Tag Archives: Oil producers

Oil Crash Means Biggest Boomers Halt Supply Growth in 2016

Repost from Bloomberg Business

Oil Crash Means Biggest Boomers Halt Supply Growth in 2016

Grant Smith and Julian Lee, November 19, 2015 — 4:00 PM PST Updated on November 20, 2015 — 6:53 AM PST

HIGHLIGHTS
•  U.S., Iraq to both stop adding barrels amid price drop
•  Faltering growth to spur global oil market rebalancing in 2016

To understand what the oil price crash will mean for global crude supplies next year, look no further than the two nations that added more barrels to world markets in 2015 than anyone else.

The U.S. and Iraq, whose extra crude this year equates to about 80 percent of the global surplus, will fail to boost output in 2016, according to the world’s biggest forecasters. While the U.S. curtailment is mainly because prices are too low to spur fresh supply, the Middle East country’s ability to boost output is also being crimped by a need to fund its battle with Islamic State.

Slowing output in the the two fastest-growing producers signals the global glut, which has depressed oil prices to near $40 a barrel, may begin to dissipate next year, according to Barclays Plc. While that would start to fulfill Saudi Arabia’s plan to re-balance world crude markets, Iraq’s struggles show that producers in OPEC are also suffering as that strategy takes effect.

“The U.S. and Iraq have been two of the biggest contributors to the global oil surplus and when we look at 2016, production in both will be challenged,” Torbjoern Kjus, an analyst at DNB ASA in Oslo, said by e-mail. “Accelerating decline rates and reduced investment will lead to falling U.S. output, while Iraq is unlikely to see much growth from further levels.”

The two nations are now pumping the equivalent of 4.88 billion barrels a year, an increase of 1.77 billion barrels, or almost 60 percent, compared with their output rates at the start of 2012. To put that in context, oil inventories in Organization for Economic Co-operation and Development nations expanded by 314 million barrels, or 12 percent, in the corresponding period.

U.S. shale production, which has driven a six-year boom in the nation’s oil output, will decline by 600,000 barrels a day next year, according to the International Energy Agency. Total U.S. oil supply is set to surge by 830,000 barrels a day this year, powered by shale formations in Texas and North Dakota. Oil traded at $40.39 a barrel in New York at 9:49 a.m. New York time.

Iraqi production “is likely to remain broadly flat” next year as the OPEC member “is struggling with the stress of $50-a-barrel oil and a costly battle” with Islamic State militants, the IEA said in a report on Nov. 13. Baghdad is also straining to reimburse international oil companies for investments in southern fields. BP Plc cut this year’s operations budget by 60 percent to $1 billion. As oil prices halved, Iraq has had to pay twice the amount of crude to foreign firms who receive per-barrel fees in the form of cargoes.

In the north, the semi-autonomous Kurdish region is struggling to pay partners amid a budget dispute with Baghdad. DNO ASA, the Norwegian operator of the Tawke field, and Gulf Keystone, which operates Shaikan, have said their plans are on hold until they receive overdue payments for output from the government. The Kurdistan Regional Government began making regular monthly transfers to companies in September, although DNO says it’s only receiving half of what it is owed for monthly exports and nothing towards reducing accumulated arrears.

With output gains in jeopardy, “there are signs that the supply glut is easing,” said Kevin Norrish, managing director for commodities research at Barclays in London.

“U.S. shale oil growth measured over last year’s levels is now coming to an end at last and given the infrastructure constraints in Iraq, plus an end to the upward trend in Saudi output it seems the phase of steadily rising OPEC production may be pausing for now as well,” he said. “The long, slow process of re-balancing the oil market continues.”

‘Keep It in the Ground’ Win: Utah Oil and Gas Auction Halted

Repost from the Center For Biological Diversity
[Editor: sign their petition .  – RS]

BLM postpones Utah auction to ‘accommodate’ climate activists

By Phil Taylor, E and E News, November 17, 2015

About the CenterThe Bureau of Land Management late last night announced it is postponing today’s scheduled oil and gas lease sale in Salt Lake City to appease activists who are fighting to keep those minerals in the ground.

BLM had planned to lease up to 37,580 acres scattered around the center of the Beehive State for future oil and gas development, but the agency said it needed more time to “better accommodate the high level of public interest in attending the sale.”

It marks the first time that the “Keep it in the Ground” climate movement — which seeks to end the sale of federally owned oil, gas and coal — has disrupted a BLM lease auction.

