Shale gas, Tight oil

Post Carbon Institute: report finds that tight oil production from major plays will peak before 2020

Repost from Post Carbon Institute
[Editor: Significant quote: “Tight oil (shale oil) and shale gas production is found to be unsustainable in the medium- and longer-term at the rates forecast by the EIA, which are extremely optimistic.”  – RS]

DRILLING DEEPER: A Reality Check On U.S. Government Forecasts for A Lasting Tight Oil & Shale Gas Boom

By David Hughes, October 27, 2014
Abstract

cover_Drilling-Deeper_300w (2)Drilling Deeper reviews the twelve shale plays that account for 82% of the tight oil production and 88% of the shale gas production in the U.S. Department of Energy’s Energy Information Administration (EIA) reference case forecasts through 2040. It utilizes all available production data for the plays analyzed, and assesses historical production, well- and field-decline rates, available drilling locations, and well-quality trends for each play, as well as counties within plays. Projections of future production rates are then made based on forecast drilling rates (and, by implication, capital expenditures). Tight oil (shale oil) and shale gas production is found to be unsustainable in the medium- and longer-term at the rates forecast by the EIA, which are extremely optimistic.

This report finds that tight oil production from major plays will peak before 2020. Barring major new discoveries on the scale of the Bakken or Eagle Ford, production will be far below the EIA’s forecast by 2040. Tight oil production from the two top plays, the Bakken and Eagle Ford, will underperform the EIA’s reference case oil recovery by 28% from 2013 to 2040, and more of this production will be front-loaded than the EIA estimates. By 2040, production rates from the Bakken and Eagle Ford will be less than a tenth of that projected by the EIA. Tight oil production forecast by the EIA from plays other than the Bakken and Eagle Ford is in most cases highly optimistic and unlikely to be realized at the medium- and long-term rates projected.

Shale gas production from the top seven plays will also likely peak before 2020. Barring major new discoveries on the scale of the Marcellus, production will be far below the EIA’s forecast by 2040. Shale gas production from the top seven plays will underperform the EIA’s reference case forecast by 39% from 2014 to 2040, and more of this production will be front-loaded than the EIA estimates. By 2040, production rates from these plays will be about one-third that of the EIA forecast. Production from shale gas plays other than the top seven will need to be four times that estimated by the EIA in order to meet its reference case forecast.

Over the short term, U.S. production of both shale gas and tight oil is projected to be robust-but a thorough review of production data from the major plays indicates that this will not be sustainable in the long term. These findings have clear implications for medium and long term supply, and hence current domestic and foreign policy discussions, which generally assume decades of U.S. oil and gas abundance.

Drilling Deeper: A Reality Check on U.S. Government Forecasts for a Lasting Tight Oil & Shale Gas Boom

Bakken Crude, Benicia CA, Rail Safety, Valero Benicia Refinery

SF Chronicle Editorial, The real crazy train: moving Bakken crude by rail

Repost from The San Francisco Chronicle

Editorial: The real crazy train: moving Bakken crude by rail

Chronicle Editorial Board, October 26, 2014

GOP gubernatorial candidate Neel Kashkari likes to deride Gov. Jerry Brown’s high-speed rail plan as the Crazy Train, but the loonier rail proposal is the one that would carry explosive Bakken crude 1,000 miles across the country to the Valero refinery in Benicia and other California refiners. Californians must have more assurances of safe rail operation before Valero’s oil-transfer-terminal plans proceed.

The City Council of Benicia, a town of 28,000 on the Carquinez Strait, has debated for months a draft environmental impact report on Valero’s plan to modify its refinery to bring in crude by rail. Oil, mostly from Alaska, currently enters the refinery via pipeline from ships docked at the Port of Benicia. Bakken crude, however, must come by rail because no major pipeline runs to the West Coast from North Dakota where it is extracted from the oil shale.

Community concerns include environmental risks but center on public safety because Bakken oil is more volatile than most other crudes. A derailed tanker train loaded with Bakken crude exploded in July 2013, killing 47 people in Canada and alerting transportation officials and the public to the real hazards of transporting this easily ignited oil. For Benicians, potentially explosive trains are no theoretical debate as two 50-car trains would pass daily through the north end of town.

Nor is it an abstract discussion for the residents of Roseville, Sacramento, West Sacramento and Davis, where trains would roll through downtown daily. Davis Mayor Dan Wolk noted: “This may be technically a city of Benicia decision, but no city is an island in our interconnected region. Our community has real concerns about the potential safety impacts.”

