Tag Archives: Oil Industry

Crude By Rail, Oil Industry, Oil stabilization, State regulation, Volatility

North Dakota oil reps say Bakken does not need more regulation

Repost from AP in The San Francisco Chronicle
[Editor: To paraphrase, ‘Bakken is no more volatile, we are already conditioning it, it would cost too much.’  …well, what did we expect them to say?  – RS]

Oil reps say ND has proper rail shipment rules

By James MacPherson, Associated Press, September 23, 2014
FILE - In this June 5, 2012 file photo provided by Rangeland Energy, LLC, a train leaves the company's crude oil loading terminal near Epping, ND. Oil industry representatives told North Dakota regulators Tuesday, Sept. 23, 2014, that the state has proper regulations in place to treat Bakken crude for shipment by rail. North Dakota's Industrial Commission is considering new rules that would remove extra hydrocarbons from Bakken crude, a process some say might make the oil more safe for rail transport. Bakken crude has been linked to fiery oil train crashes like one outside Casselton, N.D., last December that left an ominous cloud over the town and led some residents to evacuate. Photo: Courtesy Of Rangeland Energy, LLC, AP / Rangeland Energy, LLC
In this June 5, 2012 file photo provided by Rangeland Energy, LLC, a train leaves the company’s crude oil loading terminal near Epping, ND. Oil industry representatives told North Dakota regulators Tuesday, Sept. 23, 2014, that the state has proper regulations in place to treat Bakken crude for shipment by rail. North Dakota’s Industrial Commission is considering new rules that would remove extra hydrocarbons from Bakken crude, a process some say might make the oil more safe for rail transport. Bakken crude has been linked to fiery oil train crashes like one outside Casselton, N.D., last December that left an ominous cloud over the town and led some residents to evacuate. | Photo: Courtesy Of Rangeland Energy, LLC, AP

BISMARCK, N.D. (AP) — Oil producers in North Dakota are objecting to any new state regulations that would require them to reduce the volatility of crude before it’s loaded onto rail cars.

North Dakota’s Industrial Commission is considering new rules that would require companies to remove certain liquids and gasses from crude oil train shipments, a process some say would make such transport safer. But oil industry officials told the commission Tuesday that the state already has proper regulations in place.

“To date, no evidence has been presented to suggest that measureable safety improvements would result from processes beyond current oil conditioning,” Hess Corp. spokesman Brent Lohnes said.

Oil trains in the U.S. and Canada were involved in at least 10 major accidents during the last 18 months, including an explosion in Lac-Megantic, Quebec, that killed 47. Other trains carrying Bakken crude have since derailed and caught fire in Alabama, Virginia, North Dakota.

But Kari Cutting, vice president of the North Dakota Petroleum Council, said nine of the incidents involved derailments and one was due to a leaky valve.

“The material contained in these railcars was not the cause,” Cutting said.

A federal report released earlier this year by the Pipeline and Hazardous Materials Administration says oil from North Dakota’s prolific Bakken formation may be more flammable than other crudes. But a report funded by the North Dakota Petroleum Council says Bakken oil is no more dangerous to transport by rail than other crudes and fuels.

Oil from North Dakota began being shipped by trains in 2008 when the state reached capacity for pipeline shipments. The state is now the nation’s No. 2 oil producer, behind Texas.

Cutting, whose group represents more than 500 companies working in North Dakota’s oil patch, said the each of the more than 11,000 oil wells in the state already has equipment in place to stabilize or condition the oil before shipment.

“Requiring stabilization beyond current conditioning practices would be a costly, redundant process that would not yield any additional safety benefits,” she said.

Industry officials also pointed out that stripping liquids and gases from Bakken crude would result in even-more volatile products that would still have to be shipped by rail.

Outside the Bismarck building where the commission was meeting, members of an environmental-minded landowner group hoisted a large banner that read, “Stop Bomb Trains, Stabilize Bakken Crude.”

Theodora Bird Bear of Mandaree, a spokeswoman for the Dakota Resource Council, told reporters that oil companies are cutting corners to boost their bottoms lines.

“When they talk about saving money, what they are really talking about is reducing public safety,” Bird Bear said.

Members of the group said the issue of safer Bakken oil goes well beyond North Dakota’s border.

“No one in this country feels safe around these rail lines,” Scott Skokos said.

Minnesota Gov. Mark Dayton on Tuesday sent a letter to Gov. Jack Dalrymple, asking for additional safety measures for oil trains leaving North Dakota.

Alison Ritter, a spokeswoman for the regulatory panel, said a decision on whether to change state rules could come within 90 days.