BLM said it intends to reschedule the sale in the “near future.”

“As a public agency, we understand the importance of transparency,” said BLM spokeswoman Megan Crandall. “Given the large interest, we chose to postpone the sale and will be working to find the best way to accommodate the public and those who wish to attend and participate in the auction when it is held.”

It was the third consecutive BLM lease sale to be confronted by climate protesters who believe the burning of federally owned fossil fuels will undermine the nation’s efforts to reduce greenhouse gas emissions.

Roughly 50 people gathered last week outside BLM’s Colorado headquarters in Lakewood to protest the agency’s sale of 90,000 acres in the Pawnee National Grassland, according to the Western Energy Alliance.

BLM moved forward with that auction, selling 106 parcels covering 83,534 acres for $5 million.

Protesters also demonstrated outside a Nov. 3 lease sale in Wyoming.

Crandall said there was not enough room in BLM’s downtown Salt Lake City auction room to accommodate members of the public who wanted to attend. The room is about 28 feet wide by 60 feet long and also has to accommodate up to 30 bidders and reporters, she said.

BLM planned to live-stream the auction, but many activists insisted on attending in person, she said.

The “Keep it in the Ground” campaign is backed by some major environmental groups including the Natural Resources Defense Council and is buoyed in Congress by legislation from Sen. Jeff Merkley (D-Ore.) that would end new leasing and renewals of nonproducing federal leases for oil, coal and gas.

The movement is riding the momentum of President Obama’s recent rejection of the Keystone XL pipeline and Royal Dutch Shell PLC’s decision to abandon oil exploration in the Arctic Ocean. It now seeks to stop BLM from leasing fossil fuels in the West and the Bureau of Ocean Energy Management from opening the Atlantic Ocean to offshore drilling.

In Salt Lake City this morning, roughly 40 activists displayed theatrical bidding paddles, held up photos of their grandkids and sang folk songs including John Prine’s “Paradise,” according to Tim Ream, an organizer from WildEarth Guardians who is based in San Francisco and attended this morning’s protest. Organizing groups included WildEarth, the Center for Biological Diversity, Women’s Congress for Future Generations, 350.org, the Rainforest Action Network and Elders Rising for Intergenerational Justice.

Ream said BLM informed him last week that some members of the public would be turned back from the auction room regardless of whether there was space. This morning’s protest was led primarily by older activists who had no intention of disrupting the sale, he said.

“They wanted to touch the hearts of those who are selling and buying our public lands,” he said. “They realized two years in prison is too high a price.”

Ream was referring to the two-year prison sentence handed down in 2011 to activist Tim DeChristopher for his decision to pose as a bidder at a BLM lease sale in Utah in late 2008 and snatch up $1.8 million in leases with no intention of paying for them.

Vaughn Lovejoy of the group Elders Rising was among those who attended this morning’s rally.

“We’d like to see if there’s a way to inspire my generation … to spend this piece of our life doing something for the future rather than hanging out on cruise ships or golf courses,” he said.

Ream said activists will also stage protests at BLM’s upcoming oil and gas lease sales in Reno, Nev., on Dec. 8 and in Washington, D.C., on Dec. 10. “We’re going to keep on hitting every one of these lease sales,” he said.

The American Petroleum Institute has criticized the movement and Merkley’s legislation as a “political stunt,” warning that halting federal sales of fossil fuels would hike energy costs and hurt the federal government’s coffers.

The Mineral Leasing Act requires BLM to hold regular oil and gas auctions.

Kathleen Sgamma, vice president of government and public affairs at the Western Energy Alliance, whose members depend heavily on public lands leasing, said this morning that the Salt Lake City protesters are ignoring how increased production of natural gas has helped the nation transition away from coal that is more harmful to the climate when burned.

“Apparently, BLM is seeking a larger venue to accommodate the expected crowd of protesters whose goal is to disrupt the sale,” she said. “These same professional protesters bragged that they were traveling to other lease sales to try to disrupt them, but they’re on a fool’s errand.”

Sgamma noted that Interior Secretary Sally Jewell has rebuffed the “Keep it in the Ground” movement as unrealistic.

“There are millions of jobs around the country that are dependent on these industries, and you can’t just cut it off overnight,” Jewell said in September during a breakfast organized by The Christian Science Monitor (Greenwire, Sept. 15).

