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Sunday, October 12, 2014

rjs: fracking, oil, and energy news for October 12, 2014

by rjs, bless his heart, still doing my work for me, October 11, 2014

Probably the most important news as far as fracking goes has been the ongoing 20% drop in the price of oil on world markets, which continued this week as prices fell to near four year lows on Friday before they rebounded and closed just over $90 a barrel, while November contracts for US crude oil closed under $86...the likelihood of a global economic downturn plus the Saudis attempting to drive the price lower for geopolitical reasons suggest prices will fall further...this is important on two counts; first, many of the major fracking oil plays need around $90 oil to break even, and as it falls below that, continuing to drill, even in areas of such major fields as the Bakken, becomes unprofitable...second, because of articles such as Fracking Firms Get Tested by Oil’s Price Drop from the wall street journal, quoted below, everyone now knows that, and hence the frackers who are already over extended will find it increasingly difficult to borrow...

In the same vein, an article in Bloomberg this week called out several major frackers for reporting one figure for their proven oil reserves to the Securities and Exchange Commission, and another figure, often as much as ten or twelve times higher, in their prospectuses to their study of 73 shale drillers, Bloomberg found that almost all reported higher reserves to investors, with the industry wide average company alleging nearly 5 times as much oil and gas reserves as they really had when attempting to sell shares or borrow money....yep, that sounds like fraud on an industry wide scale, and we aren't a bit surprised....but now it's been reported in the media, which will again make it that much more difficult for the shale drillers to raise money from the suckers out there that they've been hustling these past several years..

Duplicity from the frackers was also fully evident in the campaign of the major fracking supplier Baker Hughes as they launched their anti-cancer ad campaign by distributing a thousand hot pink fracking drill heads to customers with the message that "we're doing our bit for the cure"...turns out they have contributed to and have teamed up with the Susan G. Komen Foundation, a PR stunt that aligns their cancer causing industry with the campaign to find a cure for breast cancer.

Also of note: under pressure from Canada, the European Commission has agreed to remove the 'extra dirty' classification from diluted bitumen from the tar sands; what that means is that the tar sands oil will be able to be used for transportation or heat over the 28 nation European Union without being penalized for excess carbon get the tar sands oil to Europe, the Canadians are patching together a 2,858-mile pipeline across the length of the country, taking advantage of existing and underused natural gas pipeline, which would be more than twice as long as the Keystone XL and carry a third more tar sands crude...

We didn't see much on Ohio fracking this week, so we'll just take the entire batch in the order that they come, starting with the news about this massive methane leak in northern New Mexico and adjoining states...

Massive Methane Hot Spot Detected by Satellite - In a study published this week, they analyzed satellite-gathered data and found that an area about 2,500 square miles, near the “Four Corners” where Arizona, Colorado, New Mexico and Utah connect, produces the largest concentration of these greenhouse gas emissions ever found in the U.S., more than triple the previous estimate based on ground-gathered information. While carbon emissions are more plentiful and have attracted most of the attention as the driver of climate change, methane has been found to be an even more potent greenhouse gas. The researchers looked at data from 2003-2009 and found that in that time, that area released 590,000 metric tons of methane into the atmosphere annually, nearly three and a half times the previous estimate for the area. That’s about 10% of the U.S. Environmental Protection Agency’s official estimate for the whole country during those years. The hot spot persisted during the entire observation period. Fracking has been widely identified as a culprit in boosting methane emissions. But this new analysis indicates that older methods of fossil-fuel extraction are just as harmful, with methane emissions added to carbon emissions to multiple the environmental damages from fossil fuels. Fracking wasn’t widely used in the area during the period studied; the boom didn’t kick off there until 2009. But it is a major coal-mining center. And New Mexico’s San Juan Basin is the most active coalbed methane production area in the country, a process in which methane-heavy natural gas (composed of about 95-98 percent methane) is extracted from pores and cracks in coal to use for fuel. In the process, it produces significant leaks (and well as coal mine explosions.)

