire conditions it had, that wasn’t what I expected for typical crude oil,” said LaFountain. “Now hearing that this crude oil is different because of where it comes from, it raises concern. It’s not safe.”

Crude Oil Transport in Maine - seacostonline

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CRUDE-BY-RAIL IN MAINE

Railroads carried 4.2 million barrels of crude oil – enough to fill up 267 Olympic-size swimming pools – through Maine last year, up from 25,000 barrels in 2011 and down from 5.2 million barrels in 2012.

The 2013 amount does not include the months of April to August when Pan Am Railways temporarily stopped reporting how much crude oil it shipped into Maine and paying into the state’s three-cent per gallon oil spill clean-up fund, according to Department of Environmental Protection spokeswoman Jessamine Logan.

At the time, the company told the Bangor Daily News that state law did not specifically require them to do so. The state legislature revised the statute effective last October.

After several fiery train explosions involving crude from the Bakken shale region of North Dakota, federal regulators issued a Jan. 2 warning that the crude may be more flammable than other varieties. A federal “Bakken Blitz” investigation has revealed that in eleven out of 18 random samples, Bakken crude was misclassified as a less volatile variety.

Three railroads – Pan Am Railways, Montreal, Maine and Atlantic Railway, and Eastern Maine Railroad – have carried Bakken crude oil through Maine to an Irving Oil refinery in St. John, New Brunswick.

The MMA Railway line enters Maine at Jackman and then traverses across central Maine to Mattawamkeag. The now-bankrupt company, whose assets are in the final steps of being purchased by a New York-based investment firm, stopped carrying crude oil last August.

A Pan Am line enters Maine at South Berwick and carries crude through towns near Interstate 95, including Portland and Bangor, before heading to Mattawamkeag.

There, the Irving Oil subsidiary Eastern Maine Railroad transports the crude oil from Mattawamkeag, to Vanceboro, to the refinery. Eastern Maine Railroad does not pay into the clean-up fund because state law only impacts carriers bringing oil into Maine, according to Logan.

In Maine, crude oil shipments by rail have dropped off since last fall, but industry experts say dynamic global oil prices could quickly change that.

North Dakota Department of Mineral Resources director Lynn Helms has estimated that up to 90 percent of the state’s crude will be transported by rail in 2014.

Following growing scrutiny on the rupture-prone DOT-111 tank cars involved in recent derailments, Irving Oil announced in February that by April 30, it will voluntarily retrofit its crude oil fleet to meet higher standards recommended by the Association of American Railroads for tank cars built after 2011.

Even stricter federal standards for the tank cars could be released by the end of 2014, said Cynthia Quarterman, head of the Pipeline and Hazardous Materials Safety Administration at a Feb. 26 Congressional hearing.

Last year, U.S. railroads spilled more crude oil – 1.15 million gallons – than in the last 38 years combined, according to a McClatchy news service analysis of federal data that does not include the 1.6 million gallons spilled in Lac Megantic.

The Association of American Railroad states that through 2010, 99.9977% of rail shipments of hazardous material reached their destination without a release caused by a train accident.

In Maine, railroads have spilled more than 200 gallons of hazardous materials like flammable gas oil and sulfuric acid since 2003, according to a review of Pipeline and Hazardous Materials Safety Administration data. This represents a large decrease from the 120,000 gallons of hazardous materials like fuel oil and sulfuric acid reported spilled between 1976 to 1999.

Approximately one gallon of crude oil spilled in March of 2013, when 13 tank cars operated by Pan Am Railways derailed near the Pencobst River in Mattawamkeag, according to a report filed to the National Response Center. Each car in the 96-car unit train was carrying 31,000 gallons of crude.

— Marina Villeneuve

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The Maine Center for Public Interest Reporting is a nonpartisan, non-profit news service based in Hallowell. Email: mainecenter@gmail.com. Web: pinetreewatchdog.org.

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