Category - Energy and Environment Forum

This almost forgotten metric is suddenly driving the oil market

Bloomberg News, By Lynn Doan & Dan Murtaugh, February 18

San Francisco & Houston – It was like clockwork.

Every week since 1944, Baker Hughes Inc. would release its survey of how many rigs were out drilling for U.S. oil and gas. And every week, oil and gas traders would, for the most part, overlook it.

What a difference a slide in oil of $50 (U.S.) a barrel makes. This past Friday, traders were bent over their desks, staring at their screens, waiting for 1 p.m. ET to see whether drillers extended their biggest-ever retreat from U.S. oil fields. (They did.) Oil futures spiked within minutes of the count, closing at the highest level in four days.

“I don’t think I’ve heard ‘Baker Hughes’ more in my life than I have in the past month,” Dan Flynn, a trader at Price Futures Group in Chicago, said by phone recently. “It’s like I’m saying it in my sleep.”

The sudden interest in Houston-based Baker Hughes’s rig counts shows how desperate traders have become to find the bottom of the oil market after the biggest collapse since 2008. The company, which was Hughes Tool Co. 71 years ago when it first released the weekly count, is the third-biggest oil field service provider in the world.

Naked Capitalism: Wolf Richter: The Chilling Thing Devon Energy Just Said About the US Oil Glut

This is the brutal irony: drillers are hoping that rising production achieved with greater efficiencies allows them to meet their interest costs; but rising production pressures the price of oil to a level that may not be survivable long-term for many of them. They can lose money, burn through cash, and keep themselves above water through asset sales for only so long. And this is the terrible fracking treadmill they’ve all gotten on and now can’t get off.

Globe and Mail: CNRL’s warning to oil sands: Cut costs or face ‘death spiral’
Bloomberg: What’s behind Buffett’s exit from Big Oil

Obama Just Blew A Chance to Crack Down on Coal

The disposal of cancer-causing coal ash will be lightly regulated, the EPA decided.

Mother Jones, By Ben Adler, December 23

On Friday, the Obama administration quietly passed up an opportunity to make the coal industry clean up its act.

The EPA issued a final rule on the disposal of coal ash, a byproduct of coal burning that contains toxic heavy metals such as arsenic, lead, and selenium. Up until now, disposal of coal ash hasn’t been regulated by the federal government at all. Now it will be regulated, but not very strongly.

“Your banana peel that you throw away has stronger protections when it winds up in a dump than coal ash does,” says Mary Anne Hitt, director of the Sierra Club’s Beyond Coal campaign, who is highly critical of the new rule.

More than 100 million tons of coal ash are produced annually in the US, and much of it is simply dumped into open pits. In recent years, there have been large coal-ash spills into rivers in Tennessee and North Carolina.

[…]

Coal ash will instead be categorized as “solid waste,” also known as garbage, and its disposal will be held to a lower standard. The rule does include requirements about where and how coal ash is stored that are intended to prevent leaching into groundwater. It has to be placed “above the uppermost aquifer,” and protected with a geomembrane and a two-foot layer of compacted soil. But environmentalists say that’s not strong enough. Also, old coal-ash dumps won’t have to be cleaned up or improved unless problems are discovered. And the EPA’s new rules won’t even be enforced by the federal government; enforcement will be left to the states.

Natural gas flaring in Eagle Ford Shale already surpasses 2012 levels of waste and pollution

AP, December 21

San Antonio — Gas flaring in the most profitable shale field in the U.S. is on pace to surpass to 2013 levels of waste and pollution in South Texas, according to a newspaper analysis of state records published Sunday.

The Eagle Ford Shale burned off more than 20 billion cubic feet of natural gas in the first seven months of this year, according to the Railroad Commission of Texas, which oversees the oil and gas industry. The tons of pollutants released into the air already exceed levels for 2012.

Experts say plummeting oil prices likely won’t stifle Eagle Ford production anytime soon.

The San Antonio Express-News (http://bit.ly/1ATJFNW ) also found some of the top sources of flaring in 2014 lacked state-mandated permits to flare natural gas. The goal of flaring is to incinerate impurities, but it generates air pollution and carbon dioxide, a greenhouse gas that scientists say contributes to climate change.