There’s a Methane ‘Hot Spot’ the Size of Delaware in the American Southwest - Four Corners can add another notch onto its belt—in addition to being high kitsch for road-tripping tourists, it will now also be known as the single biggest fountain of planet-cooking methane in the United States.  According to new satellite research from scientists at NASA and the University of Michigan, this "hot spot" is "responsible for producing the largest concentration of the greenhouse gas methane seen over the United States—more than triple the standard ground-based estimate." It is 2,500 square miles, about the size of Delaware. The thing was so big the scientists initially thought it was a mistake in their instruments. "We didn't focus on it because we weren't sure if it was a true signal or an instrument error," NASA's Christian Frankenberg said in a statement. Methane is an extremely potent heat-trapping gas; while it has a much shorter life cycle than fellow global warming culprit carbon dioxide, some estimates put it on the order of being 80 times more powerful.  Between 2003-2009, the region released 0.59 million metric tons of it into the atmosphere. So why is Four Corners spewing out an apocalyptic amount of methane? Because of old, leaky-ass fossil fuel infrastructure, that's why. The hot spot predates fracking, the researchers say, so they've flagged "leaks in natural gas production and processing equipment in New Mexico's San Juan Basin, which is the most active coalbed methane production area in the country" as the culprit. The scientists say the finding is reason enough to zoom out from fracking, and take stock of the operations of the entire established fossil fuel industry. I'd say so, unless we'd rather Four Corners remain the equivalent of the nation's largest cow fart.

Methane Hotspot Associated with Hydrofracked Coalbeds - - An area in the Southwest accounted for the nation’s largest concentration of methane emissions during a period before 2010, researchers at NASA and the University of Michigan announced Thursday. Eric Kort, the study’s lead author from the University of Michigan, pointed out that the study period from 2003 to 2009 predates widespread use of hydraulic fracturing near the hotspot over the San Juan Basin in New Mexico and Colorado, the nations’ most productive coalbed methane basin. “The results are indicative that emissions from established fossil fuel harvesting techniques are greater than inventoried,” Kort said in a statement. “There’s been so much attention on high-volume hydraulic fracturing, but we need to consider the industry as a whole.” News stories seized on the assertion that coal not fracking was to blame for the hotspot. But methane associated with coal seams has long been harvested by hydraulic fracturing from a vertical well or drilling a well in a way to cause a collapse at the coal seam, as the EPA wrote in 2004: About 2,550 wells were operating in the San Juan Basin in 2001 (CO Oil and Gas Conservation Commission and NM Oil Conservation Division, 2001). All wells are vertical wells that range from about 500 to 4,000 feet in depth, and were drilled using water or water-based muds. Almost every well has been fracture-stimulated, using either conventional hydraulic fracturing in perforated casing or cavitation cycling in open holes. Kort said Friday that in his distinction in pressing for analysis of the whole industry, the fracking he was referring to was the high-volume hydraulic fracturing associated with horizontal drilling in shale formations.

This Methane ‘Hot Spot’ Is Huge, But It’s Nothing Compared To Our Other Methane Sources - A massive amount of the greenhouse gas methane is being released into the atmosphere from underground leaks of natural gas, producing a major U.S. “hot spot” that was previously unknown, according to satellite data released by scientists at NASA and the University of Michigan on Thursday. The 2,500 square mile hot spot — located near the Four Corners border of Arizona, Colorado, New Mexico and Utah — is spewing methane, a powerful greenhouse gas that is 20 times more effective at causing global warming than carbon dioxide. The methane is likely not from fracking, NASA said, since the data analyzed is from 2003 to 2008, before the fracking boom. Instead, the scientists hypothesize that the leaks are coming from coalbed methane extraction, a process of getting natural gas from underground coal beds.  The discovery is important not only because it’s the largest concentrated spot of methane emissions in the United States, but also because it leaves questions as to whether there are other big hot spots that we’re unaware of. The methane coming from this hotspot is 3.5 times greater than what’s shown in the European Union’s popular Emissions Database for Global Atmospheric Research. This hotspot released an average of 590,000 tons of methane emissions into the atmosphere every year from 2003 to 2009. That’s a staggering amount — 590,000 tons of methane emissions is equal to almost 15 million tons of carbon dioxide, or the climate equivalent of adding 3.1 million cars to the road every year. Still, other sources of methane emissions in the United States contribute significantly more to climate change than the Four Corners hotspot. Yearly methane emissions from U.S. agriculture, land use, forestry, landfills, and energy production in general are all remarkably higher than what’s coming from the 2,500 square mile chunk of land in the southwest.

