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, May 10, 2015

another oil train burns & another pipeline spills; with oil supply down, is fracking coming back?

after a lull of nearly 2 months, there was once again another fiery derailment of an oil train carrying Bakken crude this week, this time in North Dakota itself...on Wednesday morning, a 109-car Burlington Northern Santa Fe train saw 10 of its cars leave the tracks and 6 of those burst into flames, about two miles outside of the small town of Heimdal, North Dakota...recalling the explosive train wreck of oil tankers in nearby Casselton, where 400,000 gallons of crude were spilled on December 30 2013, authorities evacuated the entire population of Heimdal and nearby farms while first responders fought the blaze..fortunately, this load of Bakken crude had been treated to remove the most volatile compounds, and as a result was less volatile than the mandated limit, so firefighters were able to get control of the fire within a day, allowing residents to return home...BNSF managed to get the rails repaired and reopened for more oil trains by Friday afternoon, while the oil remaining in the derailed cars was being offloaded onto tanker trucks...

of course, the pipeline advocates think these exploding trains are just great, as it presents them with the opportunity to present legislation to expedite taking property for pipelines in energy producing states under the the guise of saving America from the bomb trains...Senators Shelley Moore Capito (R-W.Va.), Heidi Heitkamp (D-N.D.) and Bill Cassidy, M.D. (R-La.) introduced legislation this week, called the Oil and Gas Production and Distribution Reform Act, intended to bypass the normal approval process for interstate pipelines in light of local citizen interventions and protests in several states, including those against the Nexus pipeline in Northeast Ohio this week, where surveyors employed by the company are now trespassing on privately owned property without any owner's foreknowledge or consent...a strangely similar bill, H.R.161, the Natural Gas Pipeline Permitting Reform Act, is moving thru the House, with bills in both Houses submitted under the long title of "To provide for the timely consideration of all licenses, permits, and approvals required under Federal law with respect to oil and gas production and distribution"

however, North Dakota also saw a major pipeline break this week, which seems to show that no method of handling dangerous or toxic liquids devised by fallible humans can ever be considered safe and foolproof...a North Dakota Department of Health official informed the media on Wednesday (the same day as the train fire) that 63,000 gallons of oil well brine had leaked from an underground pipeline and flowed into Smishek Lake, about 75 miles northeast of the oil boomtown Williston. which has on occasion seen more than one pipeline break nearby in less than a week....considered by health officials a “significant” spill, this brine was many times saltier than sea water and could easily kill vegetation, and although the contaminated lake is not a source of drinking water, it is (or was) a popular fishing and camping destination listed with the North Dakota Tourism Division...

returning our focus back to oil field activity and our national oil supply, we appear to be transitioning from the unsustainable period we had witnessed earlier this year, where our oil output and supply continued to skyrocket while oil rigs shut down at a record pace, as this week saw our oil production slip, US oil imports drop by more than 10%, domestic crude oil inventories fall for the fist time four months, and the number of rigs operating in the US fall by the least over the past 22 weeks...the drop in our field production of crude oil, from 9,373,000 barrels per day last week to 9,369,000 barrels per day this week, was less than 0.05%, but it fits the pattern that has seen US oil production plateau since mid March at a level that has remained more than 12% higher than the same weeks a year earlier...our crude oil imports, meanwhile, fell from 7.446 million barrels per day during the week of April 24th to 6.541 million barrels per day last week, a drop 905,000 barrels per day, to the lowest weekly level of imports since the 3rd week in May last year...thus the weekly Petroleum Status Report (62 pp pdf) from the Energy Information Administration informs us that US crude oil imports averaged over 7.2 million barrels per day over the last four weeks, 5.0% below the same four-week period last year, while just two weeks ago, our monthly oil imports were running ahead of last year's totals...so, with production slipping and imports way down, we used more oil than was supplied for the first time since the week ending January 2nd, as U.S. commercial crude oil in storage dropped by 3.88 million barrels from last week's report, although at 487.03 million barrels, our crude oil inventories are still at the highest level for this time of year in at least the last 80 years...

the excitement of seeing our oil supply drop for the first time in four months briefly pushed the price of oil to above $60 a barrel for a day or two, and that in turn brought all the frackers who've been sitting on their disassembled rigs out of the woodwork...oil & gas producer EOG Resources announced that they planned to begin fracking hundreds of wells in North Dakota and Texas if they could get prices for their oil of around $65 per barrel, while earlier Whiting Petroleum announced it would begin to add rigs if crude prices rose to $70 a barrel...so while it appears that the frack boys are chomping at the bit to get back to work, we are still far from a normal environment that would allow for a sustained supply side increase in prices...this can easily be seen in the graphic below, which comes from "This Week in Petroleum", a weekly summary from the EIA...

oil inventories as of May 1st:

May 1 2015 oil inventories

the shaded area in the graph above represents the range of US oil inventories as reported weekly by the EIA over the past 5 years for any given time of year, essentially showing us the normal range of oil inventories as they fluctuate from season to season...the blue line then shows the recent track of US oil inventories over the period from mid 2013 to mid 2015....you can see that even though inventories are down a bit this week, at the current level of 487.03 million barrels they are still 22.5% above the seasonally high level of the same week last year, much higher than they've ever been in recent years, and in fact much higher than they've been in the 80 years of EIA record keeping, which had never seen the 400 million barrel level breached before this year...also note in the shaded area that inventories of oil always decline over the summer period, from May through August, so a downturn of our oil stocks at this time of year is only to be expected...

meanwhile, as we noted, there were only 11 drilling rigs taken out of service this week, so the US rig count data has not changed much from last week...Baker Hughes reported that in the week ending May 8, the number of oil rigs operating in the US this week fell by 11 to 699, gas rigs fell by 1 to 221, and one miscellaneous rig was added, leaving 894 rigs still operating at week end...that's 961 fewer than the same week last year, when 1528 oil rigs 323 gas rigs and 4 miscellaneous rigs were operating...Canadians, meanwhile, shut down one oil rig and 3 gas rigs, leaving them with 16 oil rigs and 59 gas rigs for a total of 75....those taken out of service in the US this week included 7 horizontal rigs, leaving 692, 5 directional rigs, leaving 88 of those, while a vertical rig was added bring the vertical rig count up to 114....6 of the rigs stacked this week had been operating in Oklahoma, 3 were in Louisiana and 2 were in New Mexico, in addition, Arkansas, California, Kansas, Ohio, Texas, Utah and West Virginia each saw one rig idled, while Colorado drillers added two rigs and North Dakota drillers added one...the rig counts for all other states remained unchanged...

this week also saw the release of the international rig counts for the month of April, which are an average of the number of rigs running during the month for each area and hence differ from the weekly rig counts for North America...excluding the US and Canada, the international rig count for April was at 1,202, 49 lower that the rig count of 1,251 in March, and down 147 rigs from the 1,349 international rigs counted in April of last year...of those, offshore rigs were down 16 to 300, and down 29 from the 329 offshore drilling platforms running a year ago...most of the rigs taken out of service during April had been running in Latin America, where 26 rigs were shut down, leaving 325….of those idled, 7 had been operating in Venezuela, 6 were Colombian, and 5 rigs were shut down in Argentina...in addition, Europe saw a reduction of 16 rigs, Africa saw 5 fewer, as did the Asia-Pacific region...only the Middle East saw an increase in April, with an aggregate of 3 additional rigs, as Kuwait shut down 3, Oman added 4, Qatar added 3, Iraq and Egypt each dropped 1, and the Saudis added 1, bringing their total to 126, the most in the region...

(more here)

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