Railroad Commission spokeswoman Ramona Nye said Friday that the agency sent violation notices to three energy companies after the newspaper asked about their permitting status.

Risk in Fukushima No. 4 reactor mitigated as last of nuclear fuel removed

The Asahi Shimbun, By Yu Kotsubo & Hiromi Kumai, December 21

Okuma, Fukushima Prefecture – Tokyo Electric Power Co. removed the last four nuclear fuel assemblies that remained in the No. 4 reactor building of the crippled Fukushima No. 1 nuclear power plant from its storage pool on Dec. 20.

The No. 4 reactor was offline at the time of the March 11, 2011, Great East Japan Earthquake and tsunami. However, an explosion occurred in the building four days later, seriously damaging it.

After the accident, experts pointed to the risk of nuclear fuel in the pool melting from insufficient cooling and releasing a large amount of radioactive materials. However, the threat has been mitigated with the removal of the last assemblies.

[…]

TEPCO started the removal of those assemblies from the pool in November 2013 after installing a new roof and a crane on the building. The removal of spent nuclear fuel assemblies concluded in November this year.

There will be no work in the No. 4 reactor building for the time being. TEPCO will be engaged in efforts at the No. 1, No. 2 and No. 3 reactor buildings and in dealing with the growing volume of contaminated water partly resulting from efforts to keep the reactors from overheating.

Of course, there are still troubles; EX-SKF: #Fukushima I NPP: Plan C Also Failed in Plugging Reactor 2 Trench… Now What?

U.A.E. Sees OPEC Output Unchanged Even If Oil Falls to $40

Bloomberg, By Anthony DiPaola & Mahmoud Habboush, December 14

OPEC will stand by its decision not to cut crude output even if oil prices fall as low as $40 a barrel and will wait at least three months before considering an emergency meeting, the United Arab Emirates’ energy minister said.

OPEC won’t immediately change its Nov. 27 decision to keep the group’s collective output target unchanged at 30 million barrels a day, Suhail Al-Mazrouei said. Venezuela supports an OPEC meeting given the price slide, though the country hasn’t officially requested one, an official at Venezuela’s foreign ministry said Dec. 12. The group is due to meet again on June 5.

“We are not going to change our minds because the prices went to $60 or to $40,” Mazrouei told Bloomberg at a conference in Dubai. “We’re not targeting a price; the market will stabilize itself.” He said current conditions don’t justify an extraordinary OPEC meeting. “We need to wait for at least a quarter” to consider an urgent session, he said.

OPEC’s 12 members pumped 30.56 million barrels a day in November, exceeding their collective target for a sixth straight month, according to data compiled by Bloomberg. Saudi Arabia, Iraq and Kuwait this month deepened discounts on shipments to Asia, feeding speculation that they’re fighting for market share amid a glut fed by surging U.S. shale production. The Organization of Petroleum Exporting Countries supplies about 40 percent of the world’s oil.

The Downside of the Boom

North Dakota took on the oversight of a multibillion-dollar oil industry with a regulatory system built on trust, warnings and second chances. The cooperative approach doesn’t seem to generate results.


NYT -In early August 2013, Arlene Skurupey of Blacksburg, Va., got an animated call from the normally taciturn farmer who rents her family land in Billings County, N.D. There had been an accident at the Skurupey 1-9H oil well. “Oh, my gosh, the gold is blowing,” she said he told her. “Bakken gold.”

It was the 11th blowout since 2006 at a North Dakota well operated by Continental Resources, the most prolific producer in the booming Bakken oil patch. Spewing some 173,250 gallons of potential pollutants, the eruption, undisclosed at the time, was serious enough to bring the Oklahoma-based company’s chairman and chief executive, Harold G. Hamm, to the remote scene.

More of this lengthy, detailed article at the link.   (image: Brent McDonald/NYT)

Richard Berman Energy Industry Talk Secretly Taped

WASHINGTON — If the oil and gas industry wants to prevent its opponents from slowing its efforts to drill in more places, it must be prepared to employ tactics like digging up embarrassing tidbits about environmentalists and liberal celebrities, a veteran Washington political consultant told a room full of industry executives in a speech that was secretly recorded.

The blunt advice from the consultant, Richard Berman, the founder and chief executive of the Washington-based Berman & Company consulting firm, came as Mr. Berman solicited up to $3 million from oil and gas industry executives to finance an advertising and public relations campaign called Big Green Radicals.

The company executives, Mr. Berman said in his speech, must be willing to exploit emotions like fear, greed and anger and turn them against the environmental groups. And major corporations secretly financing such a campaign should not worry about offending the general public because “you can either win ugly or lose pretty,” he said.

Lockheed says makes breakthrough on fusion energy project

Reuters, By Andrea Shalal, October 15

Washington – Lockheed Martin Corp said on Wednesday it had made a technological breakthrough in developing a power source based on nuclear fusion, and the first reactors, small enough to fit on the back of a truck, could be ready for use in a decade.

Tom McGuire, who heads the project, said he and a small team had been working on fusion energy at Lockheed’s secretive Skunk Works for about four years, but were now going public to find potential partners in industry and government for their work.

Initial work demonstrated the feasibility of building a 100-megawatt reactor measuring seven feet by 10 feet, which could fit on the back of a large truck, and is about 10 times smaller than current reactors, McGuire told reporters.

In a statement, the company, the Pentagon’s largest supplier, said it would build and test a compact fusion reactor in less than a year, and build a prototype in five years.

Huh.

Fukushima nuclear meltdown worse than initially reported – TEPCO

Russia Today, August 7

The meltdown at the Fukushima Daiichi nuclear power plant’s third reactor building was even worse than initially believed, Tokyo Electric Power Co. (TEPCO) has announced.

In fact, the power company’s new appraisal of the Fukushima No. 3 reactor building shows that all – or nearly all – of the fuel rods contained inside were melted, dropping onto the floor of the containment vessel. If true, the news means the power plant could be even tougher to decommission.

According to the Japan Times, TEPCO first estimated back in November of 2011 that roughly 63 percent of the reactor’s fuel rods had melted.

But TEPCO now believes that after studying conditions surrounding the fuel core, the reactor’s cooling system stopped functioning more than five hours earlier than previously estimated. As a result, the meltdown would have started around that same time period.

ENE News: Gov’t: Fuel melted “much deeper” into concrete at Fukushima reactor than revealed — Triple the depth of original estimate — Tepco: “Impossible for us to evaluate potential impact”
Ex-SKF: (UPDATED) #Fukushima I NPP: Source of Neutron Detected on March 13-15, 2011 May Be Plutonium and Uranium Released by Core Melt
Enformable: TEPCO says Fukushima Daiichi Unit 3 meltdown worse than estimated

Russia Will Only Get Worse. Maybe.

Putin is on the horns of a dilemna. For the first time since the dismantling of the Soviet Union, Russia faces a severe economic crisis – after enjoying years of relative prosperity – and she has a warmongering chief executive. This is a nexus of events that will shape and define Russia for at least the next decade.

Read More

Feds approve oil exploration off US Eastern Coast

Associated Press, By Jason Dearen, July 19

St. Augustine Beach, FL – The Obama administration has sided with energy developers over environmentalists, approving the use of underwater blasts of sound to pinpoint oil and gas deposits in federal Atlantic Ocean waters.

The regulatory decision is the first real step toward what could be an economic transformation in East Coast states, potentially creating a new energy infrastructure, thousands of jobs and billions of dollars in tax revenue. But it dismayed people who owe their livelihoods to fisheries and tourism, and activists said it stains President Barack Obama’s environmental legacy.

“Opening vast stretches off the East Coast to oil and gas has no place in an otherwise historic agenda to combat climate change,” said Michael Jasny, a marine mammal expert with the Natural Resources Defense Council.

The cannons will substantially increase the noise pollution in Gulf Stream waters shared by whales, dolphins and turtles, sending powerful sound waves reverberating through the deep every ten seconds, for weeks at a time.

What Green Revolution? Coal Use Highest In 44 Years

OilPrice.com, By Nick Cunningham, June 18

U.S. President Barack Obama may be engaging in a “war on coal” with carbon regulations intended to shrink coal’s share of energy production, but worldwide, coal is in its strongest position in decades. In 2013, enough coal was burned to meet 30.1 percent of the world’s energy demands — its highest share since 1970, according to new data from BP’s Statistical Review of World Energy.

The findings are striking because of trends that appear to be pushing coal to the sidelines: An abundance of natural gas in the United States has utilities switching away from coal; Europe’s efforts to reduce greenhouse gas emissions have led to a high penetration of renewables in electricity markets; and China leads the world in annual installations of solar and wind.


ABC (AU): Brown coal project: $25m grant awarded to develop Loy Yang plant in Latrobe Valley
Deutsche Welle: German region backs brown coal, despite renewables drive


Are We Underestimating America’s Fracking Boom?

Check Out Sasol’s Energy Complex in Lake Charles, La.

The Wall Street Journal, By Dennis Berman, May 27

Start with exotic Nazi technology, take a detour with South African apartheidists, and add a bit role for Iranian imams. What you have is—what else? —one of the most improbable and important American business stories of the past decade.

It’s the tale of a company called Sasol, the former South African state oil company, which is embarking on what could be the single-largest foreign investment project in U.S. history.

Sasol is building a 3,034-acre energy complex near a bayou in Lake Charles, La. Tapping into cheap, fracked natural gas as well as the pipeline and shipping infrastructure along the Gulf Coast, Sasol plans to spend as much as $21 billion there.

It is expensive, elaborate and dirty work. Sasol plans to reduce, or “crack,” the gas into ethylene, a raw chemical used in plastics, paints and food packaging. It also plans to convert the gas into high-quality diesel and other fuels, using a process once advanced by Nazi scientists to power Panzer tanks. The state of Louisiana is even kicking in $2 billion of incentives to make it happen.

[…]

So let’s put it this way: We are building a Qatar on the Bayou. From whole cloth, companies are laying new cities of fertilizer plants, boron manufacturers, methanol terminals, polymer plants, ammonia factories and paper-finishing facilities. In computer renderings, the Sasol site looks like a fearsome, steel-fitted Angkor Wat.


Sasol upbeat as projects come on stream

The Citizen, By Sasha Planting, June 10

Standard and Poor’s, the credit ratings agency, has revised its outlook on energy and chemical company Sasol from negative to stable meaning that its foreign currency credit rating by S&P is now BBB/Stable/A-2.

[…]

Notably, in February this year the company commissioned its ethylene tetramerisation project in Lake Charles, Louisiana. The plant, the first commercial plant of its kind in the world, beneficiates [huh – nice one…] ethylene into products that are used in the manufacture of plastics that require elasticity and strength.

Sasol is also moving forward with plans for its huge ethane cracker and gas-to-liquids (GTL) facilities in Southwest Louisiana.

With an estimated total cost of between $16-$21 billion (R171.2 billion-R224.7 billion), these projects mark the largest single manufacturing investment in the history of Louisiana, and one of the largest foreign direct investment manufacturing projects in the US.

It’s obvious that Mr. Jindal has what it takes to be … The Next President of the United States!

GAO: Climate Change Threatens Energy Infrastructure

Climate Central, By Bobby Magill, March 10

Oil refineries and drilling platforms in the U.S. are vulnerable to sea level rise and greater storm surge. Fuel pipelines, barges, railways and storage tanks are vulnerable to melting permafrost and severe weather. Warming seas and water shortages put nuclear and other electric power plants at risk. Power lines can be blown away by hurricanes and other extreme weather.

In other words, all the infrastructure Americans rely on to heat their homes, power their lights and fuel their trains, trucks and cars is becoming more and more exposed to failure in a changing climate.

That may seem clear to any one of the 1.1 million people who lost power in the New York area during and after Hurricane Sandy, but those are the conclusions of a U.S Government Accountability Office (GAO) report released in January and just made public.