How ALEC Stacks Deck Against Renewables in Ohio » When Ohio’s legislature passed a two-year freeze on Ohio’s clean energy standards that was signed into law by Gov. John Kasich in June, it became the first state in the U.S. to move backwards on renewable energy. The bill, SB 310, was accompanied by a mandate to appoint a panel to hear testimony and decide if the freeze should be permanent. Many felt it was virtually a foregone conclusion, given some of the wording in SB 310 that said this was a step toward consideration of permanent repeal. Added evidence that that’s the goal came as Senate President Keith Faber named the legislators to serve on the panel. It’s packed with opponents of clean energy standards, including five who voted for SB 310. At the top of the list is State Sen. Bill Seitz from Cincinnati, who sits on the national board of the American Legislative Exchange Council (ALEC), the lobby group that writes conservative, pro-corporate “model legislation.” Repealing clean energy standards is one such bill. In the past, Seitz has been melodramatic in his opposing to the standards, comparing them to Stalin’s five-year plan and the Bataan Death March. He also invited rightwing climate-denying group the Heartland Institute to testify against them and charged that the testimony of opposing witnesses constituted a “filibuster.”

Group pushes for more chemical disclosure at fracking sites -- Disclosing chemical information before oil and gas companies break ground on a fracking site could better prepare emergency response teams for the worst fires, a Cleveland-based environmental and consumer organization contended today. Based on their study of a Monroe County well pad fire in June, the nonprofit Ohio Citizen Action Education Fund came up with recommendations for state government to clarify chemical disclosure laws for oil and gas companies working in Ohio. Oil and gas companies report the chemicals used on fracking sites to the Ohio Environmental Protection Agency, but they can be exempt from reporting hazardous chemicals to the State Emergency Response Commission and emergency planners and fire departments local to their well pads. Without information on the chemicals used, fire departments are not prepared to respond to fires and other incidents, said Melissa English, executive director for Education Fund. In the Monroe County fire, Statoil, the company that owns the well pad, listed three biocides, or organism-killing chemicals, used at their site to the Ohio EPA. However, Statoil failed to publicly list those chemicals on, an industry website where fracking companies report the chemicals they use, said Nathan Rutz, Cleveland campaign organizer for Ohio Citizen Action.

Small Study May Have Big Answers on Health Risks of Fracking's Open Waste Ponds -- When Mary Rahall discovered that oil and gas waste was being stored in open-air ponds less than a mile from a daycare center outside Fayetteville, W. Va., she started digging for information about the facility's air emissions and protections for a nearby stream. She wasn't satisfied with the answers she got from state regulators and politicians, so the mother of two set out to find a scientist who could help. Eventually her questions found their way to William Orem, a chemist at the U.S. Geological Survey office in Reston, Va., and he began collecting air and water data at the site last fall. Orem's small study could have implications far beyond Fayetteville, because it's among the first scientific efforts directed at how air emissions from oil and gas waste could be affecting human health. He suspects waste disposal might turn out to be "the weakest link of all" in the oil and gas extraction and production cycle.The industry's waste isn't subject to regular air monitoring, because in 1980s the energy industry lobbied Congress and the U.S. Environmental Protection Agency to exempt most of it from hazardous waste laws, even though it can contain benzene and other chemicals known to affect human health. In a recent story about waste pit emissions in Texas, InsideClimate News discovered that, nationally, there's little data or regulatory oversight regarding air quality at oil and gas waste disposal sites. 

Michigan Resident Confronts Natural Gas Pipeline Surveyors With Shotgun - Michigan residents aren’t happy about a proposed natural gas pipeline running through their properties, and they aren’t letting work on the pipeline begin without a fight. As the Flint Journal reports, some residents aren’t allowing representatives from Energy Transfer Partners, whose 800-mile ET Rover Pipeline is proposed to go through West Virginia, Ohio and Michigan, on their land to survey. Earlier this week, one man in Genesee County, MI, noticed surveyors had showed up on his neighbor’s property and reportedly confronted them with a shotgun. The elderly neighbor “didn’t really want [the surveyors] on her property,” according to Mundy Township Sgt. Tom Hosie, who had been dispatched when the survey crew called the police after the confrontation, but she wasn’t going to physically stop them. When the man found out that the surveyors were next door, he confronted them.  Another incident occurred when a Genesee County resident called the Sheriff’s Department after she said a survey crew visited her property without permission. The resident, Tammy Merkel, said she had plans of building a house on the vacant lot, which she had just purchased in June. But the pipeline’s proposed route goes right through the middle of the lot.

