Blog Archive

Tuesday, September 17, 2013

From rjs: working at the tar sands; Exxon illegal dumping; Political fallout from proposed natgas regs; China; fracking

from rjs:

Obama Trying to Escape Political Fallout From Natural Gas Fracking Proposals - Forbes: The Obama administration is softening its approach to natural gas drilling. But in doing so, it is now trying to escape the political fallout from its most recent proposals on how to regulate hydraulic fracturing. Public comment has just ended with respect to the administration’s proposed rules for fracking, which is applying the use of sand, water and chemicals to retrieve shale gas deposits held in rock formations deep underground. A million letters have been sent to the Department of Interior’s Bureau of Land Management, which oversees 600 million acres of federal and Indian properties. “We accept new regulations all the time,” says Rock Zierman, of the California Independent Petroleum Association, in a phone interview. “We are Okay with new regulations as long as they are realistic and they are accomplishing something. But the federal government set up a system 30 years ago whereby it gave the states the power to regulate, and then it audits them.” Democrats on the House Committee on Natural Resources, however, are taking a high-profile position in opposition to what they say are watered-down rules that allow natural gas producers to avoid publicly disclosing the chemicals they use to drill. They are also concerned that the industry has been able to win concessions from federal regulators, allowing it to self-police and to test only a single well for “fugitive” releases, especially methane that is the most potent of all greenhouse gases.

Charged With Illegally Dumping Polluted Fracking Fluid, Exxon Claims ‘No Lasting Environmental Impact’ -- Pennsylvania’s Attorney General has filed criminal charges against ExxonMobil for illegally dumping tens of thousands of gallons of hydraulic fracturing waste at a drilling site in 2010. The Exxon subsidiary, XTO Energy, had removed a plug from a wastewater tank, leading to 57,000 gallons of contaminated water spilling into the soil. The Exxon subsidiary has contested the criminal charges, claiming there was “no lasting environmental impact,” and it can “discourage good environmental practices” from guilty companies. “The action tells oil and gas operators that setting up infrastructure to recycle produced water exposes them to the risk of significant legal and financial penalties should a small release occur.” In July, XTO had agreed to several fines, including $20 million to improve its facilities treating wastewater. The company’s response raises one good point about fracking practices: How much to disclose to the public is a largely self-regulated practice.Thanks to laws pushed by corporate front groups like American Legislative Exchange Council, sponsored by ExxonMobil, states have allowed minimum disclosure of the chemicals used in fracking fluid. Pennsylvania now requires disclosure to regulators; however, it has a “gag rule” on the health risks. Meanwhile, a July study found that the closer residents live to wells used in fracking, the more likely drinking water is contaminated, with 115 of 141 wells found to contain methane.

The Failure of Fracking - Betting Our Futures on Well Bore Integrity - As a geoscientist with nearly three decades of experience in the oil industry, I have been watching the debate on fracking (or as we called it, "fracing") with great interest.  After a recent discussion with someone who stated that there had never been a blowout related to fracking like there was on BP's Macondo well, I thought that it was time to help explain exactly what fracking is and where the potential problems lie from a geoscientific viewpoint.  Fracking is a production enhancement technique that has been in use for decades in low permeability reservoirs.  Twenty years ago (or even less), fracking involved pumping what we considered to be large volumes of sand or gel (the material that would help connect the pores) in a semi-fluid state under high pressures through holes that were perforated in the production casing.  This "cracked" the rock and, after the fluids that contained the sand flowed back out of the hole, the sand (the proppant) was left behind in the formation, enhancing the permeability.  Many of us have heard of the unfortunate souls that live in areas where fracking is now commonplace (i.e. Pennsylvania, parts of southern Alberta etcetera) that find themselves with tap water that is contaminated with natural gas as shown here:  When the oil industry drills a borehole to depth, as you can imagine, the sides of the borehole are very unstable and rock continually sloughs into the hole, causing all manner of problems.  To alleviate these problems, a long string of hollow steel production casing of varying diameters is run into the hole to the total depth of the well (or somewhere below or at the depth of the producing formation depending on the type of well).  The diameter of this casing is somewhat smaller than the diameter of the borehole; the space between the two is known as the annulus.   Once the casing is in place, cement is pumped down the casing and flows back up the well between the casing and the sides of the borehole through the annulus.   Here is a cross sectional diagram showing a completed coal bed methane gas well and its components:  So, what could possibly go wrong?  Sometimes, the cement fails to displace the drilling mud in the annulus and completely fill the void between the casing and the formation and other times it fails after a period of time.  This situation allows the formation fluids, which are under pressure because of the weight of the rock that lies on top of them, to flow through the annulus to the surface where the air pressure is far lower.  It is this exact situation that can result in contamination of near surface aquifers even when hydrocarbon-producing formations are many thousands of feet below the source of groundwater.

