Category Archives: Oil producers

REVEAL: In North Dakota’s Bakken oil boom, there will be blood

Repost from Reveal, The Center for Investigative Reporting
[Editor: This is an excellent and beautifully personalized report on conditions in the oil fields in North Dakota.  Graphic images are best viewed on the original source page.  This report  is nicely summarized in a Takeaway report.  – RS]

In North Dakota’s Bakken oil boom, there will be blood

By Jennifer Gollan / June 13, 2015
A North Dakota rig was still smoldering the day after a 2011 explosion, when federal investigators drove to the scene and began their work. Credit: Courtesy of the Occupational Safety and Health Administration

In the early evening of Sept. 14, 2011, Jebadiah Stanfill was working near the top of an oil rig at a bend in the Missouri River in North Dakota. Jolted by a deafening boom in the distance, he swung around from his perch and saw a pillar of black smoke twisting into the sky.

Less than a mile away, another rig had exploded. “There’s men over there!” a worker below him shouted.

Stanfill, a compact and muscular man in his 30s, descended to the ground and hopped into the bed of a red pickup driven by a co-worker. Bruce Jorgenson, a manager overseeing the work of Stanfill and his crew, jumped into the passenger seat, and they raced to the explosion.

Jebadiah Stanfill was working on an oil rig in North Dakota in September 2011 when he was jolted by a deafening boom in the distance. Less than a mile away, another rig had exploded. Credit: Courtesy of Jebadiah Stanfill

A few minutes later, they reached the burning rig and pulled up next to Doug Hysjulien, who was wandering in a valley and clutching the front of his underwear. The rest of his clothes were gone.

“They’re over there,” Hysjulien shouted, pointing toward the fiery rig. “Go help the other boys. They’re worse.”

“They were beyond burned. Nothing but char. The smell of flesh burning. … It smelled of crude oil.” — Jebadiah Stanfill, oil worker

Stanfill sprinted until he spotted Ray Hardy, who had been hurled into a patch of gravel. His skin was charred black and peeling. His nails were bent back, exposing the stark white bones of his fingers.

“How many people were on the rig?” Stanfill asked Hardy.

“He’s over there,” Hardy responded, gazing toward a field near the rig. Stanfill scrambled over a berm and waded through knee-high wheat until he found Michael Twinn, lying on his back naked and seared. His hair was singed and his work boots had curled up in the heat. He cried out in agony.

“The derrick man’s dead! The derrick man’s dead!” Twinn screamed.

“They were beyond burned,” Stanfill recalled. “Nothing but char. The smell of flesh burning. … It smelled of crude oil.”

Brendan Wegner
Brendan Wegner, shown at a friend’s wedding in July 2011, was 21 when he died in an explosion in September 2011. Credit: Rachel Waldmer

Brendan Wegner, 21, had been scrambling down a derrick ladder when the well exploded, consuming him in a fiery tornado of oil and petroleum vapors. Rescuers found his body pinned under a heap of twisted steel pipes melted by the inferno. His charred hands were recovered later, still gripping the derrick ladder. It was his first day on the rig.

Hardy died the next day of his burns. Twinn had his lower legs amputated. Dogged by post-traumatic stress disorder, he killed himself in October 2013. Each left behind three children. Hysjulien suffered debilitating third-degree burns over half of his body. He is the lone survivor.

To this day, the explosion – pieced together from interviews, court documents and federal and local reports – remains the worst accident in the expansive Bakken oil fields since the boom began in 2006.

Beyond the human toll from that day, which continues to haunt Stanfill and others, the 2011 explosion offers a striking illustration of how big oil companies have largely written the rules governing their own accountability for accidents.

“The Bakken is the most dangerous oil field to work in the U.S. The energy producers never pay for their mistakes.” — Justin Williams, Wegner attorney

Across the Bakken, deeply entrenched corporate practices and weak federal oversight inoculate energy producers against responsibility when workers are killed or injured, while shifting the blame to others. Oil companies also offer financial incentives to workers for speeding up production – potentially jeopardizing their safety – and shield themselves through a web of companies to avoid paying the full cost of settlements to workers and their families when something goes wrong.

An estimated 7.4 billion barrels of undiscovered oil is sitting in the U.S. portion of the Bakken and Three Forks formations of the Williston Basin, a 170,000-square-mile area that stretches from southern Saskatchewan, Canada, to northern South Dakota. North Dakota now ranks just behind Texas with the second-largest oil reserve in the U.S. Both states now account for half of all the crude oil production in the country.

But the boom also has been a serial killer. On average, someone dies about every six weeks from an accident in the Bakken – at least 74 since 2006, according to an analysis by Reveal, the first comprehensive accounting of such deaths using data obtained from Canadian and U.S. regulators. The number of deaths is likely higher because federal regulators don’t have a systematic way to record oil- and gas-related deaths, and the U.S. Occupational Safety and Health Administration doesn’t include certain fatalities, such as those of independent contractors.

Only one energy operator that leases or owns wells has been cited for worker deaths in North Dakota or Montana over the past five years, Reveal’s analysis has found. Slawson Exploration Co. Inc. paid a $7,000 penalty in 2013 after a contract worker died in an explosion.

OSHA officials say they are concerned that plummeting oil prices in the past year are prompting energy producers to shortchange safety even more. To others, the deaths and injuries would be preventable if not for a combination of greed, inadequate training and lack of government oversight.

“These workers are paying for cheap gas with their lives and their limbs,” said Peg Seminario, director of safety and health for the AFL-CIO.

Oil companies offer financial incentives to workers for speeding up production, potentially jeopardizing their safety. Credit: Adithya Sambamurthy/Reveal

‘All I saw was just a fireball’

On the day of the North Dakota explosion in 2011, the job of Brendan Wegner and the three other workers of Carlson Well Service was to get the well to produce more oil. Carlson was hired by the well’s owner, Oasis Petroleum North America LLC, which is part of Houston-based oil giant Oasis Petroleum Inc.

Michael Twinn

Michael Twinn, an experienced floorhand on the rig, had told his co-workers soon after they started work that day that he was worried about the well because it was “talking,” meaning it was showing signs of being under pressure. He had warned Loren Baltrusch, an independent contractor hired through Mitchell’s Oil Field Service who was supervising the site for Oasis, that there might have been a buildup of hydrocarbon gas, according to Justin Williams, a lawyer for Doug Hysjulien, the lone survivor, and Wegner’s parents, who spoke with Twinn about his ordeal before he died. Carlson Well Service officials later would testify that Wegner and his crew were not trained to work on wells under pressure.

Oasis declined an interview, but in a written statement, spokesman Brian Kennedy said: “Pressure gauge readings confirmed that the well was in fact static when operations began. Any suggestion that Mr. Baltrusch or Oasis Petroleum might have knowingly put workers in danger is patently false.”

The day before the accident, Baltrusch pumped heavy salt water into the well to prevent volatile gases from escaping before the crew set to work the next day, OSHA documents show. But on the day of the explosion, the well started to overflow with oil as the crew inserted more pipes into the well hole. That’s when the workers saw the oil rocketing 50 feet into the air. Then the inferno. Then their bodies burning.