The Findings From Maryland’s Report On Fracking Risks Will Surprise You  -- A draft report on the risks of fracking in Maryland has found little risk of drinking water contamination in the state, despite multiple reports of contamination from fracking in other states. The report, which was put together by Maryland’s Department of Environment and Department of Natural Resources, ranked the risk of contamination of soil, ground water or surface water from a spill during most parts of the fracking process as “low.” It found that current state regulations and proposed “best practices” could reduce much of the risk of water contamination from fracking, and that in general, water contamination wasn’t high on the list of risks related to fracking. The report did, however, state that there’s a greater likelihood of contamination of water by methane — rather than fracking chemicals — especially in gas wells set 2,000 feet — rather than 3,280 feet — from a water well.  The report assessed other risks as well, finding that Maryland faced moderate to high risks associated with increased truck traffic to and from fracking sites, and that the state faced a high risk of road degradation as a result of this increased traffic. It also ranked air pollution risks from fracking as moderate to high. But the report’s overall classification of water contamination risks as low goes against the multiple reports of contamination of water near fracking operations. A September study linked failures in casing and cementing in gas wells to water contamination in Texas and Pennsylvania, a state that in August revealed that fracking had led to hundreds of cases of water contamination. A 2013 study found that the closer a person lives to a fracking well in Pennsylvania, the more risk that person has for methane contamination of water supplies. West Virginia has also linked water complaints to fracking, and according to a 2013 report, chemicals from oil and gas wastewater pits have contaminated water sources in New Mexico at least 421 times.

Report: New York Governor’s Office Altered And Delayed Fracking Study --New York Gov. Andrew Cuomo’s administration edited and delayed a fracking study commissioned by the state, according to a review by Capital New York. The New York news outlet reported Monday that the Cuomo administration had altered a report on the natural gas extraction technique commonly referred to as fracking. The report was commissioned in 2011 and was “going to result in a number of politically inconvenient conclusions” for the governor. A comparison of the original draft of the report, which was put together by the U.S. Geological Survey, and the final version, showed that some of the original descriptions and mentions of fracking-related health and environmental risks were “played down or removed.” “The final version of the report also excised a reference to risks associated with gas pipelines and underground storage — a reference which could have complicated the Cuomo administration’s potential support for a number of other controversial energy projects, including a proposed gas storage facility in the Finger Lakes region that local wine makers say could destroy their burgeoning industry,” Capital New York reported.  However, it doesn’t appear that any numerical findings of the report were altered between the first and final versions. The news outlet acquired redacted emails between members of the Cuomo administration and the federal researchers who were compiled the report through a Freedom of Information Act request.

Cuomo Cooks Books on Frack Study —A federal water study commissioned by the Cuomo administration as it weighed a key decision on fracking was edited and delayed by state officials before it was published, a Capital review has found. The study, originally commissioned by the state in 2011, when the administration was reportedly considering approving fracking on a limited basis, was going to result in a number of politically inconvenient conclusions for Governor Andrew Cuomo, according to an early draft of the report by the U.S. Geological Survey obtained by Capital through a Freedom of Information Act request. A comparison of the original draft of the study on naturally occurring methane in water wells across the gas-rich Southern Tier with the final version of the report, which came out after extensive communications between the federal agency and Cuomo administration officials, reveals that some of the authors’ original descriptions of environmental and health risks associated with fracking were played down or removed. Email communications over a period of several months between Cuomo administration officials and federal researchers were obtained by Capital, in heavily redacted form, through a Freedom of Information Act request. The messages reveal an active role by Cuomo’s Department of Environmental Conservation in shaping the text, and determining the timing of the report’s release.  In the unredacted part of the emails, a D.E.C. official refers to “alternate text” that he sent. At various points, a U.S. Geological Survey (USGS) spokeswoman thanks a state official for her edits, and reminds the study’s author that they are employed by a “science organization” which is not in the business of advocating particular positions. A later communication suggests delays from the administration side, when the USGS spokeswoman refers to a need to publish the report “in a timely fashion.”