U.S. Senators introduce “Keep It In the Ground Act”

Repost from the Independent Journal

Bernie Sanders Announces Plan to Strangle the Booming Fossil Fuel Industry in America

By Michael Hausam, November 5, 2015
Democratic presidential candidate Sen. Bernie Sanders, center, and Sen. Jeff Merkley (l) announce new climate legislation, Nov. 4, 2015, during a news conference on Capitol Hill in Washington. (Photo: AP)

The just-introduced “Keep It In the Ground Act,” co-sponsored by Bernie Sanders, would halt new oil and gas exploration on federal lands and offshore waters. It also would terminate any existing leases that aren’t currently producing.

The bill is also sponsored by Senators Barbara Boxer (D-CA), Ben Cardin (D-MD), Kirstin Gillibrand (D-NY), Patrick Leahy (D-VT), and Elizabeth Warren (D-MA).

In an announcement at the Capitol in D.C., Sanders said that the end result of the legislation would be to make sure that:

“over 90 percent of the potential carbon emissions from oil, gas and coal on our federal lands and federal waters (would stay) underground forever.”

The motivation for the bill is to combat climate change. In Sanders’ statement at the rally, he took a shot at his Republican opponents, whom he characterized as deniers:

“But somehow — somehow! — when it comes to climate change there are massive attacks on scientists who tell us the truth about climate change. Worry less about your campaign contributions, worry more about your children and grandchildren. The debate is over.”

Of course, this bill only addresses the supply side of fossil fuels and does nothing about addressing the demand for oil and gas – other than via necessarily driving up the costs of gasoline, electricity, and others that depend on their availability.

Stopping the availability of using federal lands for fossil fuels is a key priority for the anti-fossil fuels movement.

With roughly half of the remaining unexploited fossil fuels in the U.S. being on those lands, according to Grist, the jobs and fuels from this battle will make a huge difference for groups warning about global warming, as well as people who care about cheap fuel for economic growth and prosperity.

 

Drilling boom means more harmful waste spills

Repost from the Associated Press

AP Exclusive: Drilling boom means more harmful waste spills

By John Flesher, Sep. 8, 2015 8:45 PM EDT

CROSSROADS, N.M. (AP) — Carl Johnson and son Justin are third- and fourth-generation ranchers who for decades have battled oilfield companies that left a patchwork of barren earth where the men graze cattle in the high plains of New Mexico. Blunt and profane, they stroll across a 1 1/2-acre patch of sandy soil — lifeless, save for a scattering of stunted weeds.

Five years ago, a broken pipe soaked the land with as much as 420,000 gallons of oilfield wastewater — a salty and potentially toxic drilling byproduct that can quickly turn fertile land into a dead zone. The leaked brine killed every sprig of grama and bluestem grasses and shinnery shrubs it touched.

For the Johnsons, the spill is among dozens that have taken a heavy toll: a landscape pockmarked with spots where livestock can no longer graze, legal fees running into the tens of thousands and worries about the safety of the area’s underground aquifer.

“If we lose our water, that ruins our ranch,” Justin Johnson said. “That’s the end of the story.”

Their plight illustrates a largely overlooked side effect of oil and gas production that has worsened with the past decade’s drilling boom: spills of wastewater that foul the land, kill wildlife and threaten freshwater supplies.

An Associated Press analysis of data from leading oil- and gas-producing states found more than 175 million gallons of wastewater spilled from 2009 to 2014 in incidents involving ruptured pipes, overflowing storage tanks and other mishaps or even deliberate dumping. There were some 21,651 individual spills. And these numbers are incomplete because many releases go unreported.

Though oil spills tend to get more attention, wastewater spills can be more damaging. And in seven of the 11 states the AP examined, the amount of wastewater released was at least twice that of oil discharged.

Spilled oil, however unsightly, over time is absorbed by minerals in the soil or degraded by microbes. Not so with the wastewater, also known as brine, produced water or saltwater. Unless thoroughly cleansed, a costly and time-consuming process, salt-saturated land dries up. Trees die. Crops cannot take root.

“Oil spills may look bad, but we know how to clean them up and … return the land to a productive state,” said Kerry Sublette, a University of Tulsa environmental engineer and specialist in treating the despoiled landscapes. “Brine spills are much more difficult.”

