Repost from Health & Safety Executive (HSE), Great Britain [Editor: CONTEXT – I received this in an email from Fred Millar, independent consultant and expert on chemical safety and railroad transportation. Fred’s email comment puts the British commentary in a “North American oil-train” perspective: “Impact of falling oil prices may be quite small re volumes of Crude By Rail shipments, some informed observers have noted. But this UK HSE message highlights a likely, less visible but no less ominous impact: dangerous lowering of safety standards in the oil industry [and by implication in the newly important “pipeline on rails” railroads carrying crude oil and other hazmat]. If this impact had not been seen previously at significant levels by safety agencies, there would be no need for such blunt alarums, of course.” – RS]
No Compromise
By Judith Hackitt, HSE Chair, 2/6/15
The impacts of falling oil prices is having a wide ranging effect in the UK – from the lower cost of filling up the car to people’s livelihoods being under threat.
It is inevitable companies seek to adapt to rapidly changing circumstances and the decisions they are being forced to make are tough ones. It’s actually a stress test of leadership and senior management.
Part of that test is whether company decision makers have all the relevant information to make informed decisions.
How can they?
At the very least they have to make assumptions about what the future will look like. In this case, how long oil prices will stay at these levels? What decisions are competitor companies and industries taking? After all, they need to be making the right decisions for the company in the short term and for the mid to long term.
We’ve been here before, of course, in the 1990s when oil prices dropped and assumptions were made about the long term life of North Sea assets that proved to be wide of the mark. So this is a time when corporate memory really counts.
On that occasion the assumption was made that North Sea production would be wound down in the medium term and assets could afford to be neglected because they would soon be out of service. As prices rose again, the assets were called upon to continue to produce and many are now operating well beyond their original life expectancy. Doing that has required huge effort by the North Sea Oil and Gas industry to bring those neglected assets back up to the required standard.
Those who have led this effort to improve asset integrity deserve to be praised, but their voices need to continue to be heard as we go through this next difficult phase for the industry.
Cutting costs where there seems to be least tangible day-to-day effect is obviously tempting but leaders and senior managers need to pass the stress test on knowing where health and safety – and particularly process safety and asset integrity – sits in this mix.
Asset integrity must not suffer from short term expediency over where the axe falls. Leadership is critical to avoid wrong assumptions being made about the lifespan of assets, assumptions we know from previous experience can take years to reverse.
Current news headlines may be disconcerting, but I want all industries dealing with process safety to avoid inadvertently writing tomorrow’s headlines today.
Safety must not be compromised, even in tough times.
Twin Cities hospitals are front line in treating Bakken burn victims
There are no specialty centers near Bakken fields.
By Maya Rao, February 14, 2015
Kyle, 27, recovers at Regions Hospital after a fire on an oil site where he was working in the Bakken badly burned his legs. Photo: Maya Rao, Star Tribune
Flames seared the pants off Kyle’s legs as he raced across a bed of ruddy red rocks, screaming for help.
A pipe on a machine processing oil at high heat had burst, soaking him in methanol and sparking a fire.
“You could just feel it cooking my legs,” he said. “It almost sounded like chicken frying in an oiler.”
Hours later, Kyle woke up at Regions Hospital in St. Paul last month, after a 600-mile plane ride from the oil fields of North Dakota. His legs were burned so deeply that the bottom layer of skin would never grow back. It was the worst pain he’d ever felt.
Burn injuries among North Dakota workers have surged to more than 3,100 over the past five years, as the once nearly barren prairies have become the epicenter of a massive oil-drilling boom. Despite the flammability of Bakken crude and the danger of oil-rig work, North Dakota has no burn centers. The Twin Cities is the closest place to go for patients like Kyle, 27, who agreed to be interviewed on the condition that his last name not be used.
While other kinds of injuries may be more common, oil field burns are among the most painful and costly to treat. An oil field worker’s treatment at a burn unit can cost $1 million.
“The burns from the oil fields can be pretty dramatic,” said Bill Mohr, a surgeon at Regions.
Just 17 percent of North Dakota residents can be transported by air or ground to a burn center within two hours — fewer than every state but Alaska and Montana. The extra time it takes to move patients poses a medical challenge, since care administered in the first day factors into burn patients’ long-term recovery.
Mohr said oil field burns are three or four times bigger than those of the average patient and that Bakken burn victims who come in to Regions are more likely to need ventilators.
One died after arriving with 98 percent of his body burned. Some needed limbs amputated and had burns that bore down into the bone. Many never returned to the oil fields.
Shortage of burn doctors
Hospitals nationwide have been closing burn units and are grappling with a shortage of burn doctors. States with low populations, like the Dakotas, Montana, Wyoming and Idaho, have not been able to justify opening such expensive, specialized facilities.
When a truck carrying crude crashes and explodes, or an oil rig blows out, burn victims are initially taken to a hospital in the Bakken. The staff assesses whether the burns are severe enough to fly them to burn centers in the Twin Cities, Salt Lake City or Denver.
Gary Ramage, medical director at McKenzie County Healthcare Systems in North Dakota, said he sends patients out of state if the burns affect their respiratory system, face or hands — the most difficult areas to treat — and at least 10 percent of their body.
