Category Archives: fossil fuels

Huffington Post: Natural Gas Rig Blowout Highlights Dangers Of Drilling In The Gulf

http://www.huffingtonpost.com/2013/07/26/natural-gas-rig-blowout_n_3660717.html?utm_hp_ref=fb&src=sp&comm_ref=false

I’m concerned about the 27,000 old wells that have not been decommissioned and are prone to leak. They should be removed and the wellheads sealed. DV

Posted: 07/26/2013 4:36 pm EDT

From Mother Nature Network’s Russell McLendon:

Flames erupted from an offshore drilling rig in the Gulf of Mexico Tuesday night, torching a natural gas plume that had been leaking since a blowout earlier in the day. All 44 rig workers were evacuated before the fire began, according to the U.S. Bureau of Safety and Environmental Enforcement, but the rig continued spewing gas until Thursday morning, when its scorched frame finally collapsed enough to cut off the leak.

In addition to the cloud of natural gas rising from the rig, the BSEE had observed a light sheen on the water’s surface measuring half a mile by 50 feet. The well’s owner, Walter Oil & Gas, was reportedly making preparations to drill a relief well before the rig “bridged over,” clogging the well with sand and sediment. The Associated Press reported Thursday afternoon that the fire is out, the rig appears stable and no sheen is visible.

Located 55 miles off the Louisiana coast, the well’s unmanned platform wasn’t producing gas when the blowout occurred. The 44 workers were on an adjacent, portable rig that was drilling a “sidetrack well” into the original well bore. It’s unclear what ignited the gas, the BSEE says, and a diagnosis will likely be delayed by response and cleanup efforts.

“BSEE’s efforts today are focused on bringing this loss of well control event to a safe resolution,” says Lars Herbst, BSEE Gulf of Mexico regional director, in a statement issued Tuesday. “Offshore oil and gas operators need to re-affirm their aggressive approach to the safety of well operations in light of this event and other recent well control events.”

The most salient such event in recent memory is the 2010 Deepwater Horizon disaster, which killed 11 people and released 200 million gallons of crude oil into the Gulf. Officials say there’s little chance this week’s blowout will come anywhere close to matching that level of devastation, but it does cast a new spotlight on a long-running risk looming off the U.S. Gulf Coast. Earlier this month, for example, another inactive gas well ruptured off the Louisiana coast, leaking a small amount of gas and liquid before it was plugged.

The Gulf of Mexico is dotted with nearly 4,000 active oil and gas platforms (pictured above), plus a sprawling array of drilling rigs, supply ships and pipelines. This seafaring infrastructure is key to a bustling energy sector across the Gulf Coast, especially in Louisiana and Texas, but it also poses a grave danger to nearby people and wildlife.

According to the Centers for Disease Control and Prevention, the U.S. oil and gas extraction industry had a death rate of 27.1 per 100,000 workers between 2003 and 2010. That’s seven times higher than the 3.8 deaths per 100,000 workers across all U.S. industries. “The 11 lives lost in the 2010 Deepwater Horizon explosion provide a reminder of the hazards involved in offshore drilling,” the CDC report stated.

Beyond the threat from active wells and drilling, the Gulf is also haunted by more than 27,000 abandoned oil and gas wells, most of which undergo no monitoring for leaks. Some of the region’s oldest wells were abandoned in the 1940s, and many others are only considered “temporarily abandoned,” thus facing less strict sealing requirements.

These wells could be seeping oil, methane or other toxic substances for years, potentially sickening already-threatened wildlife like sea turtles or cetaceans. And as researchers have learned since 2010, large amounts of oil and gas can wreak havoc with microbial life and coral colonies, both of which are key to the Gulf’s food web – including its lucrative seafood industry. Although the Gulf is home to microbes that evolved to feed on natural oil and gas seeps, too much unnatural leaking and spilling can smother them.

“It’s important to keep in mind that if you keep pumping hydrocarbons into the system, you’ll eventually overwhelm it,” University of Georgia marine scientist Samantha Joye told MNN earlier this year, referring to the 2010 spill on its three-year anniversary.

Closer to shore, oil and gas development has already transformed many Gulf Coast wetlands, as manmade canals and other extraction-related projects have disrupted the flow of water and sediments that gradually build coastal bayous. The region has lost about 1,900 square miles of land in the past 80 years, and Louisiana alone is projected to lose another 1,750 square miles by 2060. Not only do these marshes house important wildlife, but they also serve as a protective buffer against hurricanes.