“It shook my whole shack,” Bruce Jorgenson said in an interview. He was in a trailer less than a mile away working for Oasis, which had hired him through RPM Consulting Inc. to oversee another well site. “I went outside to investigate; that’s when all I saw was just a fireball.”

He called 911. His crew grabbed fire extinguishers and first-aid kits and sped toward the blast.

“We needed to try to help them in any way we could,” Jorgenson said. “Ray (Hardy) just seemed in shock … and Mike (Twinn) was in a lot of pain; he was screaming.”

When he saw Doug Hysjulien, Jorgenson recognized him immediately. They had both lived in Powers Lake, North Dakota, at one point. “His skin was very red. At first, I thought it was strings from his gloves hanging off of his hands, but it was his skin.”

“I said, ‘Doug, what happened?’ He said, ‘It fucking blew up.’ ”

Jebadiah Stanfill helped load Hardy and Twinn into the back of a pickup. When they placed Hardy in the bed of the truck, the coarse lining sheared skin off his scorched back. Stanfill cradled Twinn as they raced across the cratered dirt road to an ambulance on the main road. The flames had turned their skin to wax.

On the way, the men frantically begged Stanfill to call their wives on his cellphone to say goodbye.

“There’s been an accident at the rig, and your husband wants to talk to you,” Stanfill said urgently into the phone to Twinn’s wife before putting her on speaker.

“How bad was it?” she asked her husband.

“It ain’t nothing,” Twinn said. “I love you.”

Stanfill hurriedly dialed Hardy’s wife next and handed him the phone.

“Don’t worry about it, I’m OK,” Hardy told his wife hours before he died. “I love you. I’ll meet you at the hospital. Everything’s fine.”

Stanfill says he can still hear the women’s “painful, wretched screams.”

 

An estimated 7.4 billion barrels of undiscovered oil is sitting in the U.S. portion of the Bakken and Three Forks formations. Credit: Adithya Sambamurthy/Reveal

Investigating the explosion

The rig was still smoldering when federal investigators drove to the scene the next day and began their work. Staff from the small OSHA office that serves the area interviewed witnesses and company officials in an attempt to re-create the blowout.

In 2011, the year of the deadly explosion, the agency’s office in Bismarck, North Dakota, had five field investigators – compared with eight this year – to handle tasks ranging from fielding complaints about butcher shops to triaging construction site hazards, along with far more technical cases involving oil and gas. The office covers roughly 148,000 square miles in North Dakota and South Dakota, including more than 12,000 producing wells in North Dakota alone.

From the start, the agency’s focus mainly fell on Carlson Well Service, the North Dakota-based company that employed Brendan Wegner and his three co-workers. The well itself was owned by Oasis Petroleum North America.

Investigators took dozens of photographs and several videos of the smoking nest of pipes and bent rig. They sifted through Carlson’s internal company documents such as work invoices and researched the company’s equipment. Over the course of six months, investigators interviewed about a dozen people and drafted reports totaling more than 200 pages.

Part of their investigation included researching the equipment they were inspecting – on Wikipedia. OSHA’s safety narrative report on the accident includes diagrams and information credited to the website’s entries for “blowout preventer” and “pumpjack.”

In the end, OSHA inspectors gave Oasis Petroleum cursory attention in their reports. A handwritten note from an OSHA investigator shows that Loren Baltrusch killed the well, or temporarily closed it, the day before the explosion, yet he was deemed an independent contractor. This was key because it is difficult for OSHA to cite energy producers that do not have direct employees on a worksite.

“No Oasis employee on site,” the investigator concluded. The company was not fined or penalized in any way by the government regulator.

Instead, OSHA penalized Carlson for failing to properly install and test the blowout preventer, a mechanism that can help control an oil and gas well, as well as failing to provide flame-resistant clothing and an emergency escape line for Wegner to abandon the rig.

None of these steps would have prevented the accident in the first place, said Williams, adding that Oasis bore ultimate responsibility for making the proper engineering decisions that would have prevented the dangerous pressure buildup.

“It’s a simple engineering calculation,” he said. “They should have people qualified to do so, but they didn’t do that to start with.” Williams added that an expert he consulted said it would have taken no more than three tanker trucks of heavy brine water, costing about $1,500 combined, to properly kill the well.

Oasis’ Brian Kennedy said it was Baltrusch who arranged and oversaw the salt water injections – both the day before and the morning of the explosion – which he maintained rendered the well “static when work began.”

“The release of gas and the subsequent fire was caused by a kick, or sudden and unexpected flow of gas into the wellbore,” Kennedy concluded.

In March 2012, Carlson was fined $84,000, in part for failing to provide required safety equipment. The company’s lawyers hit back, arguing that one of the violations was not “willful,” as OSHA investigators had claimed. After negotiations, federal officials reduced that fine to $63,000. A top Carlson official declined to comment on the accident or OSHA fines. Carlson sold its business last year.

Like Carlson, many smaller contractors in the Bakken often receive fines, rather than the energy producers that own and lease the wells. Even though large companies often exert the most control over safety on their well sites, there is no specific federal workplace safety standard that applies to the oil and gas industry, which allows producers to dodge severe penalties.

Eric Brooks

In 1983, OSHA proposed workplace safety requirements for the oil and gas industry, but the rules never were imposed, leaving a “bit of a hole,” said Eric Brooks, director of OSHA’s Bismarck Area Office. As a result, OSHA primarily relies on the so-called general duty clause, which requires all employers to provide a safe workplace.

By contrast, the mining and construction industries are subject to stringent federal workplace safety regulations that address specific hazards. In fact, the Mine Safety and Health Administration enforces specific health and safety rules for the nation’s mines to reduce deaths and injuries.

In the absence of comprehensive workplace safety regulations, OSHA frequently invokes standards written by the industry itself, including those from the American Petroleum Institute, to determine whether employees are being exposed to hazards.

For example, companies involved in drilling and well servicing activities such as hydraulic fracturing are exempt from federal workplace safety laws requiring machines and equipment that are undergoing maintenance or repairs to be locked and tagged to prevent injuries. The American Petroleum Institute recommends such practices but does not require them.

For some, this is a direct conflict of interest.

Adithya Sambamurthy/Reveal

“This premise is counterintuitive to the intent of government oversight. The problem with this scenario is that API is the lobbying arm of the industry,” said Dennis Schmitz, a former oil worker who is the chairman of the MonDaks Safety Network, an organization in North Dakota that promotes safety in the oil fields.

Following the accident, OSHA investigators interviewed Oasis officials and scrutinized Baltrusch’s role to determine how much control Oasis exercised over Carlson’s crew, Brooks said. OSHA didn’t fine the company because “in the absence of federal laws directly covering work on oil and gas sites, we couldn’t support a citation against Oasis,” Brooks said.

Brooks said that given another chance, OSHA likely would reverse itself and penalize Oasis. “If I had to look back on it, do I think things would be done differently? Absolutely,” he said. “I think we might have taken our chances and issued citations on that.”

OSHA’s statute of limitations, which is six months from an accident, would prevent the agency from citing Oasis now, Brooks said.