Massive increase in crude-by-rail, Niobrara crude, Oil Industry, Oil spill, Pipeline transport

Wyoming Oil Spills in 2014 Already Double Amount Spilled In 2013

Repost from Associated Press on Huffington Post GREEN

Wyoming Oil Spills Total 220,000 Gallons In 2014, Already Double Amount Spilled In 2013

By Mead Gruver, 09/19/2014 
WYOMING OIL SPILL
FILE – In this May 22, 2014 file photo provided by the U.S. Bureau of Land Management, a 25,000-gallon oil spill burns in the Powder River Basin southeast of Buffalo, Wyo., after officials deliberately ignited the crude in what they say was their best cleanup option in the rugged area. State records show the 25,000-gallon spill was one of three big oil spills in northeast Wyoming last spring that involved a storage tank and two pipelines owned by Casper-based Belle Fourche Pipeline. | ASSOCIATED PRESS

CHEYENNE, Wyo. (AP) — An oil boom in Wyoming has a filthy side effect: A string of accidents from a remote gulley in the Powder River Basin to a refinery in downtown Cheyenne already has made this year the state’s worst for oil spills since at least 2009, state records show.

Almost 220,000 gallons of oil already has spilled in Wyoming this year, more than double the 90,000 gallons all last year. About 165,000 gallons spilled in 2010, the previous worst year since the Wyoming Department of Environmental Quality began tracking spills in a database that year.

“There’s a lot more production,” Joe Hunter, the department’s emergency response coordinator, said Thursday. “If you’re producing more, there’s going to be more opportunities for releases. We’re doing what we can to just make sure the things get cleaned up.”

Much of the oil spilled lately has been in the Powder River Basin, epicenter of Wyoming’s nascent oil boom. Oil production in the basin has doubled in the past five years as companies tap the Niobrara Shale and other deep formations with horizontal drilling and hydraulic fracturing.

All the while, large volumes of oil spill on Wyoming’s remote landscapes with little public awareness. None of the federal or state agencies with purview over oil infrastructure and public lands in Wyoming actively notifies the public about oil spills except in extreme cases.

“Unless it’s going to have an impact on public health, that’s where we would notify the public,” Department of Environmental Quality spokesman Keith Guille said Thursday.

The biggest spills in Wyoming this year haven’t affected waterways, posed no risk to the public and promptly were cleaned up, according to Guille.

Guille said the department is working on developing a publicly accessible spills database. Such public disclosure could help the state agency encourage companies to work harder to prevent oil spills, said one environmental advocate.

“I think they’re more likely to be more careful. It’s a deterrent,” said Jill Morrison with the Powder River Basin Resource Council landowner advocacy group.

Department of Environmental Quality records disclosed in response to a request by The Associated Press show several recent oil spills weren’t inconsequential in scale. Three within a month last spring totaled more than 100,000 gallons and originated with infrastructure owned and operated by a single company, Casper-based Belle Fourche Pipeline:

— On April 30, a malfunction caused a 210,000-gallon oil storage tank owned by Belle Fourche in Campbell County to overflow, spilling 70,000 gallons of crude near a drilling site;

— On May 19, corrosion at a damaged section of a Belle Fourche pipeline spilled 25,000 gallons of oil that flowed three miles down an ephemeral drainage in Johnson County;

— On May 23, heavy equipment damaged one of the company’s pipelines in Crook County, spilling about 9,000 gallons of oil.

The Department of Environmental Quality isn’t pursuing fines against Belle Fourche or HollyFrontier, owner of a Cheyenne refinery where 70,000 gallons of oil spilled July 13, Hunter said.

The refinery spill happened when a severe thunderstorm dumped heavy rain and hail on a crude oil storage tank and cause the tank’s floating roof to collapse. The oil remained on site and was cleaned up quickly, according to Hunter.

The department decides whether to pursue fines against companies on a case-by-case basis, Hunter said.

“If we think there’s negligence, we’ll absolutely, 100 percent go after a violation. If surface water is obviously impacted, that’s grounds for seeking enforcement,” he said.

“You can’t really just say, you know, they met this number, so we’re going after enforcement. You’ve got to look at circumstances, was there negligence, could this be prevented?”

A message seeking comment from HollyFrontier wasn’t immediately returned Thursday.

Bob Dundas, environmental coordinator for Belle Fourche Pipeline, said Thursday he would forward a reporter’s message to somebody else in the company who could comment. Nobody at the company called by press time.

“It looks like if we’re going to have more oil production, we’d better step up enforcement,” Morrison said. “We want to be looking at how we’re going to prevent this increase in oil spills.”