Recognizing this risk, Louisiana officials filed a lawsuit Wednesday against dozens of energy companies, seeking damages for decades of harm to coastal wetlands. Filed coincidentally as a leaking gas rig burned offshore, the suit cites “a mercilessly efficient, continuously expanding system of ecological destruction,” according to the New York Times, and hints at evolving attitudes in a region that has prospered from drilling but also suffered from lost tourism and seafood income after the Deepwater Horizon spill.

“Coastal economies, which depend on healthy oceans, simply cannot afford more offshore drilling disasters,” says Jacqueline Savitz, deputy vice president for the environmental group Oceana, in a statement released Wednesday about the latest gas blowout. “This is yet another reminder that offshore drilling remains dirty and dangerous.”

Editor’s Note: This post has been updated since it was first published on July 24, 2013.

Special thanks to Richard Charter

Fuel Fix: Perry to lawmakers: Do more to advance offshore drilling

http://fuelfix.com/blog/2013/07/19/perry-to-lawmakers-do-more-to-advance-offshore-drilling/

Posted on July 19, 2013 at 3:08 pm by Jennifer A. Dlouhy

ric petty
Texas Gov. Rick Perry prepares for a presidential debate in October 2011. AP Photo/Scott Eells, Pool)

Congress can do more to advance offshore drilling in the Gulf of Mexico and Atlantic Ocean while boosting the economies of coastal states, eight governors said Friday.

Options rage from giving states a greater share of federal drilling royalties to passing legislation that would force the Interior Department to make more coastal tracts available for oil and gas development, the group of coastal governors said.

The governors, including Texas’ Rick Perry, made their pleas in a letter to their congressional delegations in the nation’s capital.

“During this congress, legislators will consider several matters that directly and indirectly affect the future of offshore energy development,” said the governors, who all represent coastal states. “As our federal representatives, we strongly urge you to act in concert to champion outer continental shelf energy and, by effect, the vitality of our coastal and state economies.”

The group – banded together as the OCS Governors Coalition – offered five recommendations.

At the top of their list: expanding an existing program for sharing offshore drilling revenue with states near the activity.

“Currently, the Atlantic coast states and Alaska are generally not eligible to share in revenues generated by oil, gas and renewable energy development in the outer continental shelf,” the group said. “These states should be treated equitably with all states.”

The governors may be preaching to the choir, since several of the recipients already have sponsored legislation that would open up the revenue-sharing program – which is set to begin for the Gulf Coast in 2017 – to all coastal states.

The Senate Energy and Natural Resources Committee is set next week to hold a hearing on one of those proposals, a measure by Sens. Lisa Murkowski, R-Alaska, and Mary Landrieu, D-La., that would also move up the timeline for the Gulf revenue sharing program so it starts sooner. Their measure also would do away with a $500 million annual cap on what Gulf states can collect.

Under their bill, every state with ocean views would be able to participate and collect up to 37.5 percent of the royalties from any offshore energy production, whether it comes from oil and gas or wind and solar.

But the proposal is controversial – particular among offshore drilling foes, who believe the lure of revenue could encourage cash-strapped states to support oil and gas development in nearby waters.

In a March letter to Wyden and Murkowski, eight senators insisted they would “vigorously oppose any effort that expands or provides further incentive for offshore oil and gas drilling in areas where drilling is currently prohibited.”

The coastal governors also endorse plans to expand access to new outer continental shelf areas. The Obama administration’s five-year plan for selling offshore oil and gas leases through June 2017 contains a dozen auctions of territory in the Gulf of Mexico and three of tracts near Alaska.

But regulators at the Interior Department’s Bureau of Ocean Energy Management opted not to plan an auction of leases near Virginia, where a sale had previously been scheduled (and canceled after the 2010 Gulf spill). Some Alaskan areas and southern California acreage, near existing development, also were left out of the plan.

The coastal governors say the administration should have opened access to new frontiers and should finish its ongoing review of the environmental effects of seismic research along the Atlantic that could help pinpoint possible oil and gas reserves.