Insulated from liability

After major accidents like the one that killed Ray Hardy and Brendan Wegner, big oil companies are insulated from financial costs. A spiderweb of corporate relationships allows big energy firms to shield themselves from collateral damage by forcing insurance companies for contractors at the bottom of the pecking order to pay.

Even though the government did not cite Oasis for responsibility for the accident, the company negotiated four separate settlements for undisclosed amounts with Wegner’s parents, Peggy and Kevin; Doug Hysjulien; Michael Twinn; and Hardy’s wife. During this process, disputes arose over who should pay the victims.

So the companies and their insurers took it to federal court. In the first lawsuit, Carlson Well Service argued that it should not have to defend or indemnify Oasis under their contract. The case ultimately was dismissed in June 2013 as part of a confidential settlement agreement.

In a second case, filed in the same court on the same day, Carlson’s insurance company argued that it did not have to pay damages to the injured workers on behalf of Oasis. In the end, Carlson’s insurance company agreed to share part of the settlement costs with Oasis’ insurance company, interviews show. The insurance company for Mitchell’s Oil Field Service, Loren Baltrusch’s employer, also contributed to the settlements.

“We found a way to protect Oasis,” said Kevin Cook, a Texas attorney who represented Carlson’s insurance company in the lawsuit against Oasis and its insurer in North Dakota federal court. “We resolved our differences with Oasis and their insurer by agreeing with them to divide these settlements.”

Peggy Wegner

To Peggy Wegner, the shifting responsibility and finger-pointing means that Oasis “has never been held accountable” for the accident that killed her son. “It’s just another way to cover their ass,” she said. “It’s bizarre to me that a contract like this can even take place.”

“Indemnity provisions are contained in most commercial contracts in nearly every sector of the economy,” Oasis spokesman Brian Kennedy said.

In a more recent case, for example, Continental Resources Inc. won a favorable decision in February following a well blowout that injured three contract workers in July 2011 near Beach, North Dakota. The workers’ employer, Cyclone Drilling Inc., had signed a contract containing an indemnity provision in favor of Continental that was unlimited and without regard to the cause of the accident, according to the agreement.

In addition, Cyclone’s insurance policy included coverage for Continental protecting it from paying the cost of any suits brought by Cyclone’s workers who were injured or families of workers killed on the job. As a result, a federal judge allowed Continental and its contractors to shift up to $6 million for the workers’ injuries to Cyclone’s insurance company, court records show.

Continental officials declined to address questions about this case or the company’s agreements with contractors.

“As to the cause of the incident the public records show who was cited,” Eric Eissenstat, Continental’s senior vice president, general counsel, chief risk officer and secretary, said in an email.

Patrick Hladky, Cyclone’s president, did not respond to requests for comment.

If the top energy producers that control sites with fracked wells – in which oil and gas are extracted from shale with high-pressure mixtures of water, sand or gravel and chemicals – are permitted to offload the responsibility to smaller contractors, then there is little incentive to make worksites safer, said Paul Sanderson, a North Dakota attorney who frequently has encountered these agreements.

This phenomenon seems to be lost on the federal regulators who cover the Bakken. Asked whether these agreements could make energy producers indifferent to worker safety, Eric Brooks, OSHA’s Bismarck office director, said of the practice: “I’m not aware of that at all.”

Justin Williams

To Justin Williams, the attorney for Wegner’s parents, as well as industry insiders, the agreements allow top companies to operate with impunity.

“The Bakken is the most dangerous oil field to work in the U.S.,” Williams said. “The energy producers never pay for their mistakes; the insurance company for the contractor pays. It doesn’t give them any incentive to change the procedures that are unsafe.”

Industry lobbyists fend off reforms

While Oasis contends that Carlson Well Service was largely at fault in the 2011 explosion, the contractor’s experience afterward is not uncommon. Smaller contractors have little choice but to agree to the terms in their contracts. Their insurance companies often end up shouldering part or all of the costs of settlements with workers and their families.

“This bill could have saved lives. When everyone is held responsible for their own conduct … it’s going to create a safer work environment.” — Paul Sanderson, North Dakota lawyer

“The big oil companies have you locked in,” said Connie Krinke, business manager for Diamond H Service LLC, an oil and gas service company based in Bowman, North Dakota.

“You really don’t have the ability to refuse to sign these agreements because most of these companies are billion-dollar companies, and we’re just a small pea in the big pod of people that work for them,” she added. “They have really good lawyers.”

When state lawmakers in North Dakota have tried to fix the problem, the oil and gas industry has used its considerable influence to kill any reform.

A bill proposed in the state Legislative Assembly in January 2011 sought to prevent companies from adding provisions to oil and gas production contracts that required smaller contractors to indemnify them when people are injured or die because of the action of the companies or their independent contractors.

Paul Sanderson

“If you break it, you buy it,” said Paul Sanderson, a North Dakota lawyer who crafted the bill in response to growing concern among insurers following several oil field accidents. “When a person is not responsible for their actions, they disregard the consequences.”

The bill passed out of the House Judiciary Committee. But the effort was torpedoed nearly a week later after heavy lobbying from the oil industry, Sanderson said. The bill was unnecessary and interfered with contracting in the oil industry, a lobbyist for the North Dakota Petroleum Council argued at the time. The bill was defeated 63-27 on the House floor, state legislative records show.

Yet the dangerous nature of the oil and gas industry has prompted four of the largest energy-producing states – Texas, Louisiana, New Mexico and Wyoming – to adopt statutes that prevent or limit oil companies from shifting liability, including legal costs, jury awards and settlements for workers’ injuries or wrongful death suits, to smaller contractors.

bakken-deaths

Today in North Dakota, under some agreements, oil companies and smaller contractors indemnify each other, meaning each will shoulder the cost of claims for damages made by their own employees involved in accidents, regardless of who is at fault. But this works only if large companies dispatch direct employees to work on their well sites, which they often do not.

“This bill could have saved lives,” Sanderson said, adding: “When everyone is held responsible for their own conduct … it’s going to create a safer work environment. You have situations where the oil companies know they are not going to be held responsible.”

Bill or not, safety is the top priority for oil and gas companies in the Bakken, said Kari Cutting, vice president of the North Dakota Petroleum Council, which represents 550 companies. “Any language written in a contract is not going to change where safety is in their priorities. A lot of these companies are very savvy and don’t want to be the headline in any news cycle.”

The role of the company man

Oasis’ company man the day of the 2011 explosion was Loren Baltrusch. Soon after the accident, he gave conflicting accounts to authorities and regulators of his precise role that day.

Just after the accident, Baltrusch told a McKenzie County sheriff’s deputy that he was “kind of supervising” when the rig exploded, a video shows.

Soon after the interview begins, an unidentified man interrupts: “Hey Loren, that’s the guys in Houston; they’re very concerned about you,” he says in an apparent reference to Oasis officials. “You need to get checked out.

“We need to get – I know you’re not in the right frame here,” he continued, referring to Baltrusch’s shaken state of mind following the explosion.

His interview with the sheriff’s deputy ends abruptly.

Baltrusch later told OSHA investigators that he was charged with consulting with Oasis on the engineering aspects and directing servicing activities on the well. But then he said he “really did not know what his authority was since it had never been explained to him,” OSHA records show. Baltrusch declined to comment.

