Tag Archives: Oil Industry

California Regulation, Injection wells, Oil Industry, Public permitting, Water contamination

Fired regulator: Governor pushed to waive oil safeguards

Repost from the Associated Press

Fired regulator: Governor pushed to waive oil safeguards

By Ellen Knickmeyer, Sep 4, 3:32 PM EDT
AP Photo
FILE – In this Wednesday May 27, 2015 file photo, California Gov. Jerry Brown addresses the California State Association of Counties Legislative Conference in Sacramento, Calif. California’s top oil and gas regulators repeatedly warned Gov. Jerry Brown’s senior aides in 2011 that the governor’s orders to override key safeguards in granting oil industry permits would violate state and federal laws protecting the state’s groundwater from contamination, one of the former officials has testified. (AP Photo/Rich Pedroncelli, File)

SAN FRANCISCO (AP) — California’s top oil and gas regulators repeatedly warned Gov. Jerry Brown’s senior aides in 2011 that the governor’s orders to override key environmental safeguards in granting oil industry permits would violate state and federal laws protecting groundwater from contamination, one of the former officials has testified.

Brown fired the regulators on Nov. 3, 2011, one day after what the official says was a final order from the governor to bypass provisions of the federal Safe Drinking Water Act and grant permits for oilfield injection wells. Brown later boasted publicly that the dismissals led to a speed up of oilfield permitting.

In a newly filed court declaration, Derek Chernow, Brown’s former acting director of the state Department of Conservation, also alleged that former Gov. Gray Davis urged fellow Democrat Brown in a phone call to fire Chernow and Elena Miller, the state’s oil and gas supervisor.

Brown’s spokesman, Evan Westrup, labeled the allegations “baseless.”

“The expectation – clearly communicated – was and always has been full compliance with the Safe Drinking Water Act,” Westrup said Thursday.

This year, however, the state acknowledged that hundreds of the oilfield operations approved after the firings are now polluting the state’s federally protected underground supplies of water for drinking and irrigation.

The U.S. Environmental Protection Agency has given the state until 2017 to resolve what state officials conceded were more than 2,000 permits improperly given to oil companies to inject oilfield production fluid and waste into protected water aquifers. An earlier AP analysis of the permits found state records showed more than 40 percent of those were granted in the four years since Brown took office.

Chernow’s declaration, obtained by The Associated Press, was contained in an Aug. 21 court filing in a lawsuit brought by a group of Central Valley farmers who allege that oil production approved by Brown’s administration has contaminated their water wells. The lawsuit also cites at least $750,000 in contributions that oil companies made within months of the firings to Brown’s campaign for a state income tax increase.

Westrup denied the oil companies’ support for Brown’s tax-increase campaign was related to the firings, saying, “the governor’s focus is doing what’s best for California, and that’s what informs his decisions.”

Robert Stern, former general counsel of the state’s ethics agency and the architect of a 1970s state political reform act, said there was nothing illegal about Brown receiving the oil industry contributions for his tax campaign unless they were explicitly in return for firing the oil regulators.

Chernow’s statement describes for the first time the alleged back story of the controversial permit approvals. He declined to comment to the AP and Miller did not respond to interview requests.

Brown’s boasting about the firings to speed up permitting is at odds with his image as a leading proponent of renewable energy and reduced fossil fuel consumption. That reputation led to a recent meeting with Pope Francis to discuss climate change.

Westrup said an ongoing effort by Brown to reduce consumption of fossil fuels in the state by up to 50 percent and the oil industry’s fight against elements of Brown’s climate-change campaign shows “where the administration stands and what it’s fighting for.”

The firings occurred as the governor was scrambling to drum up energy sources, jobs and business and to win support for the ultimately successful statewide vote on tax increases to tackle state budget woes.

Today, with the state in the fourth year of drought and a state of emergency declared by Brown, protecting the adequacy and purity of water supplies for farms and cities is a paramount priority.

In the declaration in the farmers’ case, Chernow said he and Miller were under intense pressure from the oil industry as well as the Brown administration to relax permitting standards for injection wells that oil companies use to pump production fluid and waste underground.

Chernow testified he was in the office of John Laird, Brown’s secretary of Natural Resources, in early October 2011 when Laird took a call from Brown. Laird told Chernow that Brown said he had just received a call from Davis, then acting as legal counsel for Occidental Petroleum, the country’s fourth-biggest oil Company.

