Masters Of War

Come you masters of war You that build all the guns You that build the death planes You that build all the bombs You that hide behind walls You that hide behind desks I just want you to know I can see through your masks. You that never done nothin' But build to destroy You play with my world Like it's your little toy You put a gun in my hand And you hide from my eyes And you turn and run farther When the fast bullets fly. Like Judas of old You lie and deceive A world war can be won You want me to believe But I see through your eyes And I see through your brain Like I see through the water That runs down my drain. You fasten all the triggers For the others to fire Then you set back and watch When the death count gets higher You hide in your mansion' As young people's blood Flows out of their bodies And is buried in the mud. You've thrown the worst fear That can ever be hurled Fear to bring children Into the world For threatening my baby Unborn and unnamed You ain't worth the blood That runs in your veins. How much do I know To talk out of turn You might say that I'm young You might say I'm unlearned But there's one thing I know Though I'm younger than you That even Jesus would never Forgive what you do. Let me ask you one question Is your money that good Will it buy you forgiveness Do you think that it could I think you will find When your death takes its toll All the money you made Will never buy back your soul. And I hope that you die And your death'll come soon I will follow your casket In the pale afternoon And I'll watch while you're lowered Down to your deathbed And I'll stand over your grave 'Til I'm sure that you're dead.------- Bob Dylan 1963

Sunday, March 22, 2015

new Federal fracking rules and a push for oil exports in an otherwise quiet week

it almost seems odd that there were no oil bomb train explosions in the news this past week to report on, while the only 2 oil spills that turned up in the news were of about 10 barrels that occurred on a Ute reservation in southwest Colorado in February and was only reported this week, and that of a spill of about 100 gallons from a cargo ship at Wilmington on the Delaware River...earlier, there was a derailment of 13 rail cars & spill of some oil in southern Manitoba late last week, apparently with no fire or explosion, that slipped under the news coverage of the larger derailment and explosion in northern Ontario that dominated last week's news...and there was also a derailment of 2 cars of an 86 car freight train near Beacon New York that didn't involve an oil spill...

even North Dakota, which usually has a major oil spill or two hit the wires each week, seems to have escaped the week relatively unscathed, with just two brine spills of under 500 barrels each...in the first spill, a pipeline owned by Continental Resources leaked nearly 19,000 gallons of brine after it was struck by excavating equipment about 16 miles north of Tioga, a fairly remote location in northwest N. Dakota...the brine, which is several times saltier than seawater, was said to be contained on the site and did not threaten any waterways or wildlife...the second spill occurred at the site of a wastewater injection well in Bottineau County, about six miles north of Maxbass, when a piping connection failure resulted in a spill of 11,970 gallons of saltwater, which was also contained on the site...

now, just because we didn't hear of any other spills doesn't mean there weren't any...for instance, we rarely hear of any spills in Texas, where nearly half the US wells are located, likely because it goes with the territory in a state where the industry owns the regulators and is hence protected...in Colorado, where they have strict reporting and remediation rules written into law, the Colorado Oil and Gas Conservation Commission requires a written report within 24 hours of any spill greater than 5 barrels, and of any spill off site greater than 1 barrel...hence, in their Oil and Gas spill report of March 16, they reported 8 spills that occurred in between March 4th and March 12, most of them minor, with the largest being of 18 barrels of produced oil that leaked when a valve was left open at the back of a production tank at a well outside of Greeley...with requirements for such reporting being enforced, we know that more than 700 oil and gas spills occurred in Colorado in 2014, a total we can only guess at for other states...

the major fracking-related news of the week came on Friday afternoon, when the Interior Department released new rules for fracking on Federally owned and American Indian lands ....the key provision of these regulations is a requirement that frackers must now disclose the fracking chemicals used on such sites to the Bureau of Land Management through the website FracFocus within 30 days of completing their fracking operations; other rules include stricter specifications for well bores and casing, requirements to ensure that flowback, produced water, and other fluids are safely contained, and detailed record keeping and reporting requirements about each fracking operation that takes place on public lands...covering roughly 100,000 oil and gas wells on Federal and Indian lands, there were hundreds of reports on these new regulationsin the media Friday afternoon, but i doubt that many reporters had any more time to read through the 395 page pdf from the Department of the Interior than i did...

usually the Friday announcement of a policy initiative such as this is intended to bury the news and catch the opponents offguard, but the outline for these new regulations were telegraphed well in advance, so the oil industry was ready to respond, while their puppets in congress already had their lobbyist-supplied scripts written and waiting...by Friday afternoon, the Republicans in the house were already speechifying about blocking these regulations, without being clear how, while 27 Senate Republicans already introduced a bill to overturn them...meanwhile, the Independent Petroleum Association of America (IPAA) and Western Energy Alliance were already filing a lawsuit against the Interior Department, apparently on the disclosure requirements which they maintain are trade secrets...that the oil industry was unhappy does not mean that environmentalists were pleased, however, as groups such as Greenpeace and Americans Against Fracking called the new regulations a giveaway to the oil and gas industry...

in an issue we should start paying more attention to, the push to allow for exports of US crude oil seemed to be getting more traction this past week as well...as you'll recall, the export of US crude is prohibited by the Energy Policy and Conservation Act of 1975, which was passed on the heels of the Arab oil embargo, and except for the earlier administration approval of the export of ultralight oil from US shale wells, US exports of heavier grades of crude have generally been restricted to Canada and Mexico, both of whom we import more from than we export to...so while it's been a ongoing wet dream of the oil industry to get that export ban overturned, and it hasn't been uncommon to see an industry official advocate that the ban be lifted, there were several such calls this week leading up to and in the wake of a Senate Energy and Natural Resources Committee hearing on oil exports Thursday...while most of the arguments in favor of exports have previously suggested that allowing them would add gazillions of jobs to the 198,300 who work in oil & gas extraction now, oil companies packed this hearing with experts who testified that allowing exports would reduce the prices of gasoline in the US, and those pushing a host of geopolitical factors, suggesting we could use oil exports as a weapon against Iran and Russia...