Because Oasis did not have a direct employee on the site, federal regulators could not cite the company for the explosion.

This loophole has allowed Oasis and other energy producers to shift blame and protect their bottom lines from government fines when workers are injured or killed. They hire so-called company men to be their eyes and ears, executing orders and supervising drilling and other tasks.

“If you ask anyone who is in control at these well sites, they’ll tell you the company man,” said Eric Brooks, OSHA’s Bismarck office director. “They are dictating what you’re doing, how you’re doing it. They’re communicating every detail in real time to the companies about what’s happening with the drilling process.”

But because most of these managers are independent contractors, they are not covered under federal workplace safety laws. So company men generally allow energy producers to duck federal fines for accidents.

“Company men became independent contractors to protect the company,” said Tom Dickson, an attorney in Bismarck who has represented dozens of workers in personal injury and wrongful death suits. “They’re not accountable to anybody when something bad happens. It protects the top dog from accountability.”

That’s what happened after an explosion at the Zacher oil well in Mountrail County, North Dakota, in 2007. EOG Resources Inc., formerly known as Enron Oil and Gas Co., was using an open-top tank to reclaim wastewater from a fracking well to save money, according to court records.

When EOG’s company man, Paul Berger, decided to jump-start a defective light tower late one evening, gas vapors wafting from the experimental tank ignited, scorching the crew. Berger said he was under pressure from EOG to get the well flowing, according to a deposition.

“You know, every – all the oil companies are in a hurry to get oil in the tanks to sell,” Berger said. “That’s the cash register.”

After the explosion, EOG prevailed in a lawsuit in federal court in North Dakota, arguing that a provision of its contract required its contractors to indemnify the company, the well’s owner and operator, against other lawsuits that three injured workers had brought against EOG. While EOG ultimately controlled the well site, OSHA did not cite or fine the company.

A spokeswoman for EOG declined to comment.

Few suffered the consequences of that thirst for cash more than Ted Seidler, one of the workers injured at the EOG site, who underwent a series of operations after he was burned on his hands, legs, face and backside.

“It was hell,” Seidler said in a phone interview from his home in North Dakota. “It was a whole year that I never worked because of the burns. My wife quit her job to take care of me.”

Seidler, 66, tried to return to his old job. But the confluence of North Dakota’s extreme temperatures and his tender skin forced him to quit the oil fields. In 2009, Seidler settled with EOG and several of its contractors for an undisclosed amount after filing a lawsuit in state court.

“Everybody was passing the buck,” Seidler said. “They shouldn’t be allowed to do that. EOG should be the one who should be held accountable for the whole deal because they are the owners of the well.”

 

There have been at least 74 deaths in Bakken accidents since 2006, according to a Reveal analysis using data from Canadian and U.S. regulators. Credit: Adithya Sambamurthy/Reveal

Incentives for speed

Oasis provides workers with financial incentives to drill quickly and has lavished them with praise for setting records when they reach target well depths.

Four months before Brendan Wegner died, Joseph Kronberg, a 52-year-old father of three, was electrocuted and died at another North Dakota well owned by Oasis Petroleum North America.

Oasis paid bonuses worth a combined $33,000 to 23 of Kronberg’s co-workers in part for working quickly – even after Kronberg died, internal company records show. At a well on the same site where Kronberg died and another nearby well, Oasis paid workers performance bonuses of $150 per day for drilling quickly, compared with $40 a day for drilling safely, records show.

“Safety is tantamount at Oasis,” spokesman Brian Kennedy said, but when pressed, he acknowledged that in the case of Kronberg’s co-workers, “bonuses should not have been paid, and we regret that they were.”

Internal Oasis documents show that company officials also have actively encouraged company men to set records.

“Nabors 149 just set a new record for Oasis on the Kline with Stoneham 18 following close behind on the Lynn. Congrats guys, keep it up!!” Laura Strong, an Oasis drilling engineer, wrote in a May 27, 2011, email to top company officials and company men.

Strong went on to call the record-holding well, Kline 5300 11-18H, the “Pace setter.”

“If you have a bonus that is simply based on getting it done faster… you’ve got a recipe for disaster.” — Eric Brooks, OSHA’s Bismarck Area Office director

It was the same well that exploded less than four months later, killing Wegner and his co-worker.

In a lawsuit filed in January 2013 in federal court in North Dakota, lawyers for Kronberg’s widow, Margo, asserted that the company fosters a culture of recklessness in which there is one imperative: speed.

In court papers, lawyers for Oasis said Nabors Drilling USA LP, a contractor, would be required to cover the cost of any judgment in the case under its drilling contract. A federal judge concluded that Oasis was not responsible for Joseph Kronberg’s death, concluding that Oasis didn’t exercise a sufficient degree of control over the company man or any of the smaller contractors on site.

In the case, the judge reviewed a string of emails between Oasis and its company men, but ruled that they “merely constitute evidence as to Oasis’ end goal for the Ross well.” In addition, the judge ruled, Oasis did not owe a duty to exercise reasonable care to prevent this kind of accident.

In 2014, Nabors Drilling USA was ordered to pay a $12,000 fine to OSHA for two electrical violations related to Kronberg’s death.

Margo Kronberg was prevented from suing Nabors under North Dakota law, which generally prohibits employees who are injured on the job and their families from suing their employers.

She appealed the decision to a federal appeals court at the end of March and declined to comment. The case is still pending.

“Safety is tantamount at Oasis. Bonuses should not have been paid, and we regret that they were.” — Brian Kennedy, Oasis Petroleum spokesman

Insiders overseeing drilling in the Bakken oil fields say Oasis is not the only company that pays bonuses for increasing production and profit. They say top companies such as EOG, Whiting Petroleum Corp. and many others also dole out incentives.

On EOG sites, for example, some workers earn $1,600 to $3,000 for “beating the curve,” or rapidly drilling their wells, according to two workers who declined to be identified for fear it would jeopardize their jobs.

EOG declined to comment. Whiting did not respond to a request for comment.

LISTEN TO THIS STORY

“Over the past five or six years, there’s been a culture that’s been primarily focused on the production side,” said Dennis Schmitz of the MonDaks Safety Network. “There’s been a culture of gettin’ it done.”

Among the most common oil field injuries are amputations, broken bones and burns, which can severely disfigure workers and diminish their career prospects, OSHA’s Eric Brooks said. Despite the dangers, workers are drawn to the Bakken for hefty salaries, some in the six figures.

Drilling and well servicing in the Bakken is high stakes, at an average cost of about $9 million per well, according to the North Dakota Industrial Commission’s Department of Mineral Resources. The faster the oil gushes, the faster it gets to market to turn a profit, which averages $27 million per well.

That was true when oil was $100 a barrel. And now that oil has slipped to about $60 a barrel, that pressure has intensified, Schmitz said. In addition, with slimmer margins, Schmitz said several companies have fired their safety managers.

On their websites, many energy producers promote a “stop work” culture, in which workers are encouraged to speak out and stop the job if they deem something unsafe. But dozens of workers interviewed in the Bakken said that when they’re drilling, time is money.

“You’ve seen that in a lot of the accidents that happen out here, guys saying yes and meaning no,” said Matthew Danks, vice president and partner of Oilfield Support Services, a New Town, North Dakota-based company that builds facilities after wells are drilled to separate oil, gas and water.

Asked about speed bonuses, Brooks said that while he has not seen any specific examples, he would consider asking his investigators to scrutinize the practice.

“If you have a bonus that is simply based on getting it done faster,” Brooks said, “ … you’ve got a recipe for disaster.”

 Jebadiah Stanfill

Jebadiah Stanfill, who helped the men in the 2011 explosion, says he will never return to the oil fields.

For his efforts in trying to save his brethren, Stanfill says he was fired from his job at Xtreme Drilling and Coil Services Corp. Stanfill said he was told by managers at Xtreme and Oasis that he’d gone beyond his “scope of employment.” He should have remained on his own rig instead of rushing to the scene.

Oasis spokesman Brian Kennedy said: “As Mr. Stanfill was an employee of Xtreme Drilling and not Oasis Petroleum, we were not party to or responsible for any decisions regarding his employment.”

Benjamin Smith, Xtreme’s vice president of human resources, said Stanfill’s claim is “bogus.” Instead, Smith said Stanfill was fired for turning off a valve that cut power to a drilling rig, which he said endangered other employees – a claim that Stanfill dismissed as “a bald-faced lie.”

“Why would I put my life on the line for those men on the burning rig and then turn off the power on a rig so that my own co-workers will die?” Stanfill said. “That makes no sense. I don’t even know how to turn off a rig.”

Now a handyman living in Alabama, he said he still struggles with PTSD, often wearing black work gloves to prevent the sight of his hands from triggering memories of skin sliding off in his palms.

“I always seem to think I still have those men’s skin on my hands,” he said.

When Bruce Jorgenson returned to the site this past March to start drilling the new well, “the anxiety came back. I relived every minute of it. I’ve been involved in other bad things in the oil field, and this one was the only one that gave me nightmares.”

A cross bearing Brendan Wegner’s name stands near the site of the oil rig explosion that killed him in 2011. He died on his first day on the rig.

Even so, Jorgenson said he hasn’t discussed the explosion with his current crew. “I didn’t want them freaked out by it in any way. I wanted their mind on what we were doing.”

On a recent visit, the lone reminder of that day was a modest wooden cross bearing Wegner’s name near the well site. Trucks thundered past.

Plumas Co. Grand Jury: Scathing indictment of hazardous material transportation through Feather River Canyon

Repost from Plumas County News
[Editor:  This Grand Jury report is thorough and well written – an excellent resource and alarming in its analysis.  Its findings and recommendations (near the end of the report) might be a valuable resource for communities everywhere.  There are a number of references to “after-action reports.”   Question for our research: how can concerned citizens obtain such reports?  – RS]

Hazardous material transportation a roulette wheel for potential disaster

Feather Publishing

6/5/2015

Editor’s note: This is the fourth in a series of midterm reports submitted by the 2014-15 Plumas County Civil Grand Jury.

SUMMARY
Early in the morning Nov. 25, 2014, a Union Pacific freight train derailed in the Feather River Canyon just east of Belden, sending 11 railcars full of corn off the tracks and down the steep embankment. In a press statement shortly afterward, a State Office of Emergency Services official was quoted as saying, “We dodged a bullet” because the train was only carrying corn.

Based on a rash of recent derailments and spills of hazardous materials happening throughout the United States and Canada, “a bullet” in fact grossly underestimates the potential devastation, magnitude and scope of the consequences left from these horrific incidents. Luckily, it was only corn that spilled. With the recent surge in crude-by-rail domestic crude oil transports between oil fields in North Dakota, Texas, Colorado and Pennsylvania and Bay Area refineries through the Feather River Canyon, the aftermath could have wrought far-reaching disaster had it been the high-flammable Bakken crude in the tanker cars.

According to sources, the number of crude-by-rail trains passing through the Feather River Canyon has tripled in number within the past three years. With developments in hydraulic fracking technology coming about in domestic oil fields, the petroleum market has seen a profound shift from importing foreign oil to extracting it in domestic oil fields in the United States. As a result, thousands of jobs have been created and oil prices have plummeted since this recent boon in domestic oil production. In addition, other hazardous chemicals are transported throughout the United States by rail and by truck. According to the Federal Railroad Administration, only the railroads are required to know what’s in the cars they’re shipping.

The grand jury found it extremely important to examine the recent corn derailment other recent crude-by-rail disasters in the U.S. and Canada to determine whether Plumas County agencies and private transportation operators are adequately prepared in “worst-case” scenarios. In respect to the Plumas County corn derailment, because the corn was relatively harmless and could be immediately dealt with without invoking hazardous material protocols, local, state and railroad officials and crews did an excellent job in containment of the spill and clearing and repairing the tracks within the impact area.

As a result of a quick and well-coordinated response, the Feather River Canyon rail route was restored and passing rail traffic three days after the initial derailment. Nonetheless, the grand jury has found the incident to be a practical review for a county hazardous material spill and useful opportunity to compare and contrast the corn spill with other recent more disastrous spills. Plumas County did indeed “dodge the bullet,” and from this incident the grand jury believes it will provide valuable findings and recommendations which may in turn act as a catalyst and cast fresh perspectives and insights on dealing with future potential spills and hazardous material disasters.

BACKGROUND
In review of the Feather River Canyon corn spill Nov. 25, 2014, a total of 11 cars full of raw corn derailed and spilled down a steep embankment near Rich Bar. Luckily, the spill was only tons of kernels and husks, and the incident proved to have had only a minimal impact, environmentally speaking.

The corn spill turned out to be good opportunity to test the Plumas County emergency response system. The incident was first reported by Union Pacific Railroad Dispatch in Omaha, Nebraska, to the Plumas County Warning Center, stating, “12 rail cars close to Rich Bar at Hwy 70 MPM 265 on the Canyon Sub,” and that “12 rail cars loaded with grain derailed, it is unknown whether the cars are upright or on their sides, and that the derailment occurred in a canyon next to a stream or river and it is unknown at this time if the waterway was impacted.”

According to the after-action report on the incident, the State Warning Center notification included the Plumas County sheriff, California Highway Patrol, Plumas County Environmental Health, State Water Quality Board, State Department of Toxics, State Drinking Water, Cal Office of Emergency Services, U.S. Environmental Protection Agency and the California Department of Fish and Wildlife. The accident occurred around 3 a.m. Nov. 25. By 8 a.m. Union Pacific had placed containment booms 100 feet down the Feather River. Fortunately, none of the cars landed in the river and only a small amount of corn spilled into the river.

One of the important facts that should be emphasized here concerns containment supplies and where they are located. It took roughly five hours for the railroad to have containment booms in place. According the Plumas County officials, Union Pacific does not have any spill containment kits in Plumas County. A formal request from the grand jury was emailed to Union Pacific safety representatives asking about the whereabouts of containment kits — according to their response (the grand jury received a very quick email reply that day), Chico, Roseville and Reno, Nevada, were the closest railroad facilities that had emergency containment kits.