Oilfield workers are brought to Regions almost once a month, including a patient last month who had been working on an oil heater near Mandaree, N.D., that ignited. He died.
Another dozen Bakken burn victims have been treated at the Hennepin County Medical Center in the last three or so years, according to its burn unit director, Ryan Fey.
HCMC paid closer attention to oil field burns after a train carrying Bakken crude derailed in Casselton, N.D., 13 months ago. While no one was injured, members of the medical staff are examining how they would address an oil train accident that caused mass burn injuries.
“That’s become more and more of an issue because we have all these Bakken oil trains that come rolling through just one after another,” Fey said.
Bakken hospitals are looking at how to improve burn care. Two nurses at St. Joseph’s Hospital in Dickinson, N.D., recently traveled to a Galveston, Texas, hospital to learn burn management techniques. And doctors at Regions regularly travel to the Bakken to talk to medical staff about treating burns in the early stages.
Serious oil field burns destroy what’s known as the dermis, or the thicker, second layer of skin that contains blood vessels and sweat glands. Burn doctors excise the damaged skin to prevent infections. Then they apply bioengineered tissue made of cow collagen and shark cartilage to function as the new dermis. They harvest the top layer of skin from a healthy part of the body and graft it over the artificial skin tissue.
Even after recovering from those surgeries, patients must still do months or years of physical therapy to fix the loss of flexibility in their skin. And then there is the emotional recovery: Severe burn patients can face post-traumatic stress disorder on par with soldiers.
Lighting a cigar
Advances in burn treatment mean that some oil workers who would have died a decade or two ago now have a chance.
One is Casey Malmquist. The head of a Whitefish, Mont., construction company, Malmquist came to the Bakken to build housing for oil workers. In July 2013, he stepped onto the deck of one of the newly finished homes for Halliburton employees and leaned over to light a cigar.
There was a whoosh and then an explosion. He flew off the deck. His shirt, he recalled, lit up like a lantern.
The cause appeared to be leaking propane gas that had not been properly odorized to alert him that he was near a flammable substance. He fell into a coma and woke up three weeks later at Regions, 68 percent of his body burned. The Bemidji native, then 56, seemed destined to die.
But after three months at Regions and many surgeries, Malmquist returned to Montana. He still goes to physical therapy daily and hasn’t returned to some of the activities he once loved, like hockey, because his skin is fragile and managing his body temperature is difficult.
He said living in his new body “is like wearing a wet suit that’s five times too small, and there’s ground glass between you and the wet suit.”
In November, Minneapolis attorney Fred Pritzker sued Horizontal Resources on Malmquist’s behalf, claiming the company was negligent in not odorizing the propane.
Nightmares
Kyle moved to Williston, N.D., in 2011 with his pregnant wife, Shawna, after he was laid off as a plumber in Helena, Mont.
He found work as a maintenance roustabout, checking oil tanks, pumping units, well heads and other equipment.
Last month, Kyle and a co-worker went to an oil pad just south of Ross, N.D., and noticed a unit by the oil treater was frozen. Oil treaters separate oil from water and gas before it moves to storage tanks. After they worked to thaw it with water from a hot oil truck, Kyle said he tried to fix a misplaced valve.
A pipe blew out and soaked him with gas. It was so uncomfortable that he took off the flame-retardant pants over his jeans just before a fire ignited.
Several men who saw Kyle ablaze tackled him and blasted him with a fire extinguisher, ordering him to roll on the ground.
As the ambulance took him to a hospital in Stanley to be stabilized, Kyle said he thought, “How am I going to support my family now?”
He woke up in Regions with a breathing tube, his legs stapled and wrapped in casts.
Kyle can walk; he strode down the hall to pick up Forrest Gump from the hospital’s movie selection after his wife joked that she’d make him watch Titanic. But it hurts.
As OSHA investigates, Kyle said he doesn’t blame his company and considers it a freak accident. He hopes to get his old job back one day.
Memories of the fire shake him. “I keep having nightmares about it,” Kyle said. “I’ve been trying to take a nap all day and … I jump and think that I’m back in the fire.”
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. | 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.
Oil Price Slumps Again as US Crude Inventories Surge
NEW YORK — Feb 4, 2015
Oil prices plunged on Wednesday, ending a four-day rally, after the U.S. government reported that crude inventories surged last week.
The 6.3 million barrel increase was far more than analysts had expected and renewed worries in the market that supplies of oil are still outstripping demand.
Oil had rallied 19 percent over the previous four days as traders hoped that low prices would force more energy companies to curtail exploration and production.
U.S. benchmark crude dropped $4.60, or 8.7 percent, to settle Wednesday at $48.45 a barrel in New York.
The price of oil reached its highest point of the year Tuesday, leading to speculation that a long-running collapse was abating. The price has been falling sharply since last June, when it peaked at $107 a barrel.
Brent crude, a benchmark for international oils used by many U.S. refineries, declined $3.75, or 6.5 percent, to close at $54.16 a barrel in London.
In other futures trading on the NYMEX:
— Wholesale gasoline fell 12 cents to $1.482 a gallon.
— Heating oil fell 8 cents to close at $1.767 a gallon.
— Natural gas fell 9.2 cents to close at $2.662 per 1,000 cubic feet.