Brown said Davis and Occidental had demanded Brown fire Chernow and Miller over what Occidental complained was the slow pace of issuing drilling permits, according to Chernow.

Davis declined to comment Thursday.

A few weeks later, on Nov. 2, 2011, Chernow and Miller received a call from Brown’s energy adviser, Cliff Rechtschaffen, who urged the regulators to “immediately fast-track” approval of new oilfield permits, according to Chernow’s filing.

Miller replied that what Brown aides and the oil industry were pressing for “violated the Safe Drinking Water Act, and that the EPA agreed” with that conclusion, Chernow said. In response, according to Chernow, Rechtschaffen told them “this was an order from Governor Brown, and must be obeyed.”

Chernow and Miller were fired the following day.

Memos sent to Department of Conservation staff the next month – obtained through state public records laws by lawyers for the farmers – allegedly detail some ways state oilfield regulators were told they could now bypass some federally mandated environmental reviews and approve permits.

The state, under increasing pressure from the EPA, this year and last ordered the shutdown of 23 improperly permitted oilfield wells posing the most immediate threat to nearby water wells.

Current officials in the Department of Conservation said they believe the actual number of flawed permits granted under Brown is lower than the 46 percent the state records show, but they have not provided alternate figures.

The state improperly issued permits, they said, because of misunderstandings and poor record-keeping, rather than willful decisions by Brown’s administration.

The safeguards at issue in the alleged permitting dispute were a “very fundamental” part of the federal Safe Drinking Water Act’s protections against oilfield contamination, said David Albright, manager of the EPA’s California groundwater office, this week.

California “has a huge amount of work to do” to bring its regulation of oilfield injection wells into compliance with federal law, said Jared Blumenfeld, the regional EPA administrator in California. Blumenfeld cited a “sea change” over the past year in state compliance efforts, however.

Executives of Occidental and Aera Energy at the time thanked Brown for his involvement in the oilfield permitting process, as Occidental CEO Steven Chazren noted in a January 2012 call with financial analysts, two months after top regulators were fired.

That month, Occidental became the first major oil company to come out in support of the Brown’s tax measure and donated the first of $500,000 to Brown’s campaign for the tax referendum. A month later, Aera donated $250,000.

Margita Thompson, a spokeswoman at what is now the independent California spin-off of Occidental, California Resources Council, said that all the farmers’ allegations were “wholly without merit.” Cindy Pollard, spokeswoman for Aera, said the company often donates to revenue-raising state campaigns. “Aera’s contributions were not quid pro quo,” she said.

 

Bakken Crude, Crude By Rail, Oil Industry, Oil prices, Oil refineries

Does zero Bakken crude for Irving Oil indicate a trend?

Repost from Railway Age
[Reference:  see the 8/20/15 Wall Street Journal article, Canada’s Largest Refinery Shifts from Bakken Shale Oil to Brent Crudes.  – RS]

Does zero Bakken crude for Irving Oil indicate a trend?

By  William C. Vantuono, Editor-in-Chief, August 28, 2015
Irving Oil Ltd. Saint John, N.B. refinery
Irving Oil Ltd. Saint John, N.B. refinery

Irving Oil Ltd., operator of Canada’s largest crude oil refinery, has stopped importing crude oil sourced from the Bakken shale formation in North Dakota and shipped by rail in favor of cheaper crudes from such producers as OPEC, “reflecting a shift in crude costs affecting East Coast refiners during a global slump in oil prices,” the Wall Street Journal recently reported.

The 320,000-barrel-a-day refinery in Saint John, N.B., one of the biggest by volume in North America, had been receiving 100,000 barrels a day by rail, a high reached two years ago that was only temporarily affected by the Lac Mégantic disaster. (The Montreal, Maine & Atlantic crude oil train that derailed on July 6, 2013, claiming 47 lives, was bound for the refinery). Today, CBR shipments the refinery are zero, a move “that reflects shifting economics in the energy industry even as the price of oil—including Bakken crude—has slumped to six-year lows,” said the WSJ. “About 90% of the crude oil Irving currently buys is shipped by sea from such producers as Saudi Arabia and those in western Africa, with the remainder coming by rail from such western Canadian oil-sands operators as Syncrude Canada Ltd. and Royal Dutch Shell PLC. A year ago, Bakken crude made up about 25% of Irving’s feedstock and in 2013 it supplied nearly one-third of its procurement volume, or about 100,000 barrels a day. ‘The Bakken price has gone up’ relative to other crudes when CBR costs are factored in,’ [an Irving Oil executive] said.”