Other revelations from the after-action report revealed that the Union Pacific Railroad Dispatch Center could not pinpoint the exact location in the Feather River Canyon to the Warning Center. In addition, dispatch was not “forthcoming” on what was spilled, although the center did state that the Plumas County Sheriff’s Department was notified that “there were no injuries, no hazardous materials released, and that no assistance was needed.” The corn spill after-action report in its conclusion posted its “corrective actions from railroad incident” review. Some of the recommendations are summarized here:

—Push Union Pacific dispatch for better initial report information.

—Use GPS to pinpoint incident location.

—Coordinate with the U.S. Forest Service and the California Department of Fish and Wildlife for any incident in the Feather River Canyon.

—The incident commander for any hazardous materials incident is designated as the primary law enforcement authority.

—Follow Plumas County Hazardous Materials Response Plan.

—The Office of Emergency Services will try to find a local Union Pacific dispatch contact person.

Evidently, the cause of the corn derailment was a section of the railroad track breaking or separating. Ironically, Union Pacific reported that all railroad ties along the Feather River Canyon were replaced in 2013. Union Pacific conducts track inspections at regular intervals and reportedly it conducts Feather River Canyon inspections every three months. Nonetheless, the corn derailment exemplifies that rail accidents can happen at any time.

In respect to the other crude-by-rail spills, the same results were concluded. Train speed was not a factor and rail and bridge inspections were documented before the incidents occurred. The crude-by-rail derailments were all on relatively flat landscapes. The Feather River Canyon route, with its rocky and unstable terrain, is much more prone to outside factors that can lead to derailments.

According to 2013 Plumas County Hazard Mitigation Plan, in 2007 and in 2012 a rockslide struck and derailed passing trains. The 2007 slide derailed 22 rail cars; 20,000 gallons of peanut oil ruptured from several cars and 30,000 gallons of highly flammable denatured alcohol also spilled down the embankment. The 2012 incident was caused by a large boulder that fell onto the tracks and was struck by a Burlington Northern Santa Fe train. Over 3,000 gallons of diesel fuel spilled from the train into the Feather River.

The recent crude-by-rail spills throughout the U.S. showcase the dramatic rise in domestic oil production and rail shipments to coastal refineries. According to railroad data, in 2008 there were reportedly about 10,000 oil cars carrying domestic crude. In 2014, there were over 400,000 crude-by-rail train cars, representing a 4,000 percent increase. Furthermore, the type of crude oil coming from shale deposits from Bakken oil fields (commonly referred as “light crude”) is high combustible. In almost every instance in which trains carrying Bakken crude derail and tanker cars are punctured, fiery detonation results. First responders and emergency service crews can merely watch it burn and concentrate on containment perimeters rather than extinguishing the oil fire. Without sensationalizing a disaster that occurred in another place, had any of the recent oil tanker disasters happened along the Feather River route, particularly at locations near population areas including downtown Portola, Blairsden, Twain and Keddie, where the railroad tracks are relatively close, the extent of the damage could have been far different.

The grand jury would first like to acknowledge as a matter of fact that hazardous chemical hauling is an integral part of our economy. As potentially dangerous as they are, crude oil, gasoline and chemicals are used safely every day. Without them our economy and all the things we do, all the products we require in our daily lives, the way we move would be changed; just about everything revolves around the consumer and the safe use of chemicals and their byproducts.

That being said, the vital role of both the national carriers of hazardous materials and our public safety officials at each level is to make safety the No. 1 priority. Safety, defined here, entails the complete processing of any particular product, from its extraction and refinement to transportation, delivery and ultimate usage.

Railroads carry over 40 percent of our nation’s freight. When conducted safely and securely, commodity transport over rail is proven to be economically the best and most efficient mode of transportation in terms of fuel efficiency, supply chain costs and safety. Intermodal traffic refers to the transport of goods on trains. Today, two major rail companies, Union Pacific and Burlington Northern Santa Fe, transport intermodal goods through Plumas County. According to the Union Pacific Railroad, chemical transport is roughly 17 percent of total payload being carried. The breakdown of goods, however, is not representative of actual train payloads. In other words, trains passing through the county could have any number of railcars full of one particular commodity or another and the cars may be full or empty.

The grand jury has found that the mission statements, top priorities, primary focus and action plans are remarkably similar in commitment, scope and language between hazardous material producers, transport carriers and government officials at every level. In other words, everyone directly engaged in the production and distribution of everything delivered over rail, by air or on pavement — as well as their overseers — share a common pledge to make safety their top priority in the public domain and the environment.

In addition, the grand jury has studied the after-action reports of many of the most recent crude-by-rail derailments and public highway chemical transport accidents and learned that in nearly every case, there were inspections completed days or weeks before the incidents, rail and highway speeds were under the mandated limits and handling of the volatile payloads were properly done according to federal safety mandates.

According to official published reports, there has been more oil spilled from trains in the past two years than in the previous four decades. Between 1975 and 2012, around 800,000 gallons of crude oil was spilled in the U.S. By comparison, according to data from the Pipeline and Hazardous Materials Safety Administration data, over 1.5 million gallons of crude oil was spilled from rail cars.

As a result of the series of ruptures and fires that have recently plagued the U.S., federal regulators are considering higher safety standards and further upgrades such as thicker tanks, rollover protection for chemical carrying tanker cars, electronic braking systems on individual rail cars and increased track inspections.

The U.S. Department of Transportation has issued a notice for crude oil and high-hazard flammable trains tanker cars, calling for a phaseout of the older CTC-111A tanker car (commonly known as the DOT-111). Currently there are still around 300,000 CTC-111A cars still being used throughout the U.S. These tanker cars each generally carry between 20,000 and 30,000 gallons of oil. According to the U.S. Department of Transportation the older CTC-111As have the following safety flaws:

—Thin skins: Upon derailment, tanks often rupture.

—No head shields: Shields on both ends of tanker cars can prevent puncturing during collisions.

—Poor protection over valves and fittings.

—Lack of pressure relief devices for boiling liquid expanding vapor explosions.

In short, the older CTC-111A tanker cars were not designed for hauling flammable materials.

The new replacement tanker car, called the CPC-1232 (CPC is a railroad industry standard that stands for casualty prevention circular), features new standards for hazardous material railway transport. As of November 2011, all new tank cars built for transporting crude oil and ethanol must follow new standards, including half-height shields, thicker tank and head material, normalized steel, top fitting and gauge protection and recloseable pressure relief valves.

As of March 2015, there are reportedly 60,000 of the newer CPC-1232 tanker cars hauling crude in the U.S. In response to all the recent crude-by-rail derailments, Union Pacific, CSX and Burlington Northern Santa Fe have all stepped up in increased safety inspections and adapting new safety standards. The railroads are now relying on distributed power units, which place locomotives in the middle and/or both ends of the trains. Studies show that placing power locomotives on both ends and in the middle enhances safety because it even spreads physical forces on the train.

This revelation is significant — the 1991 Dunsmuir toxic chemical derailment was caused by this very reason. The power locomotive was placed in the rear of a 97-car train and light and empty cars flanked a full tanker car filled with 19,000 gallons of metam sodium. The investigation of the Dunsmuir disaster found that because all the power was placed at the rear of the large train, the uneven power distribution caused the train to buckle.