"Report fuels fracking cynicism" - Since the early days of his administration, the issue of fracking has been a thorn in Gov. Andrew Cuomo’s side. He claims he is waiting for the results of a study on fracking’s potential health impacts in deciding whether to allow the controversial energy extraction procedure in New York. When pressed for information on when this study will be completed, he tends to be evasive, and sometimes reverses course. In 2013, he said he expected to make a decision before the election; now he says there will be no decision until after the election. Anti-frackers and pro-frackers have found the process immensely unsatisfying. Both camps are weary of being jerked around by the Cuomo administration and maintain that the governor and his staff have more than enough information to make a decision, but have put off doing so because it’s politically inexpedient. The governor’s Democratic primary challenger, Zephyr Teachout, attacked him for not banning the practice, while Cuomo’s Republican opponent, Rob Astorino, has promised to allow fracking if elected. The state’s moratorium on fracking is now six years old and whichever side of the issue you fall on, it’s hard not to be cynical about the governor’s careful refusal to take a position on it. This cynicism was reinforced Monday when Capital New York reported that the Cuomo administration edited and delayed an important fracking study before it was published. The online news site obtained the original draft of the report through a Freedom of Information Act request and compared it to the final version of the study, which was conducted by the U.S. Geological Survey.

Cuomo’s Frackastrophe – “Doesn’t Know” Who Altered Frack Study —Governor Andrew Cuomo on Wednesday said he was not sure why his administration helped shape a federal study on water quality in the Southern Tier. On Monday, Capital reported that officials from the Department of Environmental Conservation and the New York State Energy Research and Development Authority weighed in on a federal water quality study that is a necessary first step to prepare for fracking. State officials have claimed that their frequent communications with the U.S. Geological Survey were a normal back-and-forth between federal and state agencies.But in emails obtained by Capital, federal officials occasionally bristled at the editing and the delays from the state, and some fracking risks were downplayed in the final version of the report, compared to the original draft.Asked why state officials delayed and edited the fracking study on Wednesday, Cuomo said, “I don’t know.” He did not elaborate.

Fracking Gestapo (aka Pa. State Police) Harass Fractavists . . . in New York - Anti-fracking activists protesting a natural-gas conference in Philadelphia last fall were being monitored by a private security company that sent a photo of a demonstrator to the Pennsylvania State Police, according to an email obtained by Pittsburgh City Paper. A few months earlier, at another industry-led conference, state trooper Michael Hutson delivered a presentation on environmental extremism and acts of vandalism across Pennsylvania’s booming Marcellus Shale natural-gas reserves. He showed photographs of several anti-fracking groups in Pennsylvania, including Shadbush Environmental Justice Collective protesters demonstrating at an active well site in Lawrence County, in Western Pennsylvania. That same Pennsylvania state trooper visited the home of anti-fracking activist Wendy Lee, a Bloomsburg University philosophy professor, to question her about photos she took of a natural-gas compressor station in Lycoming County. Remarkably, the trooper earlier had crossed state lines and traveled to New York to visit Jeremy Alderson, publisher of the No Frack Almanac, at his home outside Ithaca, N.Y., to accuse him of trespassing to obtain photos of the same compressor station. The photo, presentation and house visits are part of a little-known, intelligence-sharing network that brings together law enforcement, including the FBI, Pennsylvania Office of Homeland Security, the oil and gas industry, and private security firms. Established in late 2011 or early 2012, the Marcellus Shale Operators’ Crime Committee (MSOCC) is a group of “professionals with a law-enforcement background who are interested in developing working relationships and networking on intelligence issues,”

Fracking Energy Independence: Exporting America’s Gas Reserves on the Cheap -- Natural gas pulled from below Pennsylvania’s state forests and privately owned lands might soon get siphoned to a Maryland port, then shipped – not to markets in the nation’s heartland, but instead – overseas. Initial recipients are said to include Japan and India, but in this multibillion-dollar industry, it’s not difficult to imagine the Keystone State’s resources going to the highest bidder, no matter where. Presumably, to whichever government has the most yen for it. The international exporting of coveted fuel from places such as Susquehanna County could begin by 2017. On Monday, the Federal Energy Regulatory Commission gave its preliminary blessing to Dominion Energy’s planned liquefied natural gas terminal in Calvert County, Maryland, the first such facility on the East Coast. Three other export terminals have received the go-ahead in the Gulf of Mexico. Diane Leopold, president of Virginia-based Dominion Energy, praised this week’s decision, noting the terminal project’s “economic, environmental and geopolitical benefits.” Uh-huh. That sounds swell, but it sure seems as if Pennsylvania gets only the short end of this stick. The good-old boys from Oklahoma and Texas who crisscrossed our state’s Northern Tier in the early days of the Marcellus Shale gas boom never spent much time talking to Towanda-area residents about “geopolitical benefits.” They foretold of plentiful jobs in the yet-undeveloped gas fields and said Pennsylvanians could expect to see their home heating prices go down. Already, some U.S. manufacturers have spoken out against liquefied natural gas (LNG) exports, suggesting they will eventually drive up domestic prices. Wouldn’t the nation fair better, they ask, by using its natural gas bounty to power our vehicles and boost U.S. manufacturing, then sell American-made products, instead of raw materials, to the world?