“A once-yawning gap, between the cost of oil produced in North America and overseas crudes priced at the Brent global benchmark, has narrowed since 2013,” the WSJ noted. “Refiners on North America’s east coast can now import crude shipped by sea for less than the cost of shipping it by rail from shale oil producers in North Dakota and elsewhere in the U.S.”

Production of U.S. shale oil, especially that from the Bakken, led to CBR shipments increasing exponentially due to a lack of pipelines. CBR is more expensive than by shipping by pipeline and even by ship, and fewer refiners are willing to pay a premium for CBR. <p< Whether Irving Oil’s decision to abandon Bakken crude for a single refinery reflects a broader trend that will affect CBR movements remains to be seen. Two other refiners have followed suit, but the situation may not be permanent.

“Refiners PBF Energy Inc. and Phillips 66 both said they increased procurement of overseas crudes at the expense of CBR in the second quarter, though they signaled it is unclear if that will continue throughout the rest of the year,” the WSJ reported. “‘Our ability to source sovereign waterborne crudes was far more economic to the East Coast facilities, and that’s what we did,’ PBF Energy CEO Tom Nimbley said in late July. Phillips 66 CEO and Chairman Greg Garland told investors last month, ‘We actually set [crude-by-rail] cars on the siding. We brought imported crudes in the system.’ But, he added, ‘I’d say given where our expectations are for the third quarter, I’d say cars are coming off the sidings, and we’re going to import less crude.’”

CBR traffic has dropped substantially compared to last year, “reflecting both the worsening economics of CBR and better pipeline access to refineries on the Gulf of Mexico,” the WSJ noted. According to Association of American Railroads figures, U.S. Class I railroads originated 111,068 carloads of crude oil in the second quarter of 2015, down 2,201 carloads from the first quarter and some 21,000 fewer carloads than the peak in 2014’s third quarter.

 

Oil Industry, Rail inspection, Rail Safety, Railroad workers, State regulation, Track maintenance

N.D. hires BNSF manager as inspector for state rail safety program

Repost from the Billings Gazette

N.D. hires BNSF manager as inspector for state rail safety program

By Mike Nowatzki, Forum News Service, August 10, 2015
Train derailment
Oil tank cars not damaged in a train derailment near Culbertson are removed from the area on July 17, 2015. Amy Dalrymple/Forum News Service

BISMARCK, N.D. – A manager for the railroad involved in two fiery oil train derailments in North Dakota during the past two years has been hired as the first track inspector for a new state-run rail safety program.

Karl Carson will go to work for the state Public Service Commission on Aug. 17, doing inspections to identify problems with track and worker safety.

A Minot native, Carson is a division engineer with BNSF Railway. He’s worked for the railroad since 1992, holding several positions including assistant director of maintenance production, in which he supervised maintenance and replacement of track and track components, according to the PSC. He’s worked in management for BNSF since 2004.

Commission chairwoman Julie Fedorchak said the PSC wanted an inspector with experience, and with only two major railroads operating in the state – BNSF and Canadian Pacific – hiring someone with connections to one of them was “just an unavoidable situation.”

She said she asked Carson during his interview “if he would have a hard time regulating his old friends, and he said, ‘Absolutely not.’”

“His experience helps him to understand where the strengths and the weaknesses are and will really help him engage directly with the railroad,” she said. “They know his experience and they know he knows what he’s talking about.”

North Dakota is the 31st state to partner with the Federal Railroad Administration on a state rail safety program. The FRA has primary responsibility for rail safety in every state.

The PSC began looking seriously at the need for a state program after the December 2013 derailment of a BNSF oil tanker train near Casselton, which caused a massive fireball and voluntary evacuation of the city. Six cars from a BNSF oil train derailed May 6 near Heimdal in east-central North Dakota. No one was hurt in either incident.

Carson’s new position is one of two approved by state lawmakers in April when they voted to spend $523,345 on the state rail safety program in 2015-17, with the intent of continuing the pilot program in 2017-19.

“We’re quite pleased with the caliber of the first inspector,” Fedorchak said. “He’s got more rail experience than I had hoped for, and I think in talking with other states, that was the key ingredient they emphasized.”

State Sen. Tyler Axness, D-Fargo, who first publicly suggested a state-run rail safety program in July 2014 during his unsuccessful campaign for the PSC, said he doesn’t necessarily disagree with Fedorchak that the pool of qualified applicants for the inspector job is probably limited in North Dakota, and he declined to make any judgments about the hire without seeing the pool of applicants.

But Axness and Wayde Schafer, conservation organizer for the Dacotah Chapter of the Sierra Club, both said it seems like the state has a pattern of hiring regulators with close ties to the industries they will oversee. Schafer said on such a contentious issue as rail safety, “it seems like they would want to hire somebody who was a little bit more neutral.”

“You’d think something this controversial, even the appearance of impropriety should be avoided whenever possible,” he said.

Don Morrison, executive director of the Dakota Resource Council, drew a comparison to the hiring of Lynn Helms, a former employee of Texaco and what is now Hess Corp. who now regulates and promotes the state’s oil and gas industry as director of the state Department of Mineral Resources.

“It certainly looks like business as usual, which is give the industry what they want,” he said. “Time will tell.”

Fedorchak said the PSC had 18 applicants for the job and interviewed the top five, with second interviews for the two finalists. She noted Carson was the “strong favorite” among the FRA inspectors on the interview panel.

Carson earned a certificate of completion in auto mechanics from Bismarck State College in 1990 and also served in the North Dakota Army National Guard from 1990 to 1994. He couldn’t immediately be reached for comment.

His annual salary with the PSC will be $90,000.

Carbon dioxide, Coal industry, Federal Regulation (U.S.), Natural gas, Oil Industry, Power plants

US carbon pollution from power plants hits 27-year low

Repost from the Associated Press
[Editor:  Significant quote: “A factor behind all these trends is that the writing is on the wall about the future of coal and thus the future of U.S. carbon dioxide emissions. The regulatory noose is tightening and companies are anticipating a future with lower and lower dependence on fossil fuels and lower and lower carbon dioxide emissions.”  (Princeton University professor Michael Oppenheimer)  For background data, see U.S. Energy Information Administration report on April emissions.  – RS]

US carbon pollution from power plants hits 27-year low

By Seth Borenstein, Aug. 5, 2015 5:00 PM EDT

WASHINGTON (AP) — Heat-trapping pollution from U.S. power plants hit a 27-year low in April, the Department of Energy announced Wednesday.

A big factor was the long-term shift from coal to cleaner and cheaper natural gas, said Energy Department economist Allen McFarland. Outside experts also credit more renewable fuel use and energy efficiency.

Carbon dioxide — from the burning of coal, oil and gas — is the chief greenhouse gas responsible for man-made global warming.

“While good news for the environment, we certainly would not want to assume that this trend will continue and that we can simply relax,” said John Reilly, co-director of MIT’s Joint Program on the Science and Policy of Global Change.

Electric power plants spewed 141 million tons of carbon dioxide in April, the lowest for any month since April 1988, according to Energy Department figures. The power plants are responsible for about one-third of the country’s heat-trapping emissions.

April emissions peaked at 192 million tons in 2008 and dropped by 26 percent in seven years.

Carbon pollution from power plants hit their peak in August 2007 with 273 million tons; summer emissions are higher because air conditioning requires more power.

In past years, experts said the U.S. reduction in carbon dioxide pollution was more a function of a sluggish economy, but McFarland said that’s no longer the case.

“You don’t have a 27-year low because of an economic blip,” McFarland said. “There are more things happening than that.”

The price of natural gas has dropped 39 percent in the past year, he said. Federal analysts predict that this year the amount of electricity from natural gas will increase 3 percent compared to last year while the power from coal will go down 10 percent.

Those reductions were calculated before this week’s announcements of new power plant rules. The new rules aim to cut carbon pollution from electricity generators another 20 percent from current levels by 2030.

The pollution cuts in April are because efficiency has cut electricity demand and energy from non-hydropower renewable sources has more than doubled, said Princeton University professor Michael Oppenheimer.

“A factor behind all these trends is that the writing is on the wall about the future of coal and thus the future of U.S. carbon dioxide emissions,” Oppenheimer said in an email. “The regulatory noose is tightening and companies are anticipating a future with lower and lower dependence on fossil fuels and lower and lower carbon dioxide emissions.”