Metam sodium is a soil fumigant. When it spilled into the upper Sacramento River — because of poor containment action and the nature of toxicity of the chemical — it killed every plant and fish for approximately 40 miles downstream.

Railroads also use wayside electronic detectors to monitor railroad tracks. New safety detecting technology is also being used in their prevention and risk reduction process that features use of lasers and ultrasound to identify rail defects.

The grand jury has learned that many of the hazardous material railcars do not belong to the rail carrier but to the company producing and transporting the product. For example, most of the older CTC-111A and newer CPC-1232 tanker cars are actually owned by the crude oil fracking companies and refineries.

The number of trains carrying crude oil and other hazardous materials is actually based on sheer economics. For example, in 2014, when oil prices hovered around $100 a barrel, the price sent domestic oil production to an all-time high. Crude-by-rail oil shipments though Plumas County increased substantially as coastal refineries in Martinez and Benicia purchased more oil from the Bakken oil fields in North Dakota and other domestic oil fields in Texas and Oklahoma.

DISCUSSION
The grand jury chose a review of several recent U.S. crude-by-rail derailments for comparative reasons. The after-action reports provide valuable findings and recommendations from disasters that can happen anywhere, anytime. The reports are particularly invaluable to first responders, and public safety agencies.

After-action reports detail each incident from the time of the initial report that entails the scope and severity of the incident. In response to the above disastrous incidents, the U.S. Department of Transportation and the Federal Pipeline and Hazardous Materials Safety Administration issued a “call to action” in January, calling on “rail company executives, associations, shippers and state and federal agencies to discuss how stakeholders can prevent and mitigate the consequences of rail accidents that involve flammable liquids.”

The grand jury also believes that examining the recent corn spill in Plumas County and comparing it with the way other derailments were handled can lead to information and recommendations that enhance and hopefully improve upon the vanguards (prevention, preparedness, response, recovery) of any future local potential disaster.

The tenets from the PHMSA call to action report produced similar recommendations — a strategic approach that promotes “effective preincident planning, preparedness, response, outreach and training.” One important point that the grand jury kept hearing was a difficulty and lack of communication between the railroad and local emergency management officials. One of the key elements the PHMSA call to action report specifically addresses is the absolute need for interaction and relevant guidance to first responders and local emergency management teams to “safely and effectively manage incidents.”

The report also called for preincident planning and communication with all organizations to learn about what is being transported. Emergency response teams must have the training to safely contain and protect themselves and the contaminate zone affected. The need for a local hazmat team cannot be overemphasized.

The following crude-by-rail disasters summarized in this grand jury report illustrate some of the potential circumstances other public safety agencies have had to deal with. Despite all the mandated safeguards dealing with hazardous material hauling, i.e., safe speeds, upgraded rail cars, railcar and track inspections, specialized training, etc., accidents can happen anytime and anywhere within transportation routes of hazardous materials.

Plumas County and the surrounding 12 counties in northeastern California lie within Region 3 of the State Emergency Services System. At the time of this report, Plumas County has no hazmat team. Upon any need for hazmat response, Plumas County must contact nearby Butte or Shasta teams. In more serious incidents, Plumas County would have to enlist state or federal emergency service agencies.

Lac-Megantic, Canada: In July 2013 a train carrying 72 tank cars full of crude oil exploded after the train braking system released, sending the unmanned train on a downhill run into the Canadian town of Lac-Megantic, Quebec. The runaway train crashed into a crowded downtown pub, killing 47 people and destroying over 30 buildings. According to the National Transportation Safety Board investigation, the train had been idling and unmanned for over seven hours and the emergency braking system disengaged. The train then rolled down the tracks for several miles, picking up speed and eventually derailing into downtown Lac-Megantic. Of the four disaster crude-by-rail spills mentioned in this report, the results from the official investigation determined that sheer neglect (train left running and unattended and braking system released, causing a runaway unmanned train) was the primary factor in the disaster.

Aliceville, Alabama: A 90-car train carrying Bakken crude derailed in November 2013 and exploded. Nearly 750,000 gallons of its 2 million gallon load spilled in wetlands in Alabama. Officials still assail cleanup operations today and report that containment booms and absorbent products were ineffective.

Lynchburg, Virginia: In April 2014 a CSX train carrying crude oil derailed and caught fire, spilling thousands of gallons of oil into the James River. Oil fires from the ruptured tanker cars burned for two days. Reports indicate that the tanker cars were all the new CPC-1232 model.

Casselton, North Dakota: In December 2013 a Burlington Northern Santa Fe train hauling grain derailed and fell across another set of tracks. Shortly after, a crude oil train heading in the opposite direction struck the derailed cars and derailed itself. Several tanker cars exploded. A slow response to the first incident set up the chain of events for the explosive second incident.

Montgomery, West Virginia: In February 2015 a train carrying crude oil in West Virginia derailed sending 27 tanker cars off the tracks. Twelve of those rail cars exploded, not at once, but randomly for up to 12 hours. The cause is still under investigation.

In the event of a local hazardous material disaster, the Plumas County Office of Emergency Services is notified and it determines the scope and magnitude of the incident and then contacts the Plumas County Board of Supervisors. Depending on the incident assessment of the Plumas County OES, the BOS has the authority to officially declare an emergency, which allows the Plumas County OES to request help from relevant local, state and federal agencies.

Through leadership and partnership with all first responders, each incident goes through a foundational process that includes prevention, preparedness, response and recovery. The first three steps of the mitigation process rely on the safe containment of the hazardous material as quickly as possible with a special focus on protecting human life (isolate, deny entry, protect life safely, mitigate). The recovery phase, however, can last for years. The Dunsmuir toxic spill, for example, seriously impacted the area for several years after. At the time of this report, the crude-by-rail spills were all still in the recovery phase. Fortunately, the Plumas County corn derailment had a minimal effect on the environment. The first three phases of emergency services mitigation at the corn spill served as a great training exercise for all agencies and first responders involved.

Recovery, in this case, was at a minimum in terms of environmental impact.

In regard to Plumas County hazmat, the grand jury has learned that the county must rely on local volunteers to devote their time as first responders.

Plumas County has had a difficult time finding enough volunteers to cover the entire county, and retaining volunteers after hazmat certification and specialized training has not worked out. All the local fire districts within Plumas County have been actively seeking volunteers.

FINDINGS
F1) The grand jury finds that communication between Plumas County public safety agencies and railroad officials is profoundly inadequate.

F2) The grand jury finds that the lack of spill and containment equipment along rail routes in Plumas County poses a direct threat to public safety and the natural environment.

F3) The grand jury finds that relying on hazmat response teams from surrounding counties compromises response times and threatens Plumas County public safety and natural resources.

F4) The grand jury finds that the lack of training of first responders concerning hazardous materials that they may have to deal with could have profound consequences.

F5) The grand jury finds that population centers within Plumas County that are in close proximity to railroads have grossly inadequate protection resources.

RECOMMENDATIONS
R1) The grand jury recommends Plumas County Emergency Services and the Plumas County Environment Health Agency establish direct local contact with Union Pacific and Burlington Northern Santa Fe and any hazardous material carrier that operates within the county.