So does California Attorney General Kamala Harris, who wrote Benicia officials earlier this month that “the DEIR fails to provide sufficient information for an adequate analysis of the safety risks from transportation or the air quality impacts from refining the new crude. These issues must be addressed and corrected before the City Council of Benicia takes action.” It is unclear whether the state would sue if the city failed to act.

Valero representatives clearly have no interest in expanding the scope of the permitting process to the state. Valero spokesman Bill Day told The Chronicle, “This is really the city of Benicia’s decision.”

Harris also wrote to Benicia that the draft report “ignores reasonably foreseeable project impacts by impermissibly limiting the scope of the affected environment analyzed to only the 69-mile stretch from Benicia to Roseville.” With so many communities affected, the state should stand firm and Solano County should use its authority over the refinery-expansion permits to persuade Valero to negotiate better public safety protections from the railroads, such as state-of-the-art train-control technology.

What’s really crazy is the federal law that allows pre-emption of municipal and state law when it comes to critical decisions on rail safety. Affected communities deserve a say over what rolls through their towns.

Benicia City Attorney Heather McLaughlin, Benicia City Council, Benicia Mayor Elizabeth Patterson, California Attorney General Kamala Harris, Valero Crude By Rail

Jan Cox Golovich letter: Benicia’s big problem

Repost from The Vallejo Times-Herald
[Editor: Jan Cox Golovich is a former Benicia City Councilmember.  – RS]

Jan Cox Golovich: Benicia’s big problem

Vallejo Times-Herald, 10/24/2014

Behind closed doors, the Benicia City Attorney and certain members of the city council have attempted and failed to strip the mayor of her First Amendment right of free speech. Even though they refuse to identify themselves to the public, the council members have revealed their desperation to salvage Valero’s doomed and dangerous Crude By Rail project.

The city attorney has a much bigger problem— the State Attorney General has called out the city for the legal inadequacy of Valero’s Crude by Rail Draft Environmental Impact Report (DEIR). Lined up behind the state is a long list of other public agencies, NGO’s and community groups ready to humiliate the city in court should it dare certify the document without major revisions and recirculation.

A competent city attorney, acting in the public interest, would extricate us from this legal dilemma by withdrawing the currently flawed DEIR and defend freedom of speech with all her might.

Jan Cox Golovich/Former member Benicia City Council

CPC-1232, DOT-111, Tank car design

Berkshire’s BNSF to Add Surcharge on Older Oil Tank Cars

Repost from Bloomberg News

Berkshire’s BNSF to Add Surcharge on Older Oil Tank Cars

By Thomas Black, Dan Murtaugh and Lynn Doan, Oct 24, 2014

BNSF Railway Co. plans to apply a $1,000 surcharge for each older tank car that hauls oil, as the railroad owned by Warren Buffett’s Berkshire Hathaway Inc. encourages shippers to scrap the puncture-prone cars.

The charge, which will take effect Jan. 1, will add about $1.50 a barrel to the cost of shipping oil across the country. It’s the first one announced by a major U.S. railroad for older cars known as DOT-111s, and won’t apply to cars called CPC-1232s that are built to higher standards adopted in October 2011, according to a BNSF notice.

The Obama administration in July proposed phasing out thousands of the older tank cars within two years and lowering speed limits as part of new rules to reduce the risk of hauling crude by rail. The plan followed a series of fiery accidents, including the derailment and explosion of a crude train last year that killed 47 people in the Canadian town of Lac Mégantic.

The extraction of oil from shale fields with limited pipelines, such as in North Dakota’s Bakken, caused U.S. rail carloads of crude to surge to 415,000 last year from 9,500 in 2008, according to the Transportation Department.

Mike Trevino, a spokesman for BNSF, confirmed the surcharge notice.

Tank cars typically hold about 700 barrels of oil, which means the surcharge would boost the cost of shipping in older cars by $1.50 a barrel. The cost to ship crude by train to East Coast refineries from North Dakota is about $9 to $10 a barrel, San Antonio-based Tesoro Corp. said in a September presentation.

BNSF, which operates tracks that connect into the Bakken and other shale oil fields, said in February it plans to order 5,000 new crude tank cars with safety standards higher than the CPC-1232s in an effort to push shippers toward safer cars.

For safe and healthy communities…