ExxonMobil comes clean on fracking risks - not: For whatever reason, lately it looks like drilling companies have been stumbling all over each other in a rush to disclose fracking risks and other formerly secretive aspects of the drilling industry. ExxonMobil issued a major new report to its shareholders on September 30, Andarko and EOG hopped on the bandwagon with a financial risk commitment to their shareholders last Friday, and Baker Hughes earlier pledged to disclose the secret sauce in its fracking fluid. “Looks” is the operative word here, so let’s start with ExxonMobil and work our way down. The new ExxonMobil fracking risk report is titled “Unconventional resources development risk management report to shareholders.” As our friends over at reported last summer, ExxonMobil issued the document in response to repeated demands by groups of activist shareholders including Green Century Capital Management and the office of the New York State Comptroller among others. Just a wild guess, but we’re thinking those shareholders didn’t have very high expectations given ExxonMobil’s history (such as this), and the company doesn’t seem to have disappointed. Here’s ExxonMobil VP of Investor Relations Jeffrey Woodbury with his money quote in an ExxonMobil press release announcing the new report: Hydraulic fracturing has been responsibly and safely used by the oil and gas industry for more than 60 years, but the process isn’t without risks. This report to shareholders details how ExxonMobil uses sound risk management processes and engages with stakeholders to ensure safe and environmentally responsible operations.

Fracking Sell-Outs Killed Home Rule Vote in Colorado --On Monday, Aug. 4, as the result of a political compromise with Colorado’s Democratic Governor, John Hickenlooper, U.S. Rep. Jared Polis (D-Boulder) agreed to withdraw his support for the citizen initiative process that could have placed two anti-drilling/fracking initiatives (Amendments 88 and 89) on the November ballot. The initiatives, which had each garnered well in excess of the 86,105 signatures needed to be placed on the ballot (provided the signatures held up), would have amended the state constitution to give more control over drilling and fracking to local communities and/or establish a 2,000-foot setback from occupied structures for oil and gas drilling operations.  Because Polis was funding the organization charged with getting the ballot measures before voters (Safe. Clean. Colorado.) he appears to have had the final say that day as to whether citizens would get to vote on fracking in November or instead, whether he would pull the measures as part of a compromise with Gov. Hickenlooper.  As Colorado and the rest of the country where the oil and gas industry has moved in now know, Polis chose the latter and pulled the measures at the last minute in exchange for several concessions from the governor, including the appointment of a 21-member taskforce made up of oil and gas industry insiders, mainstays of the Democratic Party loyal to the governor and citizens or representatives of environmental groups who support more regulation of the oil and gas industry and fracking but who have publicly not endorsed bans and moratoriums. The governor also agreed to drop the state’s lawsuit against the City of Longmont for having established oil and gas regulations considered stricter than the state’s and promised to enforce a 1,000-foot setback as the norm rather than the exception.

Oil-field health studies continue but answers are still lacking -  It's been 18 years since Steve Mobaldi and his late wife, Chris, first got burning eyes and nosebleeds when oil and gas drilling came to their Garfield County neighborhood. In the interim, hundreds of others have complained about health problems. Dozens of studies have looked for a link between those problems and drilling. One of those studies, done partly in the Mobaldis' old neighborhood nearly five years ago, found enough emissions in the air to potentially cause illnesses. But, before that link could be strengthened by researchers at the Colorado School of Public Health, the oil and gas industry complained about the quality of the research. County commissioners dropped the study contract. Now, another air-pollution-measuring study is underway n Garfield County, and it is being touted as the research that will finally help connect the dots on drilling and health. But to Mobaldi and others who have been seeking answers for so long, its reliance on drilling-industry funding and access raises the same old questions. "It's all politics to me. They promise to do something and never come to a conclusion. It's all just so wrong," said Mobaldi, four years after his wife died  at the age of 63 after bewildering and debilitating illnesses that included pituitary tumors and suspected brain damage.

In Texas, a Fight Over Fracking - — Many Texans have long held the oil and gas industry as dear to their hearts as a prairie range full of feeding cattle. Now suddenly that love is being tested here in a local election, where a grass-roots campaign against gas producers has pushed the industry into a corner.The battle is over a proposed city ban on hydraulic fracturing — the technique of blasting shale rock with water, sand and chemicals to dislodge oil and gas, often called fracking — in a referendum on Nov. 4. No city in Texas has ever come close to passing such a measure. But in this college town of 130,000 outside Dallas, the producers find themselves in an uphill battle against a diverse band of doorbell ringers and lawn-sign distributors who are working day and night. The debate in Denton echoes themes heard in communities around the country, pitting economic arguments like job creation and school funding against quality-of-life and environmental concerns like noise, traffic, fumes and fears that fracking might endanger local water supplies.

Is “Big Oil” influencing OGS earthquake study?  -- As the Oklahoma Geological Survey tries to determine the cause of the recent earthquakes, some believe there may be a conflict of interest since OGS is funded by oil and gas companies. Some say those companies are the cause. Bob Jackman, a Tulsa geologist and oil and gas operator, wrote an article in The Oklahoma Observer that claimed nearly 90% of OGS’s funding comes from big oil producers. The University of Oklahoma is home to OGS, but a university spokesperson told us it would take “a day or two” to figure out how much money oil and gas companies give them. “It’s the disposal wells, stupid,” Jackman said Tuesday. “The science supports that.” He said oil and gas disposal wells, which pump wastewater into the earth, build pressure along fault lines and cause earthquakes. The solution, Jackman said, is simple. Pump that water away from fault lines. But he doesn’t believe producers want to do that. “It would cost them money,” Jackman said. “They’ve chosen to ignore the general public’s safety over their profit.” In the article, Jackman claims an OGS employee told him that oil and gas producers who give money to OU don’t want earthquake research to point the finger at them. “You don’t understand the politics of my position,” Jackman claimed the employee said.

California Finally to Reap Fracking’s Riches - WSJ: For the past decade, the U.S. shale boom has mostly passed by California, forcing oil refiners in the state to import expensive crude. Now that’s changing as energy companies overcome opposition to forge ahead with rail depots that will get oil from North Dakota’s Bakken Shale. Thanks in large measure to hydraulic fracturing, the U.S. has reduced oil imports from countries such as Iraq and Russia by 30% over the last decade. Yet in California, imports have shot up by a third to account for more than half the state’s oil supply. “California refineries arguably have the most expensive crude slate in North America,” says David Hackett, president of energy consulting firm Stillwater Associates. Part of the problem is that no major oil pipelines run across the Rocky Mountains connecting the state to fracking wells in the rest of the country. And building pipelines is a lengthy, expensive process. Railroads are transporting a rising tide of low-price shale oil from North Dakota and elsewhere to the East and Gulf coasts, helping to keep a lid on prices for gasoline and other refined products. Yet while California has enough track to carry in crude, the state doesn’t have enough terminals to unload the oil from tanker cars and transfer it to refineries on site or by pipeline or truck. Just 500,000 barrels of oil a month, or 1% of California’s supply, moves by rail to the state today. New oil-train terminals by 2016 could draw that much in a day, if company proposals are successful.

California aquifers contaminated with billions of gallons of fracking wastewater --Industry illegally injected about 3 billion gallons of fracking wastewater into central California drinking-water and farm-irrigation aquifers, the state found after the US Environmental Protection Agency ordered a review of possible contamination. According to documents obtained by the Center for Biological Diversity, the California State Water Resources Board found that at least 9 of the 11 hydraulic fracturing, or fracking, wastewater injection sites that were shut down in July upon suspicion of contamination were in fact riddled with toxic fluids used to unleash energy reserves deep underground. The aquifers, protected by state law and the federal Safe Water Drinking Act, supply quality water in a state currently suffering unprecedented drought. The documents also show that the Central Valley Water Board found high levels of toxic chemicals - including arsenic, thallium, and nitrates - in water-supply wells near the wastewater-disposal sites. Arsenic is a carcinogen that weakens the immune system, and thallium is a common component in rat poison. “Arsenic and thallium are extremely dangerous chemicals,” “The fact that high concentrations are showing up in multiple water wells close to wastewater injection sites raises major concerns about the health and safety of nearby residents.”