Air Quality, Climate Change, Flaring, Oil Industry

Shale Oil Drillers Deliberately Wasted Nearly $1 Billion in Gas, Harming Climate

Repost from Desmogblog

Shale Oil Drillers Deliberately Wasted Nearly $1 Billion in Gas, Harming Climate

2014-09-04, by Sharon Kelly

In Texas and North Dakota, where an oil rush triggered by the development of new fracking methods has taken many towns by storm, drillers have run into a major problem.

While their shale wells extract valuable oil, natural gas also rises from the wells alongside that oil. That gas could be sold for use for electrical power plants or to heat homes, but it is harder to transport from the well to customers than oil. Oil can be shipped via truck, rail or pipe, but the only practical way to ship gas is by pipeline, and new pipelines are expensive, often costing more to construct than the gas itself can be sold for.

So, instead of losing money on pipeline construction, many shale oil drillers have decided to simply burn the gas from their wells off, a process known in the industry as “flaring.”

It’s a process so wasteful that it’s sparked class action lawsuits from landowners, who say they’ve lost millions of dollars worth of gas due to flaring. Some of the air emissions from flared wells can also be toxic or carcinogenic. It’s also destructive for the climate – natural gas is made primarily of methane, a potent greenhouse gas, and when methane burns, it produces more than half as much CO2 as burning coal.

Much of the research into the climate change impact the nation’s fracking rush – now over a decade long – has focused on methane leaks from shale gas wells, where drillers are deliberately aiming to produce natural gas. The climate change impacts of shale oil drilling have drawn less attention from researchers and regulators alike.

A new report from Earthworks finds that drillers in North Dakota alone have burned off over $854 million worth of gas at shale oil wells since 2010, generating 1.4 billion pounds of CO2 in 2013 alone. The 1.4 billion pounds of CO2 produced by flaring equal the emissions from 1.1 million cars or light trucks – roughly an extra 10 cars’ worth of emissions per year for every man, woman and child living in the state’s largest city, Fargo (population 113,000).

Flaring at shale oil wells is now so common that satellite images of the largely rural state at night are dotted with what appear at first to be major metropolises but are instead the flares burning round-the-clock in the Bakken shale drilling patch.

But while the highly visible flaring in North Dakota has drawn the most media attention, the practice is on the rise in Texas, particularly in the state’s Eagle Ford shale.

“The Eagle Ford produces considerably more natural gas than the Bakken,” Earthworks noted. “In June 2014, the Eagle Ford Shale produced seven billion cubic feet per day, while the Bakken produced 1.3 billion cubic feet per day.”

In 2013, nearly a third of the gas in North Dakota’s Bakken was flared – but the numbers coming from Texas seem a bit more murky, in part because unlike North Dakota, Texas does not tax flared gas and – according to a new four-part investigative report by the region’s newspaper – the state has failed to track or control flaring adequately.

The year-long investigation by the San Antionio Express-News recently uncovered striking problems with the regulation of flaring in Texas, including:

  • Texas law forbids drillers to flare past 10 days without a permit – but out of the twenty wells that had flared the most gas in the state, the paper discovered that 7 had never obtained required permits. State law calls for fines of up to $10,000 a day for flaring violations, but regulators have issued a total of less than $132,000 in fines in the Eagle Ford since the boom began, despite over 150 “possible flaring or venting violations” found by state inspectors in the region between 2010 and 2012.
  • Statewide, 33 billion cubic feet of natural gas were flared or vented in 2012 – a 400 percent rise from 2009, when the shale oil rush arrived. The Eagle Ford was responsible for two thirds of the state’s wasted gas in 2012, totaling 21 billion feet for the year. Eagle Ford drillers burned off gas at ten times the combined rate of drillers in the state’s other oil fields.
  • That much gas produces enormous amounts of airborne pollution. “In the early days of the boom, flaring released 427 tons of air pollution each year. By 2012, pollution levels shot up to 15,453 tons, a 3,500 percent increase that exceeds the total emissions of all six oil refineries in Corpus Christi,” the paper wrote. “Moreover, flaring and other oil industry activity in the Eagle Ford released more ozone-creating pollution in the summer of 2012 than two dozen Texas oil refineries.”
  • Despite concerns over how these emissions can affect human health, the state operates just seven air monitoring stations in the region. It can take regulators up to 10 days to arrive to take samples when citizens complain about potentially hazardous fumes.
  • Texas’s environmental agency, the Railroad Commission, is run by a 3-member panel of elected officials. “The three Railroad Commissioners have raised $11 million from campaign donors since 2010,” the paper found. “At least half that money came from employees, lobbyists and lawyers connected to the oil and gas industry, according to campaign finance records.”