OCS governors letter – this is the version sent to Sen. Mary Landrieu (see attached file)
OCS-governors-letter-this-is-the-version-sent-to-Sen-Mary-Landrieu.pdf OCS-governors-letter-this-is-the-version-sent-to-Sen-Mary-Landrieu.pdf
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Special thanks to Richard Charter

Common Dreams: Lac-Mégantic Victims Challenge Corporations Behind Deadly Explosion Death toll climbs to 42 as environmental costs continue to mount

Published on Friday, July 19, 2013 by Common Dreams
http://www.commondreams.org/headline/2013/07/19-0
– Lauren McCauley, staff writer

lac_megantic
Victims of the train crashed which devastated the small town of Lac-Megantic, Quebec have filed suit against the corporations behind the devastation. (Photo: Reuters)

Two residents of Lac-Mégantic, Quebec have filed a class action lawsuit against the corporations behind the July 6 train derailment and explosion which killed nearly fifty people and devastated the small Canadian town.

Yannick Gagne and Guy Ouellet, who together own the Musi-Cafe—a bar that was crowded with people the night it was destroyed by the blast—are seeking damages from the Maine-based Montreal Maine & Atlantic Railway (MM&A), Irving Oil, World Fuel Services and its subsidiary Dakota Plains Holdings, which extracted the crude oil the train was carrying.

According to the Portland Press Herald, the plaintiffs filed a motion Monday in Quebec Superior Court seeking to authorize a class-action suit against the railway company. On Wednesday, they amended the motion to include the oil and extraction companies.

The unattended train was carrying 72 cars of crude oil from North Dakota’s Bakken shale fields to an Irving Oil refinery in Saint John, New Brunswick when it derailed initiating an explosion and fireball which engulfed the small downtown.

Meanwhile, the death toll for the disaster has risen to 42 after four more bodies were discovered Thursday. Eight more people remain unaccounted for though are presumed to be dead.

The impact on the town of 6,000 has been severe. Beyond the crippling effect of the casualties, the untold environmental costs continue to unfold.

An estimated 250,000 to 300,000 liters of oil spilled into Lac-Mégantic, according to Quebec’s Environment Minister. And, as the Globe and Mail report, traces of oil were visible in the Chaudière River “and the air was pungent with the scent of oil.”

“Multi-coloured sheens could be seen on the surface of the water in areas where the current slowed, and the grass along some stretches of the shoreline was brown and straw-like,” they continue.

Following the accident, finger pointing prevailed among the major corporations involved.

Edward Burkhardt, CEO of MM&A as well as its much larger parent company, Rail World Inc., had initially attempted to blame local firefighters before claiming the fault lay with a train employee for not properly setting the brakes—despite the fact that he has continuously opposed arguments by railway employees who have long-insisted that one-man crews were too dangerous.

Similarly, a spokesman for Irving Oil—whose crude fueled the small town’s incineration—told the Associated Press, “We did not own or control the crude oil or its transportation at any time.”

Of the pending suit, the Press Herald continues:

The motion claims that the companies failed to ensure the oil was properly secured and safely transported. The lawsuit would seek compensation for any person or business affected directly or indirectly by the disaster.

It was not known Thursday when the court will rule on the motion.

If a Quebec Superior Court judge approves the motion, the lawsuit could be among the largest in Canadian history, though according to Jeff Orenstein, a lawyer from one of the firms working on the suit, no dollar amount on the damages sought will be available for some time.

“It will require interviews with the people of the city and expert evaluators as well,” Orenstein said. “There is no number I can pin down without much further research and expertise.”

_____________________

Posted by Pear Energy: Who Pays the Cost of Fracking? a new report by Environment America Research and Policy Center

http://pearenergy.blogspot.com/2013/07/who-pays-cost-of-fracking.html
Posted by Pear Energy
Raising new concerns about a little-examined dimension of the fracking debate, Environment America Research & Policy Center today released a report analyzing state and federal financial assurance requirements for oil and gas drilling operations. As fracking expands at a frenzied pace in several states and federal officials consider allowing fracking near national parks and forests and key drinking water sources, Who Pays the Costs of Fracking? reveals current bonding requirements are inadequate to cover the costs of damage from gas drilling.

Read the full report by clicking below:
Who Pays the Cost of Fracking_vUS screen

Just reclaiming a fracking site can cost hundreds of thousands of dollars, and the damage done by fracking—from contaminated groundwater to ruined roads—can cost millions of dollars. But today’s report shows that:

The Bureau of Land Management (BLM) generally requires drillers to post bonds of only $10,000 per lease or a blanket bond of only $25,000 for all wells in any one state;
All but eight states require bonds of less than $50,000; and
In most cases, these bonds only cover the cost of site reclamation and well plugging, providing little or no up-front financial assurance for the broader damage done by fracking.