China: #1 in Shale Gas Reserves, Paltry Production -Much has been made of the United States growing energy independence as it taps shale gas reserves at home. However, the US is far from the only country with a lot of shale gas reserves. China purportedly has the most, but it has been quite slow in tapping these reserves. The numbers tell the story of China's backwardness: Beijing has struggled to find a way to emulate the frenetic exploration and production activity of the shale gas boom in the United States, and the latest setback makes reaching even a modest 2015 output target of 6.5 billion cubic metres (bcm) unlikely. This is only a fraction of the 224 bcm of shale gas the United States produced in 2011, and would amount to just 6 percent of China’s total current output of natural gas. Why this sloth?  It's a combination of various things, with less readily accessible reserves and uncertain land ownership featuring large:  The region's rough terrain, poor infrastructure and deeply buried gas formations present tough technical challenges. The area is so densely populated and intensely farmed that drilling sites are being built within 360 feet of homes in villages like Maoba—upsetting residents who complain of noise, dust and environmental concerns. To ease the way, Shell and its partners are compensating local residents and local government officials for using their land and roads and other inconveniences.  You would have thought that in an authoritarian regime alike China, it's easier to excavate since the state owns more land and can evict people if it is deemed necessary, but no: it's proven easier to pay US (private) landowners for mining for shale gas. By contrast, in China you have militant residents who do not want to deal with the mess of fracking since they will not benefit directly from state-owned resources. I argue that a lot of their environmental complaints would be mitigated otherwise. Such difficulties are compounded by rudimentary infrastructure in parts of China with lots of shale and an unclear regulatory framework:

Oilprice Intelligence Report: US Natural Gas Exports Picking Up Momentum - Washington has backed down over a strike on Syria—for now—and oil prices have responded with crude oil for October delivery falling $1.01 to close on Monday this week at $109.52 a barrel in New York. Wholesale gas prices also fell 5 cents to $2.80 per gallon, and heating oil declined 5 cents to $3.12 per gallon, while natural gas rose 8 cents to $3.61 per 1,000 cubic feet. Now that we have a reprieve from Syria for the time being, we can focus on US natural gas exports, which have clearly picked up momentum in recent months.This week, the Obama administration approved the fourth liquefied natural gas project, giving the conditional green light to Dominion Resources for LNG exports from Maryland’s Western Shore. Dominion plans some $3.8 billion to revamp its Cove Point natural gas import facility into an export terminal, and has already signed 20-year contracts with importers in Japan and India for natural gas shipments. The contracts went to Japan’s Sumitomo Corp. and India’s GAIL Ltd. Dominion is eyeing next year for the start of construction and plans to have its first LNG ready for export in 2017. The company will be allowed to export 0.77 billion cubic feet of natural gas per day from the new facility.  The Department of Energy (DOE) has between over 25 applications to export LNG—some of them seeking to export at least 30 billion cubic feet a day, for which they will fetch much higher prices than at home. The US produces about 70 billion cubic feet a day of natural gas. So the competition will be stiff for these approvals. 

Undercover at the Tar Sands: What It's Really Like Working for Big Oil - You can smell the oil in the air, and smog hangs across the otherwise crisp northern horizon. Drive further, and things get even worse. . Shell, Imperial Oil, Exxon, Encana, Husky, BP, Suncor Energy, CNR, Southern Pacific and Petro-Canada all have a stake in this game, and there's an estimated 170 billion barrels of crude on the line. Thousands of employees are put up in temporary housing settlements. The big "camps" have gyms and rec rooms with pool and ping pong tables; a few even have ice rinks, yoga classes and movie theaters. For the most part, though, it's all insulated aluminum-sided trailers with private sleeping quarters and communal bathrooms. The camps serving Shell's Albian Sands project and Imperial Oil's Kearl worksite are among the biggest. Shell's complex – two camps collectively known as "the Village" – is home to about 2,500 employees. Meanwhile, Imperial Oil's Wapasu camp houses more than 7,300. It even has its own airstrip to accommodate workers as they fly in and out on chartered 747s.  Wapasu is a dry camp, meaning absolutely no alcohol is allowed. Employees are bussed in and out of the fenced, guarded compound for work, and aren't allowed to leave or have visitors during off-hours. Meanwhile, all rooms are subject to search. There's nothing like coming home from a long day's work, only to find a note stating drug-sniffing dogs searched your room while you were away. Living in a camp means you get free room and board, including three substantial meals a day. But if you're not careful, the isolation and boredom can wear on you. Many of us get stuck paying inflated prices for cigarettes or smuggled-in drugs and alcohol. There are stories of late-night card games where guys bet – and lose – entire paychecks just for a rush.

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