Flaring has angered environmentalists, landowners and even many in the oil and gas industry itself.

“The Railroad Commission is statutorily required ‘to prevent waste of Texas’s natural resources’,” said Earthworks Texas organizer Sharon Wilson. “I don’t see how the Railroad Commission isn’t breaking the law by allowing drillers to waste natural gas by flaring it off rather than capturing it.”

“Nobody hates flaring more than the oil operator and the royalty owners,” Ron Ness of the North Dakota Petroleum Council, an industry trade group, told Reuters last year. “We all understand that the flaring is an economic waste.”

But the problem is projected to get worse not better. An environmental report from the Alamo Area Council of Governments predicted that by 2018, emissions of volatile organic compounds – which the EPA warns can have “short- and long-term adverse health effects” – could quadruple in the Eagle Ford.

Nonetheless, the EPA has decided to consider air emissions from each shale well, pipeline compressor or other piece of equipment individually when deciding whether there’s enough pollution for federal regulators to get involved – meaning that even though the Eagle Ford’s wells collectively pollute more than multiple oil refineries, the flaring escapes federal oversight.

New federal regulations, aimed at cutting down on the release of climate-changing carbon dioxide and methane from the wells and scheduled to go into effect in 2015, will require many drillers to use a process called a “green completion,” rather than flaring the gas or venting it to the atmosphere as raw unburned methane. Green completions can help reduce leaks by up to 99 percent, according to a study by the Environmental Defense Fund that has was heavily touted by the drilling industry and its advocates.

But those requirements only apply to wells whose purpose is to produce natural gas, not oil. This means the regulations will have little impact on shale wells in Texas’s Eagle Ford, the Express-News pointed out.

More than 1 million Texans live near the Eagle Ford, some of whom say they have suffered a litany of health effects that they suspect are tied to flaring.

“We went from nice, easy country living to living in a Petri dish,” Mike Cerny, who lives within a mile of 17 oil wells, told the Center for Public Integrity.  “This crap is killing me and my family.”

There’s a simple way to spot a poorly-performing flare. “If you see a smoking flare that’s not complete combustion,” Neil Carman, a former state scientist who now works with the Sierra Club, told the Express-News. “If it’s not completed, you get a smorgasbord of chemicals.”

At times, the gas is simply released unburned directly to the atmosphere – a practice labeled “venting” by the industry.

Texas state regulators fail to distinguish between flaring and venting in their public production database, the newspaper pointed out, making it impossible to know precisely how bad the impacts of the pollution might be.

Photo Credit: Flaring Natural Gas in North Dakota, via Shutterstock

Bakken Crude, DOT-111, Federal Regulation (U.S.), Oil Industry, Oil stabilization

North Dakota perspective on Bakken: ‘Getting it right’

From The Bismarck Tribune, Bakken Breakout
[An interesting analysis of the future of Bakken crude extraction from the perspective of an apparent oil industry advocate.  They’re listening!  – RS]

Getting it right

By Brian Kroshus, Publisher, September 17, 2014

Domestic oil production levels in the United States continue to rise – largely the result of the boom in shale oil drilling across the country. Notable plays like the Bakken shale in North Dakota and Permian and Eagle Ford shale in Texas, have been leading the way with more promising formations in different geographies, targeted for exploration and drilling in the years ahead.

Plays like the Bakken, Permian and Eagle Ford were actually in decline until only recently, having peaked decades ago when conventional, vertical wells were the only economically viable means of extracting crude. Now, those same plays are part of a drilling renaissance in key parts of the country. Geologists have known for years that more oil was present, trapped in source stone within the formations, but developing technology to profitably extract shale oil hasn’t come easy.

Today, oil production in the United States is surging thanks to advances in horizontal drilling and hydraulic fracturing techniques. Drillers are not only better understanding the geology of shale formations, but technology necessary to economically drill and produce oil. Increasingly, they’re becoming more efficient. Still, only a small percentage resource is making its way to the surface presently. Undoubtedly, more will continue to be learned in the years ahead, ultimately leading to higher extraction percentage and proven reserves.

From an energy independence standpoint, the outlook for the United States is certainly promising. In October 2013, for the first time in nearly two decades, the United States produced more oil than it imported. Predictably, while there are those including the current administration attempting to take partial credit, rising output has been the result of drilling on state and private lands. On federal lands, production has actually declined during Pres. Barack Obama’s time in office according to the American Petroleum Institute.