“This appalling lack of financial assurance dramatically increases the risks that our communities, our drinking water and our natural heritage face from fracking,” observed John Rumpler, senior attorney with Environment America Research & Policy Center and a co-author of the report.
Today’s report comes as the oil and gas industry is seeking to frack in several national forests and other sources of drinking water for millions of Americans—including George Washington National Forest in Virginia, White River National Forest in Colorado, Otero Mesa in New Mexico, Wayne National Forest in Ohio and the Delaware River Basin.

“It’s bad enough to think that fracking could pollute major sources of drinking water,” said Rumpler. “The fact that we could wind up paying the clean-up bill as well just adds insult to injury.”
Environment America is urging the BLM to implement a key recommendation of the administration’s advisory panel on fracking, which is the “preservation of unique and/or sensitive areas as off limits to drilling …”

The report shows that financial assurance requirements at the state-level are also quite weak in areas at the center of the current fracking boom—including in Colorado, New Mexico, Ohio and Pennsylvania.

Of particular concern for financial accountability are the long-term costs of fracking. According to the report, across the nation by 2006 there were already 59,000 abandoned oil and gas wells and at least another 90,000 whose status is unknown. The potential cost for just plugging these wells exceeds $780 billion.

“From coal to oil to mining, we’ve seen every boom of extraction leave a legacy of pollution that future generations are left to grapple with,” observed Rumpler. “Weak financial assurance requirements virtually guarantee the same fate wherever fracking is allowed.”

Bloomberg: U.S. Gulf Oil Profits Lure $16 Billion More Rigs by 2015

http://www.bloomberg.com/news/2013-07-16/u-s-gulf-oil-profits-lure-16-billion-more-rigs-by-2015.html

By David Wethe – Jul 17, 2013 8:51 AM PT

oil rig
The Royal Dutch Shell Plc Olympus tension leg platform (TLP) is seen at dawn as it sets sail from Kiewit Offshore Services in Ingleside, Texas, U.S., on Saturday, July 13, 2013. Olympus, Shell’s biggest constructed tension leg platform, started the ten day, 425-mile voyage to Mars B Field in the Gulf of Mexico on July 13.

The deep-water Gulf of Mexico, shut down after BP Plc (BP/)’s record oil spill in 2010, has rebounded to become the fastest growing offshore market in the world.

The number of rigs operating in waters deeper than 1,000 feet (300 meters) in the U.S. Gulf will grow to 60 by the end of 2015, said Brian Uhlmer, an analyst at Global Hunter Securities LLC in Houston. As of last week, there were 36 rigs working in those waters, according to industry researcher IHS Petrodata.

Producers will need $16 billion worth of additional rigs to handle the expanded drilling, analysts including Uhlmer estimate. Demand is driven in part by exploration successes in the lower tertiary, a geologic layer about 20,000 feet below the sea floor containing giant crude deposits that producers are only now figuring out how to tap. Companies such as Chevron Corp (CVX). and Anadarko Petroleum Corp (APC). must do more drilling to turn large discoveries into producing wells — as many as 20 wells for each find.

“The Gulf had more than its fair share of discoveries,” Chris Beckett, chief executive officer at Pacific Drilling SA (PDSA), said in an interview. “Right now, the Gulf is the fastest growing deep-water region in the world.”

The revival will add to surging crude oil supplies from the U.S. shale boom, with Gulf production climbing 23 percent to 1.55 million barrels a day by December 2014 from 1.26 million in March, according to the U.S. Energy Information Administration.

Under-appreciated Growth
While deep-water exploration in the Gulf of Mexico has been increasing since 2011, the magnitude of the growth and the potential for revenue and profit for the service companies is under appreciated, Jud Bailey, an analyst at International Strategy & Investment Group in Houston, said in an interview. Offshore contractors from Schlumberger Ltd. (SLB) to Pacific Drilling are benefiting from the region’s growth spurt.

Hornbeck Offshore Services Inc (HOS). and other contractors that provide supply vessels to the giant drill ships than can work in water depths of more than two miles are among companies that may reap the biggest benefit from a rebounding Gulf, James West, an analyst at Barclays Plc in New York, said in an e-mail.