let's be clear; if there's one policy change that will bring fracking back with a vengeance, it would be to allow domestic drillers to sell their crude overseas...over the past 5 years, WTI (West Texas Intermediate), the US benchmark price for crude oil, has generally been trading for about $10 a barrel less than the price of Brent oil, the similar international oil benchmark price...if we allow exports, that price gap will close, most likely to the upside, because it's been the domestic glut of oil that has been holding US oil prices lower...so in addition to tearing up more of our countryside with the kind of industrial activities we've seen are associated with fracking, we'll be seeing even more oil and brine spills, more oil bomb trains crisscrossing the country, more injection well and fracking induced earthquakes, and higher prices for all the oil based products most of us still buy, all so that the oil companies can extract a few more bucks of profit out of each barrel...and this applies not just to the current push in Congress to allow for exports of US crude, but it also applies to the two trade agreements being negotiated in secret by the administration at the behest of 600 multinational corporations...if Obama gets trade promotion authority (TPA) from Congress, also known as "fast track", which the Republicans tend to support, these two trade deals, which would mandate oil and gas exports to Asia and Europe in the same way that NAFTA clears them for Mexico and Canada, can be passed without a public hearing or debate, on a simple majority yes or no vote of Congress...even worse, draining America first will leave us vulnerable to higher prices and the whims of international oil producers in the future, after our fracking boom runs its course; in the most recent forecast from the Energy Department, US oil production is expected to peak in 2020 and gradually decline from there...meanwhile, they also project the average price for oil to rise to $234.53 a barrel by 2040...so if we let the oil companies drain our oil basins to sell that oil at $50 to $60 a barrel now, we'll be paying them 4 to 5 times as much to import whatever oil we still need 25 years into the future...

…..

otherwise, this week's story on oil production, inventories and rig count was pretty much the same as it's been...our oil production for the 2nd week in March averaged 9,419,000 barrels a day, up .57% from the 9,366,000 barrels per day rate of the prior week, and 14.7% than the 8,215,000 barrels per day that we produced in the 2nd week of March last year...similarly, our inventories of crude in storage reached yet another record. increasing by 9.6 million barrels from the previous week to 458.5 million barrels; that's 22% more than the 375,852 barrels of oil stored commercially in the US in the 2nd week of March a year ago...the weekly Petroleum Status Report (62 pp pdf) also showed that US crude oil imports averaged 7.5 million barrels per day last week, up by 703,000 barrels a day from our imports in the first week of March...in the four weeks ending March 13th, US crude oil imports averaged over 7.2 million barrels per day, 0.6% higher than the same 4 week period last week...so you see that despite our record production, our imports of oil are still rising to cover the contango trade...

oil field activity continued to slow, however, as the number of US rigs drilling for oil this week fell by 41 to 825, and the count of rigs drilling for natural gas fell by 15 to 242; this leaves 648 less oil rigs operating than a year ago, and 48 less gas rigs than the same week in 2014 ...the Baker Hughes weekly rig summary also showed that of the 1069 rigs operating as of March 20th, 829 were engaged in horizontal drilling, down 20 from the prior week, 148 were drilling straight down, 18 less than the prior week, and 92 were engaged in directional drilling, again a drop of 18 rigs from the week of March 13th count...and in an oddity, 11 of the 46 Gulf of Mexico platforms that were working last week and 6 of the 8 rigs drilling on inland lakes were shut down; in prior weeks, most of the closures had been land based...nonetheless, this week also saw 39 fewer land based rigs operating, with just 1030 operating as of March 20th...once again, the Permian Basin in west Texas saw the greatest decrease in activity, with 19 rigs taken out of service there; combined with losses of 8 rigs in the Eagle Ford and more elsewhere, that left Texas with 465 active rigs, 36 fewer than last week...with the Gulf shutdowns, Louisiana's rig count fell by 18 to 75; in addition, New Mexico's count dropped by 5, while North Dakota and Ohio both saw 3 rigs shut down...Ohio now has 28 rigs operating, down from 35 two weeks ago...

while the number of rigs actively drilling for oil and gas in the US fell for the 15th consecutive week, the rig count story that everyone seems to be missing is occurring north of the border...in the past two weeks, Canadian drillers have shut down 160 rigs, more than half of the 300 they had running on March 6th, leaving them with just 140 operating...moreover, 120 of the rigs idled in Canada over this period were drilling for oil, so now they only have 30 oil rigs left up, meaning that drilling for oil in Canada has just about stopped...while their gas drilling operations are also down, it's not as severe a cutback, as they shut down 15 gas rigs last week and another 25 this week, leaving them with 110 gas rigs still in use...this leaves Canada down 249 rigs from last year's 389, with oil rigs down from 210 to 30 and gas rigs down from 135 to 110...quite interestingly, that Canadian oil would shut down first was one of the first things we discovered when we compared the breakeven prices for production in various US and worldwide oil fields the weekend after the Thanksgiving OPEC oil meeting...

~~~~~~~~~~~~~~~~more at Focus on Fracking~~~~~~~~~~~~~~~

No comments: