Tag Archives: Texas

Bakken Crude, Benicia CA, Bridge safety, California, Crude By Rail, Derailment, Emergency Readiness & Response, Explosion, Fire, Hazmat notification, Massive increase in crude-by-rail, Oil Industry, Oil prices, Rail inspection, Valero Benicia Refinery, Valero Crude By Rail, Volatility

Crude oil train shipments dwindle in California, for now

Repost from The Sacramento Bee

Crude oil train shipments dwindle in California, for now

By Tony Bizjak, 03/11/2015 9:47 PM
A BNSF train carries Bakken crude oil in the hills outside the Feather River Canyon last June.
A BNSF train carries Bakken crude oil in the hills outside the Feather River Canyon last June. Jake Miille / Special to The Bee

A year ago, California officials nervously braced for an influx of milelong trains carrying volatile crude oil to refineries in the Valley and on the coast – trains similar to the one that exploded two years ago in Canada, killing 47 people.

The trains never arrived. Although tank cars full of oil now roll daily through cities in the Midwest and East, provoking fears of crashes and fires, the number of oil trains entering California has remained surprisingly low, state safety regulators say, no more than a handful a month. In recent weeks, they appear to have dwindled to almost nothing.

The reasons appear to be mainly economic.

“Crude oil shipments from out of state have virtually stopped,” said Paul King, rail safety chief at the California Public Utilities Commission. “Our information is that no crude oil trains are expected for the rest of this month.”

Most notably, the BNSF Railway recently stopped running a 100-car train of volatile oil from the Bakken region of North Dakota through the Feather River Canyon and midtown Sacramento to the Bay Area. The trains, several a month, carried an estimated 3 million gallons of fuel each.

Bakken oil, a lighter type of crude, similar to gasoline, has gained a fearsome reputation since it entered the national scene a few years ago. A string of Bakken train explosions around the country prompted the federal government to issue a warning last year about the oil’s unusual volatility and launch efforts to write stiffer regulations on rail transport, including a proposal to require sturdier tank cars for oil.

Two more Bakken train derailments and explosive fires recently in West Virginia and Illinois triggered a new round of complaints that the federal government is dragging its heels in finalizing those regulations.

The BNSF train through Sacramento was believed to be the only train in California carrying 100 cars of Bakken oil. PUC rail safety deputy director King said his commission’s rail monitors have been told by owners of a Richmond oil transfer station in the Bay Area that refiners stopped the shipments in November as global oil prices dropped.

California Energy Commission fuels specialist Gordon Schremp said lower prices for other types of oil have made Bakken marginally less marketable in California, although that could easily change in the future.

Other projects, like a Valero Refining Co. plan to run two 50-car oil trains daily through Sacramento beginning this spring to its Benicia plant, have not yet gotten off the ground, in part because of political opposition. Under pressure from state officials, including Attorney General Kamala Harris, Benicia recently announced it is redoing part of its environmental and risk analysis of the Valero rail project. Valero has said it intends to ship lighter fuels, but has declined to say whether those will be Bakken.

State safety officials said the slowdown provides a bit more time to provide hazardous-materials training for more firefighters, as well as to put together a state rail-bridge inspection program and to upgrade disaster and waterway spill preparedness. But state officials said they still feel like they’re playing catch-up as they prepare for existing and future potential rail hazards.

“This apparent reprieve may seem helpful, but we still have substantial amounts of … hazardous materials traveling across California’s rail lines,” said Kelly Huston, deputy director of the state Office of Emergency Services. “It only takes one train to create a major disaster.”

Oil prices have begun rising again, and state officials say they expect Bakken shipments to Richmond and potentially elsewhere to be back on track at some point. “We don’t have any concrete info about when it will resume,” the PUC’s King said. “When prices come up, it is likely to resume, and that could be in months.”

Federal emergency rules require railroads to report to states when they run trains carrying more than 1 million gallons of Bakken crude, and then again when that amount changes by 25 percent or more. BNSF sent the state Office of Emergency Services a brief notice on Wednesday acknowledging it had not shipped more than 1 million gallons of Bakken on any train in the last week. The notice does not say how long ago the shipments stopped or when they may resume.

BNSF officials have contended in letters to the state that shipping information is proprietary and should be kept secret. A BNSF spokeswoman declined this week to discuss shipments with The Sacramento Bee, writing in an email, “Information regarding hazardous material shipments is only provided to emergency responders.”

King of the PUC said his monitors estimate that eight or more non-Bakken crude oil trains had been entering the state monthly from Canadian and Colorado oil fields recently, headed to refineries or transfer stations. The Canadian oil, called tar sands, is not considered as explosive as Bakken, but two tar-sands trains derailed and exploded in recent weeks in Ontario, creating fires that lasted several days.

The national concern about crude oil rail shipments follows a boom in domestic oil production, notably in North Dakota, where hydraulic-fracturing advances have freed up immense deposits of shale oil. Lacking pipeline access, North Dakota companies have turned to trains to ship the oil mainly to East and Gulf Coast refineries and to Washington state. Crude by rail shipments in the United States skyrocketed from 9,500 carloads in 2008 to 436,000 in 2013, according to congressional data.

California continues to produce a sizable amount of its own oil in Kern County and receives marine shipments from Alaska and foreign sources. Still, a recent state energy-needs analysis estimates the state could receive as much as 23 percent of its oil via train or barge from continental sources, including North Dakota, Canada, Texas and other Western states, in the coming years. That estimate is based on plans by refineries in Benicia, San Luis Obispo and Kern County to build rail facilities that can accommodate large crude transports.

Earthquake, Fracking

Federal study: Oklahoma more at risk of big damaging quakes because of increase in small ones

Repost from The Vallejo Times-Herald (Covered elsewhere, including U.S. News and World Report)

Federal study: Oklahoma more at risk of big damaging quakes because of increase in small ones

By Seth Borenstein, AP Science Writer, Feb 14, 2015
File - In this Nov. 6, 2011 file photo, maintenance workers inspect the damage to one of the spires on Benedictine Hall at St. Gregory's University in Shawnee, Okla., after two earthquakes hit the area in less than 24 hours. New federal research says small earthquakes shaking Oklahoma and southern Kansas daily are dramatically increasing the chance of bigger and dangerous quakes, new federal research indicates. (AP Photo/Sue Ogrocki)
Maintenance workers inspect the damage to one of the spires on Benedictine Hall at St. Gregory’s University in Shawnee, Okla., after two earthquakes hit the area in less than 24 hours. New federal research says small earthquakes shaking Oklahoma and southern Kansas daily are dramatically increasing the chance of bigger and dangerous quakes. Associated Press/Nov. 6, 2011

SAN JOSE, California (AP) — Small earthquakes shaking Oklahoma and southern Kansas daily and linked to energy drilling are dramatically increasing the chance of bigger and dangerous quakes, federal research indicates. This once stable region is now just as likely to see serious damaging and potentially harmful earthquakes as the highest risk places east of the Rockies such as New Madrid, Missouri, and Charleston, South Carolina, which had major quakes in the past two centuries. Still it’s a low risk, about a 1 in 2,500 years’ chance of happening, according to geophysicist William Ellsworth of the U.S. Geological Survey. “To some degree we’ve dodged a bullet in Oklahoma,” Ellsworth said after a presentation to the American Association for the Advancement of Science. But, he added, “This is not to say we expect a large earthquake tomorrow.” During the 90-minute session on human-induced earthquakes, three quakes larger than 3.1 magnitude hit northern Oklahoma. Federal records show that since Jan. 1, Oklahoma has had nearly 200 quakes that people have felt. These quakes started to increase in 2008 and made dramatic jumps in frequency in June 2013 and again in February 2014, Ellsworth said. They are mostly in areas with energy drilling, often hydraulic fracturing, a process known as fracking. Many studies have linked the increase in small quakes to the process of injecting wastewater deep underground because it changes pressure and triggers dormant faults. Until now, those quakes were mostly thought of as nuisances and not really threats. But Ellsworth’s continuing study, which is not yet published, showed the mere increase in the number of tiny temblors raises the risk of earthquakes that scientists consider major hazards. That’s generally above a magnitude 5 with older buildings and a magnitude 6 for modern ones, Ellsworth said. “The more small earthquakes we have it just simply increases the odds we’re going to have a more damaging event,” Ellsworth said. A 2011 earthquake in Prague, Oklahoma, was a 5.7 magnitude, causing some damage and hurting two people. Some studies said that was a side effect of the drilling process, but other scientists are not convinced. Experts at the science session said Ellsworth’s finding of a higher risk for big quakes makes sense. “We are worried about this, no question about it,” said Rex Buchanan, interim director of the Kansas Geological Survey. Not all states with fracking and wastewater injections are seeing increased quakes and not all those with increased quakes, such as Texas and Ohio, are at a higher risk for major quakes, Ellsworth said. Arkansas and Ohio, for example, are also now seeing fewer man-made quakes, he said. Much depends on geology and how the wastewater is injected, said Stanford University geophysics professor Mark Zoback. He said industry and regulators can be smarter about where they inject wastewater and where they do not, and can avoid many of these problems.