R2) The grand jury recommends that Plumas County negotiate with railroad officials to have spill containment booms and absorbent kits in key strategic storage facilities in Plumas County.

R3) The grand jury recommends that the BOS find the means to provide hazmat training and certification to in-county first responders.

R4) The grand jury recommends more hazardous material training between first responders and all those involved in mitigating hazardous material disasters. Union Pacific, for example, offers tank car safety training in Roseville at the California Office of Emergency Services Specialized Training Institute every year. The training involves practically all aspects of hazardous material incident mitigation.

R5) The grand jury recommends that the BOS and Plumas County OES conduct a “what-if” evaluation for population centers within Plumas County that are within potential “blast zones” of crude-by-rail tanker cars.

Why You Should Be Skeptical Of Big Oil Companies Asking For A Price On Carbon

Repost from ClimateProgress

Why You Should Be Skeptical Of Big Oil Companies Asking For A Price On Carbon

By Emily Atkin, June 3, 2015 at 4:19 pm

Shell, Statoil, Total, and BP were four of six companies to request a price on carbon be included in international policy frameworks. Six large European oil and gas companies are asking governments across the world to charge them for the carbon dioxide they emit.

In a letter released Monday, Shell, BP, Total, Statoil, Eni, and the BG Group told the chief of the United Nations Framework Convention on Climate Change that a price on carbon “should be a key element” of an international agreement to address global climate change. The letter came while U.N. negotiators met in Bonn, Germany to work towards that agreement.

For those who want to fight climate change, this is good news. But it’s not totally unprecedented. Other high-emitting companies, including Shell, have expressed support for a carbon price before. And big oil companies have been expecting some sort of carbon price for a long time — the biggest ones have already incorporated it into their business plans. Exxon Mobil, ConocoPhillips, Chevron, BP, Shell; they’re all financially prepared for a carbon price if and when it comes their way.

That more and more oil companies are now actively calling for a carbon price, though, is good for the climate fight. Total, BP, Statoil, and Royal Dutch Shell are all among the 90 companies causing the vast majority of global warming via their exorbitant carbon emissions. Now, they’re acknowledging they want to at least pay for some of those emissions, and that seems like a positive development.

At the same time, it’s not like any of those six companies are halting their plans to drill. They haven’t recognized the science that says two-thirds of all proven fossil fuel reserves will have to be left in the ground to avoid catastrophic warming. Shell is still planning to explore for oil in the Arctic; BP just recently expanded its operations in the Gulf of Mexico.

More importantly, though — at least in terms of getting a carbon price in the final U.N. climate deal — the European companies that signed the letter wield little power within the U.S. Congress compared to other big oil companies. This matters because the terms of that deal will almost certainly have to be approved by Congress if it is to include an enforceable price on carbon. Under U.S. law, any international agreement that binds or prohibits the United States from actions not otherwise mandated by law must be ratified by Congress.

BP, Statoil, and Total might be actively calling for a carbon tax, but the three biggest U.S. oil companies — ExxonMobil, Chevron, and ConocoPhillips — aren’t. (ExxonMobil says they would prefer a carbon tax to a cap-and-trade system, but they don’t outright support it). And those U.S. companies are spending much more to influence Congress than the letter-writing companies on campaign donations and lobbying.

Contributions include donations from company employees, PACs, and soft money contributions.
Contributions include donations from company employees, PACs, and soft money contributions. CREDIT: Patrick Smith

To be fair, European companies have more restrictions on how much they can give than U.S.-based companies do. But not only are the biggest U.S. companies spending far more to influence U.S. politics, their money is going to politicians who are actively fighting efforts to price carbon in the United States.

During the 2014 election, for example, the biggest receiver of funds from ExxonMobil, Chevron, and ConocoPhillips was former Sen. Mary Landrieu (D-LA). Landrieu marketed herself, among other things, as the “key vote” that made sure a carbon pricing system wasn’t implemented by Congress in 2010. Other candidates supported by those three companies were John Boehner, Mitch McConnell, Mark Begich, John Cornyn — all have said they oppose a price on carbon.

In fact, the Republican party as a whole in the United States is opposed to policies that price carbon. Though it says nothing about a carbon tax, the last official Republican party platform touts opposition to “any and all cap-and-trade legislation.” Unsurprisingly, the vast majority of all oil company campaign contributions is going to Republicans.

oillobby (1)
Oil Lobby CREDIT: Patrick Smith

There are other reasons to be skeptical of any big oil company fighting for a price on carbon. For one, some companies have said they would support a carbon tax, but only if they can avoid other climate-related regulations. As David Roberts pointed out for Grist back in 2012, “the fossil fuel lobby would never give a carbon tax their OK unless EPA regulations on carbon (and possibly other pollution regs) were scrapped.” It’s also reasonable to assume that oil companies see profits increasing in the markets for low-carbon natural gas while the high-emitting coal industry tanks, and realize that coal would be hurt far worse by the policy.

In other words, it is great that some of the world’s biggest contributors to climate change want to be charged for the carbon they emit. But we still have a long way to go before big oil actually joins the fight.

Oil price crash: companies shelved or delayed 26 schemes, including 9 tar sands projects

Repost from Business Green

Report: Oil price crash stalls more than $100bn of fossil fuel investment

Research on behalf of the Financial Times shows oil majors have shelved or delayed 26 schemes, including nine tar sands projects
By Jessica Shankleman | 19 May 2015
Tar sands in Canada
Tar sands in Canada

Oil majors have put more than $100bn of investment in new projects on ice in response to the plunge in oil price, new analysis by consultancy Rystad Energy revealed today.

The study, commissioned by The Financial Times, shows that 26 projects in 13 countries have been delayed or axed since oil prices started to tumble last year, including nine Canadian tar sands schemes.

The revelation follows warnings from analysts such as the Carbon Tracker Initiative that capital and carbon intensive projects such as tar sands developments and deep sea drilling operations will struggle to turn a profit if oil prices remain low.

The price of oil crashed to $45 per barrel in January from a high of $115 in June 2014 as a result of surging output of US shale oil and lower than expected demand in Asia. The downward trend in prices was further accelerated by the decision of the Organization of the Petroleum Exporting Countries (Opec), led by Saudi Arabia, to resist calls for it to curb supplies in a bid to protect prices.

As a result, companies such as Royal Dutch Shell, BP and Statoil have been forced to shelve some of their costlier projects.

The analysis shows that at least $118bn of investment has been hit, which is likely to delay future production by as much as 1.5 million barrels per day. This in turn could lead to a substantial rebound in the price of oil, said Rystad.

The report follows a series of studies that have warned capital intensive fossil fuel projects could become stranded assets if the transition to a low carbon economy leads to tighter environmental regulations and reduced demand for fossil fuels.

The findings come after a report from the Institute for Energy Economics and Financial Analysis (IEEFA) yesterday showed how coal company stock prices have collapsed in recent years, concluding that the industry now faces a “grim outlook” as a result of tightening environmental legislation and increasing stranded asset risks.

Moreover, yesterday saw the University of Oxford confirm it will not invest in coal and tar sands as part of its ethical policy to fight climate change.