Despite declines on federal ground, experts still predict that the United States could be fully energy independent by the end of this decade. According the EIA, U.S. oil production will rise to 11.6 million barrels per day in 2020, from 9.2 million in 2012, overtaking Saudi Arabia and Russia and becoming the world’s largest oil producer. Over the same period, Saudi Arabia production levels are expected to decline from 11.7 million barrels to 10.6 million. Russia will also product less oil, falling from 10.7 million to 10.4 million barrels per day.

With a shale revolution and energy renaissance underway in the United States, there’s reason to be optimistic. Achieving energy independence appears to be within our grasp. Still, despite the prospect of becoming an energy independent nation, potential roadblocks loom.

In May, at the 2014 Williston Basin Petroleum Conference, Harold Hamm, CEO of Continental Resources told convention attendees that “we can’t have any more issues.” He also said “It has to be done in an absolute, safe manner. It’s going to take all of us.” He was referring to recent problems related to Bakken crude including pipeline ruptures and the fiery train derailment near Casselton, North Dakota this past December.

There’s a lot at stake. Companies like Continental Resources and others, are expected to invest billions in the years ahead to fully develop plays like the Bakken. Drillers are keenly aware that it’s their game to lose. Hamm stressed, “If we have anything, they’re going to shut us down. So many people want to stop fossil fuel use and production.”

Despite the positive macroeconomic effects rising domestic oil production and decreased imports have on the U.S. economy, job creation and economic growth alone won’t guarantee that shale oil production will continue, unless it is deemed safe and not a threat to public safety during transportation of Bakken crude in particular.

Volatility levels of Bakken crude and implication on public safety, continues to be heavily debated. The Lac-Megantic, Quebec, rail tragedy, where 47 people lost their lives when a runaway train carrying tanker cars filled with Bakken formation crude, derailed and exploded in the heart of town has been at the center of that debate. The explosions were so intense, that approximately one-half of the downtown area was destroyed.

Understandably, safely transporting Bakken crude by rail throughout North America, knowing freight rail routes frequently pass through residential areas on their way to final destinations, is a top industry priority. Much of the focus has been and remains on the DOT-111 tank car. On July 23 the U.S. Department of Transportation announced comprehensive proposed rulemaking for the safe transportation of crude oil and flammable materials, with Bakken crude being mentioned – in the form of a Notice of Proposed Rulemaking (NPRM) and a companion Advanced Notice of Proposed Rulemaking (ANPRM).

The NPRM language includes “enhanced tank car standards, a classification and testing program for mined gases and liquids and new operational requirements for high-hazard flammable trains that includes braking controls and speed restrictions.” Within two years, it proposes to “phase out of the older DOT-111 tank cars for the shipment of flammable liquids including Bakken crude oil, unless the tank cars are retrofitted to comply with new tank car design standards.” It also seeks “Better classification and characterization of mined gases and liquids.”

The North Dakota Public Service Commission has set a special hearing for September 23rd, as a part of the discussion on the volatility of Bakken crude and potential oil conditioning requirements necessary to safely transport oil from the Williston Basin. Reducing the light hydrocarbons present in Bakken crude would not only provide greater safety, but the standardization of Bakken crude into a class of oil much like West Texas Intermediate, possibly creating premium pricing opportunities.

NDPSC involvement and recommendations in addition to oil conditioning include heightened rail inspection efforts at the state level in addition to the Federal Pipeline and Hazardous Materials Administration, and emergency response training. Working closely with federal officials and a heightened inspection process, will require additional resources moving forward.

Expanding pipeline capacity and reducing reliance on rail to transport Bakken crude will continue to be a growing need, playing a role in addressing public safety concerns. The North Dakota pipeline authority anticipates two new pipelines coming online before the end of 2016, with capacity for 545,000 barrels a day. Another third proposed pipeline, capable of handling an additional 200,000 barrels, could potentially be in operation by late 2016 or early 2017.

With daily production expected to reach 1.5 million barrels in 2017, and 1.7 million barrels in early 2020, diversifying how Bakken crude is moved to market will be necessary not only from a public safety standpoint, but in order to address logistically challenges that continue to surface as production levels increase.

Extracting domestic oil and gas, moving it to market and properly disposing of or using byproducts created during the production process in a safe and efficient manner will be necessary in order for plays like the Bakken to be fully capitalized on. Those opposed to fossil fuel production will continue to watch and patiently wait for any opportunity to pressure elected officials and sway public opinion.

Ensuring both public and environmental safety to ensure the future of domestic oil production – will require a cooperative effort on the part of both industry and the state. As Harold Hamm alludes to, it truly is industries game to lose.