In addition to the extreme salinity, the fluids often contain heavy metals such as arsenic and mercury, plus radioactivity. Even smaller discharges affecting an acre or two gradually add up for landowners — “death by a thousand bee stings,” said Don Shriber of Farmington, New Mexico, a cattleman who wrangled with an oil company over damage.

For animals, the results can be fatal. Ranchers, including Melvin Reed of Shidler, Oklahoma, said they have lost cattle that lapped up the liquids or ate tainted grass.

“They get real thin. It messes them up,” Reed said. “Sometimes you just have to shoot them.”

The AP obtained data from regulatory agencies in Texas, North Dakota, California, Alaska, Colorado, New Mexico, Oklahoma, Wyoming, Kansas, Utah and Montana — states that account for more than 90 percent of the nation’s onshore oil production. Officials in ninth-ranking oil producer Louisiana and second-ranking gas producer Pennsylvania said they could not provide comprehensive spill data.

The spill total increased each year, along with oil and gas production. In 2009, there were 2,470 reported spills in the 11 states; by 2014, the total was 4,643. The amount of wastewater spilled doubled from 21.1 million gallons in 2009 to 43 million in 2013 before dipping to 33.5 million last year.

The extent of land or water contamination is unknown; state and federal regulators make no such assessments. Texas, the nation’s biggest oil and gas producer, had the most incidents, 4,783, and the highest volume spilled, 62 million gallons.

Industry groups and regulators said much of the waste is recovered during cleanup operations or contained by berms near wells. Still, they acknowledged a certain amount soaks into the ground and can flow into waterways.

“You’re going to have spills in an industrial society,” said Katie Brown, spokeswoman for Energy In Depth, a research and education arm of the Independent Petroleum Association of America. “But there are programs in place to reduce them.”

Wastewater spills have dogged the oil industry from its earliest days more than a century ago, borne witness by barren sites from the Great Plains to the Pacific. A notorious symbol is the “Texon scar,” where brine from a well drilled in 1923 near that tiny West Texas town created a desolate 2,000-acre swath dotted with dead mesquite trees. Efforts to restore the land continue to this day, said range conservationist Joe Petersen.

Concentrated brine, much saltier than seawater, exists naturally in rock formations thousands of feet underground, a remnant of prehistoric oceans. When oil and gas are pumped to the surface, the water comes too, along with fluids and chemicals injected to crack open rock — the process known as hydraulic fracturing. Production of methane gas from coal deposits also generates wastewater, but it is less salty and harmful.

The spills usually occur as oil and gas are channeled to metal tanks for separation from the wastewater, and the water is delivered to a disposal site — usually an injection well that pumps it back underground. Pipelines, tank trucks and pits are potential weak points.

Accidents range from the mundane to the freakish; in 2010, a storage tank near Ardmore, Oklahoma, overflowed after a snake slithered into a panel box and blew a fuse. Most spills are caused by equipment malfunction or human error, according to state reports reviewed by the AP.

Though no full accounting of damage exists, the scope is sketched out in a sampling of incidents:

— In North Dakota, a spill of nearly 1 million gallons in 2006 caused a massive die-off of fish, turtles and plants in the Yellowstone River and a tributary. Cleanup costs approached $2 million. Two larger spills since then scoured vegetation along an almost 2-mile stretch and fouled a creek and a river.

— Wastewater from unlined pits seeped beneath a 6,000-acre cotton and nut farm near Bakersfield, California, and contaminated groundwater. Oil giant Aera Energy was ordered in 2009 to pay $9 million to grower Fred Starrh, who had to remove 2,000 acres from production.

— Brine leaks exceeding 40 million gallons over decades on the Fort Peck Indian Reservation in Montana polluted a river, private wells and the municipal water system in Poplar. “It was undrinkable,” said resident Donna Whitmer. “If you shook it up, it’d look all orange.” Under a 2012 settlement with the U.S. Environmental Protection Agency, oil companies paid $320,000 for new water wells and other improvements. Drinking water tainted with oilfield brine can cause high blood pressure, dehydration and other health risks, EPA spokeswoman Sarah Teschner said.

— In Fort Stockton, Texas, officials in February accused oil company Bugington Energy of illegally dumping 3 million gallons of wastewater in pastures. Paul Weatherby, general manager of the Middle Pecos Groundwater Conservation District, said he fears contamination of the area’s groundwater table. The district levied a $130,000 fine but the company hasn’t paid, contending the district overstepped its authority.

— A pipeline joint failure caused flooding on Don Stoker’s ranch near Snyder, Texas, in November 2012 and turned his hackberry shade trees into skeletons. Vacuum trucks sucked up some saltwater and the oil company paid damages, but Stoker said his operation was in turmoil. “I had to stay out there three days and watch them while they were getting the saltwater out, to make sure they didn’t totally destroy the whole area.”

Government agencies acknowledge having a limited view of the accidents, which often happen in remote places and, unlike oil spills, don’t produce dramatic images of birds flailing in black goo and tourist beaches fouled. Regulators rely on private operators to notify them, and it’s not always required. For example, Oklahoma exempts reporting of most spills of less than 10 barrels, or 420 gallons.

The loudest whistleblowers are often property owners, who must allow drilling access to their land if they don’t own the mineral rights.

“Most ranchers are very attached to the land,” said Jeff Henry, president of the Osage County Cattlemen’s Association in Oklahoma. “It’s where we derive our income, raise our families. It’s who we are.”

A big reason why there are so many spills is the sheer volume of wastewater extracted: about 10 barrels for every barrel of oil, according to an organization of state ground water agencies, or more than 840 billion gallons a year.

Sometimes, the exact cause is never determined. The Johnsons have yet to learn why an underground line ruptured in at least two places on the state-owned land they lease for ranching. A salty, oily odor wafted heavily on the breeze when Justin Johnson reached the site in October 2010.

“I was just totally and thoroughly disgusted,” he said.

New Mexico Salt Water Disposal Co. acknowledged responsibility. No fines were levied because the leak was accidental. Vice President Rory McGinn blamed practices and materials the company no longer uses, saying in an interview that “an enormous amount of money” has gone into upgrades.

The company said much the same in 2005 after earlier spills, telling the state in a letter obtained through a records request it had spent nearly $250,000 on higher-grade pipe, tanks and valves and “our objective and goal is to be 100 percent maintenance and environmentally safe in our operation.”

The company has had a dozen spills since 2003, said Larry Behrens of the New Mexico Department of Energy, Minerals and Natural Resources.

Despite such incidents, relatively few farmers and ranchers complain publicly. Some get royalty checks for wells on their property. Others don’t want to be seen as opposing an industry that is the economic backbone of their communities.

“If they treat us right, we’re all friends of oil,” said Mike Artz, a grower in North Dakota’s Bottineau County who lost a five-acre barley crop in 2013 after a saltwater pipeline rupture. “But right now, it’s just a horse running without the bridle.”

Oil and gas developers said they have everything to gain from stopping spills, which cost them money for cleanup and soil restoration.

Sara Hughes, spokeswoman for pipeline operator Kinder Morgan, said her company has lowered water injection pressure and installed additional leak-detection devices on its lines since its spill on Stoker’s land.

“We are committed to public safety, protection of the environment and operation of our facilities in compliance with all applicable rules and regulations,” Hughes said.

In North Dakota, where the spills increased at a higher rate than the well count during the boom years of 2009-’14, pipelines near waterways must have leak prevention devices but not those elsewhere; critics said that shows the oil industry’s political clout. Lynn Helms, director of the North Dakota Department of Mineral Resources, said more devices would be costly and wouldn’t necessarily catch small leaks.

Tessa Sandstrom, of the North Dakota Petroleum Council, said the industry is cooperating with scientists studying prevention and land restoration. When spills do happen, she said, most are cleaned up within a year.

But Bottineau County grain farmer Daryl Peterson said it took years of prodding before regulators ordered an oil company to dig up 300 truckloads of tainted soil on his property and replace it. The soil is still salty, he said.

Sublette, the University of Tulsa engineer, said soil excavation and replacement is unreliable because some operators “bring in the nastiest stuff they can find.” He recommends extensive flushing with fresh water to remove salts from the zone where plants take root, then rebuilding the soil with nurturing additives. Even done correctly, it can take years to get plants growing again.

Similar methods were used on the Johnsons’ pastures, but father and son said the land has not come back to life.

“It will never, ever be like it was,” Justin Johnson said, giving a bleached-white stone a desultory kick. “It will never fully recover.”

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This story has been corrected to reflect a change in the overall spill number to more than 175 million gallons instead of more than 180 million gallons, and to correct the total spill volume for 2014 to 33.5 million.

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Associated Press Data Journalist Dan Kempton in Phoenix contributed to this report.