The report summarizes much of the research published in recent years about the vulnerability of U.S. energy infrastructure to a changing climate. It is a response to a request from members of Congress for details about risks posed by global warming, how infrastructure can be adapted to withstand the ravages of a changing climate and what role the federal government plays in helping make the adaptation happen.


Climate State: The Antarctic Half of the Global Thermohaline Circulation is Collapsing
Nature: Cessation of deep convection in the open Southern Ocean under anthropogenic climate change
Climate State: Does Freshwater Runoff in the Arctic change Ocean Circulation to Unlock Methane Hydrate in the Deep Ocean?

Arctic freshwater input into the North Pacific could serve as a catalyst for methane hydrate destabilization, an event suggested as a precursor to the onset of the PETM.

[…]

They conclude from their ocean model study that an initial increase in CO2 in the atmosphere, caused possibly by volcanic outgassing, would increase the strength of the hydrological cycle. These increases could cause a warming at intermediate depths within the ocean on a regional scale that could induce limited methane hydrate destabilization. They argue that this release of CH4 would then oxidize to CO2 in either the ocean or atmosphere and further exacerbate extremes in the hydrological cycle and eventually switch high southern latitude deep-water formation to high northern latitude deep-water formation. This switch would bring sudden warm water to the ocean bottoms and incite methane release on a global scale.

Robert Scribbler: The Arctic Methane Monster’s Nasty Little Helpers: Study Finds Ancient, Methane Producing, Archaea Gorge on Tundra Melt
Robert Scribbler: Arctic Heat Drives Sea Ice Back Into Record Low Territory At Top of Melt Season
The Guardian: Nasa-funded study: industrial civilisation [could be] headed for ‘irreversible collapse’?

These factors can lead to collapse when they converge to generate two crucial social features: “the stretching of resources due to the strain placed on the ecological carrying capacity”; and “the economic stratification of society into Elites [rich] and Masses (or “Commoners”) [poor]” These social phenomena have played “a central role in the character or in the process of the collapse,” in all such cases over “the last five thousand years.”

[…]

Although the study is largely theoretical, a number of other more empirically-focused studies – by KPMG and the UK Government Office of Science for instance – have warned that the convergence of food, water and energy crises could create a ‘perfect storm’ within about fifteen years. But these ‘business as usual’ forecasts could be very conservative.


Mother Jones: Contractor That Evaluated Greenhouse Gas Emissions for Keystone XL Report Had Ties to TransCanada
The State (SC): Former Obama adviser: Build Keystone XL pipeline
WSJ: Sen. Landrieu Steps Up Pressure on Kerry to Clear Keystone XL Pipeline

Ms. Landrieu is one of several vulnerable Democratic senators up for re-election this fall and busily burnishing their pro-business, pro-jobs credentials.

Sens. Mark Begich of Alaska, Mark Pryor of Arkansas, and Kay Hagan of North Carolina–all in the same boat–are also pushing hard for the pipeline’s approval, and signed a letter to the president urging approval.

US News: EPA to Lift Ban Barring BP From New Federal Contracts
ClimateProgress: Four Years After Deepwater Horizon Disaster, U.S. Agrees To Let BP Oil Rigs Back Into The Gulf

Washington Post: New (March 7) Post-ABC News poll: Keystone XL project overwhelmingly favored by Americans

Americans support the idea of constructing the Keystone XL oil pipeline between Canada and the United States by a nearly 3 to 1 margin, with 65 percent saying it should be approved and 22 percent opposed, according to a new Washington Post-ABC News poll.

The findings also show that the public thinks the massive project, which aims to ship 830,000 barrels of oil a day from Alberta and the northern Great Plains to refineries on the Gulf Coast, will produce significant economic benefits. Eighty-five percent say the pipeline would create a significant number of jobs, with 62 percent saying they “strongly” believed that to be the case.

At the same time, nearly half of those interviewed — 47 percent — say they think Keystone will pose a significant risk to the environment.

That so many Americans back the pipeline, even with environmental risks, highlights the quandary facing President Obama and his top aides as they weigh whether to approve the proposal.

Climate Progress: Sea Levels To Rise More Than Expected Due To Warming-Driven Surge In Greenland Ice Loss

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