Hornbeck is expected to more than double adjusted earnings to $5.56 a share, from an estimated $2.43 this year, according to the average of five analysts’ estimates compiled by Bloomberg.

Drilling rig contractors Rowan Co. Plc and Noble Corp (NE)., which are building some of the world’s most expensive oil rigs to operate in some of the deepest areas offshore, are also expected to at least double earnings per share in the same period.

Drilling Moratorium
The blowout at BP’s Macondo well in April 2010 killed 11 workers, injured 17 and triggered an 87-day oil spill that fouled thousands of square miles and shut much of the Gulf to fishing for months. The U.S. suspended drilling in the Gulf for five months, and even after activity restarted, obtaining permits for drilling was slow as federal regulators stiffened safety rules.

As a result, some deep-water drilling rigs migrated to other exploration frontiers such as offshore West Africa and Brazil where work continued. Now some of those rigs are returning, though most of the Gulf’s rig growth will come from newly ordered, more sophisticated deep-water vessels, Bailey said. Better financing terms from the shipyards, put in place in late 2010, are helping fuel a record number of orders for new deep-water rigs around the world, David Smith, an analyst at Johnson Rice & Co. in Houston, said in a phone interview.

Support Structure
The Gulf’s prosperity today is helped by the large offshore industry already in place along the U.S. Gulf Coast. With infrastructure such as pipelines, ports and supply vessels readily available, producers are able to move quickly from drilling discovery wells to developing the fields. Meanwhile, government permitting has picked up since mid-2011, giving contractors and their customers more confidence that their work can continue, Smith said.

Even though the rules are stricter post-Macondo, the U.S. Gulf still provides a more stable operating environment than other frontier drilling regions around the world, where foreign governments can change the rules on producers, Smith said.

The lower operating costs in the Gulf of Mexico make the region more profitable for service contractors than places such as Brazil and Africa, Global Hunter’s Uhlmer said.

A booming offshore U.S. industry comes at a welcome time for diversified oilfield servicers that have struggled with an oversupplied hydraulic fracturing market onshore in the U.S. and Canada that has increased competition and lowered prices. Servicers including Schlumberger and Baker Hughes Inc (BHI). may exceed analysts’ estimates for second-quarter revenue from the Gulf driven by “a solid bump in deep-water activity,” Bailey wrote in a June 28 note to investors.

Better Vision
Schlumberger and Baker Hughes, among the world’s three largest service providers, will report earnings July 19.

“Drilling activity looks like it’s going to start really ramping up here in the Gulf,” Brian Youngberg, an analyst at Edward Jones in St. Louis, who rates Schlumberger shares a buy and owns none. “That’s a very strong positive for the oil services including Schlumberger.”

Improved technology such as seismic imaging, which bounces sound waves off the ocean floor to map pockets of underground oil, has enabled companies to more accurately hunt for crude under layers of salt in the earth’s crust, Beckett said. That’s helped fix one of the biggest challenges in the region from 10 years ago.

“The limitation on the ultra-deepwater in the Gulf of Mexico at the time was the ability to see under the salt,” said Beckett, who spent a decade running Schlumberger’s onshore seismic business. “Now we’re in an environment where you can drill those very expensive subsalt wells with a degree of confidence.”

Rig Orders
Most of the Gulf rig expansion is fueled by newly built rigs rolling out of the shipyards, more so than existing rigs relocating from other parts of the world, Smith said. Lower prices from the shipyards and easier financing terms have induced more construction, he said.

The global industry is in the midst of the fattest pipeline of orders for new deep-water rigs since the advent of deep-water drilling in the 1970s, according to IHS Petrodata. Vessels expected to be delivered between this year and 2019 will be more than double the 39 delivered between 2003 and 2009.

Last year’s 52 ultra-deepwater discoveries around the world, in about 7,500 feet of water or greater, made for a record year in the offshore industry, David Williams, chief executive officer at Noble, told analysts and investors in a presentation earlier this year.

In the Gulf of Mexico, the story is evolving into development over exploration, Uhlmer said.
“It’s more: ‘OK, we know what we have out here, we spent a lot of money buying the right blocks, and now we need to develop them,'” he said. “That’s going to provide you more growth than anything.”

To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net
To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

Special thanks to Richard Charter