Oil Industry, Oil prices, Oil producers

AP: Oil on wild ride: How will it end?

Repost from The Seattle Times (AP)

Oil on wild ride: How will it end?

Predicting oil prices is especially tricky now because the oil market has never quite looked like this. Oil-price collapses of the past were triggered either by plummeting demand or an increase in supplies. This latest one had both.

By JONATHAN FAHEY, 2/10/15

An oil well owned by Apache Corp. in the Permian Basin in Texas. As prices have fallen globally, many U.S. communities that depend on oil revenue are bracing for hard times.
An oil well owned by Apache Corp. in the Permian Basin in Texas. As prices have fallen globally, many U.S. communities that depend on oil revenue are bracing for hard times. | Spencer Platt / Getty Images

NEW YORK — The price of oil is on a wild ride, and there is little agreement on where it’s headed.

After falling nearly 60 percent from a peak last June, the price of oil bounced back more than 20 percent as January turned to February. Then, on Tuesday, it sank 5 percent, closing just above $50.

Oil has fallen or risen by 3 percent or more on 14 of 27 trading days so far this year. By comparison, the stock market hasn’t had a move that big in more than three years.

Predicting prices is especially tricky now because the oil market has never quite looked like this. Oil price collapses of the past were triggered either by plummeting demand or an increase in supplies. This latest one had both.

Production in the U.S. and elsewhere has been rising, while slower economic growth in China and weak economies in Europe and Japan mean demand for oil isn’t growing as much as expected.

As recent trading shows, any sign of reduced production inspires traders to buy oil, and every new sign of rising supplies sends prices lower. In a report Tuesday the U.S. Energy Department, citing unusual uncertainty, said the price of oil could end up anywhere from $32 to $108 by December.

“There are many more laps to come on this roller coaster,” said Judith Dwarkin, chief economist at ITG Investment Research.

As oil bounces up and down, so will the price of gasoline, diesel and other fuels. Almost no one expects a return to the very high prices of the past four years, so drivers and shippers will continue to pay lower prices. It’s a question of how much less, and for how long.

Those expecting a quick and lasting price jump see mounting evidence that drillers in the U.S. are pulling back fast because they’re no longer making money. A closely watched survey by the oil-services company Baker Hughes shows that the number of rigs actively drilling for oil fell to 1,140 last week, down 29 percent from a record high of 1,609 in October.

Oil companies have announced spending cuts in the billions of dollars; oil-service companies have announced layoffs of thousands of workers.

If companies stop drilling new wells in North Dakota and Texas, the centers of the U.S. oil boom, overall U.S. production could fall fast. Output from most of those wells declines far more quickly than production from more traditional wells. Analysts at Bernstein Research estimate that U.S. production declines at 30 percent a year without constant investment in new wells.

A quick decline in production would send prices higher by reducing global supplies. At the same time, demand could be on the rise. The U.S. economy seems to be improving rapidly, and demand for gasoline is increasing. Global demand may also rise somewhat simply because low prices tend to encourage more consumption.

If the oil bulls are right, it means prices for transportation fuels would rise and the slowdown in drilling activity in the U.S. would perhaps be short-lived.

Others say oil production is still rising and demand isn’t yet catching up — a recipe for lower oil prices.

The oil bears argue that there are plenty of rigs still working, and they are now focused only on the most prolific spots. Also, oil-services companies are charging significantly less for equipment and expertise. This means oil companies may be able to keep oil supplies rising from already high levels despite low prices.

The Energy Department reported last week that there was a record 1.18 billion barrels of oil in storage in the U.S. ITG’s Dwarkin estimates that in the first half of this year the world will be producing, on average, 2 million barrels per day more than it will be consuming.

Analysts at Bank of America Merrill Lynch say $32 a barrel is possible. Ed Morse, an analyst at Citi, called the recent rise in prices a “head fake” and predicts oil could plunge into the $20 range, the lowest since 2002.

The bears also don’t expect much increase in demand. Many developing nations are cutting back on fuel subsidies, which means that consumers could be buying less fuel, not more.

And demand in the United States and other developed nations won’t rise much, they argue, because of environmental policies and high fuel taxes.

After its recent rise, some think oil may already be close to finding its level.

The International Energy Agency said in a report Tuesday that prices will stabilize in a range “higher than recent lows but substantially below the highs of the last three years.”

In the past, once production went offline it took years to bring it back. Now, the IEA said, drillers can quickly and easily tap shale deposits to bring new oil to market as soon as supplies fall or demand rises. That should help keep a lid on prices.

Tom Pugh, an analyst at Capital Economics, forecasts that Brent crude, the most important benchmark for global crude, will end the year around $60 a barrel, within $4 of where it closed Tuesday — and to be at $70 by the end of 2020.

That doesn’t mean, however, that there won’t be further bumps along the way. “We wouldn’t be surprised to see more large price movements before the market settles down,” Pugh wrote.

 

Bakken Crude, Oil Industry, Oil reserves

U.S. oil reserves continue rising, surpass 36 billion barrels for first time since 1975

Repost from U.S. Energy Information Administration – Today In Energy

U.S. oil reserves continue rising, surpass 36 billion barrels for first time since 1975

December 5, 2014

graph of U.S. crude oil and lease condensate proved reserves, as explained in the article text

Source: U.S. Energy Information Administration, U.S. Crude Oil and Natural Gas Proved Reserves

U.S. crude oil and lease condensate proved reserves rose for the fifth consecutive year in 2013, increasing by 9% from the 2012 level to 36.5 billion barrels, according to the U.S. Crude Oil and Natural Gas Proved Reserves, 2013 report released yesterday by the U.S. Energy Information Administration (EIA). U.S. crude oil and lease condensate proved reserves surpassed 36 billion barrels for the first time since 1975.

Proved reserves

Proved reserves are those volumes of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.

North Dakota had the largest increase (1.9 billion barrels, 51%) in oil reserves among individual states in 2013, based on development of the Bakken/Three Forks formation in the Williston Basin. With 5.7 billion barrels of proved reserves, North Dakota has more reserves than the federal offshore waters of the Gulf of Mexico. Texas remains by far the leading state in total proved oil reserves—its reserves increased from 11.1 billion barrels in 2012 to 12 billion barrels in 2013 (an 8% increase). The largest decline of 2013 was in Alaska, where proved reserves decreased by 454 million barrels, due mainly to reduced well performance at large existing oil fields.

map of changes in oil and lease condensate proved reserves by state/area, as explained in the article text

Source: U.S. Energy Information Administration, U.S. Crude Oil and Natural Gas Proved Reserves
Note: * data withheld to avoid disclosure of individual company data

Changes in reserves reflect exploration and development activities as well as financial factors. Increases in crude oil and lease condensate reserves in 2013 were mainly attributable to nearly 5 billion barrels of extensions to existing fields. Extensions are the result of additional drilling and exploration in previously discovered reservoirs, and have accounted for the majority of reserves increases over the past three years. Continued development of the Bakken/Three Forks play in North Dakota accounted for a large portion of the reserves additions, and overall, tight oil plays accounted for almost 30% of all U.S. crude oil and lease condensate proved reserves.

graph of components of crude oil and lease condensate reserve changes, as explained in the article text

Source: U.S. Energy Information Administration, U.S. Crude Oil and Natural Gas Proved Reserves

EIA’s estimates of proved reserves are based on an annual survey of domestic oil and gas well operators. For more information, read the full U.S. Crude Oil and Natural Gas Proved Reserves, 2013 report.