With New Fracking Rules Coming, State Regulators Struggle With Enforcement - Next year, California will implement a wide range of new regulations aimed at providing a lot more public disclosure about the hydraulic fracturing process. The new rules, set into motion by 2013’s Senate Bill 4, will put California on par with other top drilling states when it comes to policing the fracking process. But tough rules are only half of the equation — they don’t matter if they aren’t enforced. And the struggles state regulators have had keeping tabs on another part of the drilling process raise a lot of questions about whether California has the resources and the tools to handle a fracking boom. 

Garbage Cans For Drilling Operations The method in question: deep injection wells. Drilling for oil and gas creates a lot of water waste. Fracking uses millions of gallons of salty, chemical-laced water. A lot of it comes back up with the oil and gas, and drillers have to do something with all that wastewater. They usually take that stuff and bring it to an injection well, where they shoot the waste deep underground. Injection wells are basically garbage cans for drilling operations. The federal Environmental Protection Agency says these wells are the best way to dispose of drilling waste. And while the fracking boom hasn’t arrived in California yet, the state already hosts thousands of these wells. That’s because the oil being drilled here is very watery.

Report Confirms Fracking is Poisoning California's Dwindling Aquifers -  One of America’s greatest assets are the abundant natural resources that helped elevate a new country into a world-class nation, and over the past century a world leader.  Of all this nation’s resources, fossil fuels are far and away the single-most valuable in driving the industrial revolution and enriching one industry above all others except maybe banking and agriculture.  Water is also a fundamental necessity for the oil industry that could not care less how their extraction processes contaminate water used for agriculture, or human consumption. This week, yet another report reveals that fracking in California has contaminated aquifers during a historical drought. In July, California state regulators, Department of Gas and Geothermal Resources (DOGGR), shut down 11 fracking wastewater injection wells over concerns that what precious water the severely drought-stricken state has left is being contaminated with toxins and carcinogens; particularly in highly productive agricultural areas. According to its due diligence, the agency the oil industry and Republicans hate above all others, the Environment Protection Agency (EPA), promptly ordered a report within 60 days to determine if the oil industry did indeed poison what little water California has left and what extent, if any, the damage might have on the agriculture industry and drinking water supply. This past week, with little to no mention in the conservative media, the California State water Resources Board issued a report to the EPA confirming that yes, at least 9 of the 11 fracking sites were deliberately dumping poisoned waste water directly into central California aquifers. The waste water is laden with extremely hazardous toxins and carcinogenic chemicals used in fracking and the aquifers the industry destroyed are protected by both state laws as well as the federal Safe Drinking Water Act.

Fracking Company Launches Pink Drill Bits, Because Nothing Says Breast Cancer Awareness Like Fracking -- The Susan G. Komen Foundation is taking an odd marketing turn for Breast Cancer Awareness Month: fracking. After donating $100,000 to the leading breast cancer research organization, fracking company Baker Hughes is partnering with Susan G. Komen to spread awareness of the disease through hot-pink drill bits. According to Baker Hughes, this is the company’s “bit for the cure.” Why would a massive fossil fuels company, which employs mostly male drillers, change the color of their drilling bits to Barbie-pink during the month of October? Well, the company seems to think the color will motivate employees to talk about breast cancer prevention with their female family members. The company has reportedly delivered 1,000 of these breast-cancer drill bits to fracking sites worldwide. This is the second year in a row Baker Hughes distributed these specially designed bits during Breast Cancer Awareness Month; last year, the company produced 500 pink drilling bits as part of the “Doing Our Bit for the Cure” campaign.” Baker Hughes also has a year-long partnership with Susan G. Komen, and participates in their Race For the Cure fundraiser.

Fracking For the Cure ? Really ? Komen Foundation, Have You No Shame ? -- Sandra Steingraber -  What do you get when you cross a breast cancer charity with a frack job? The answer is the image below, which, as I am writing, is going epidemically viral.  It’s hard to stop staring in utter baffled amazement. Is it some kind of … phallic cyborg? The opening scene of a yet another sequel to Tremors? (Kevin Bacon! Nevada! Subterranean, worm-like, cross-dressing graboid!) A sex toy from hell? In fact, it’s all these things and more. Susan G. Komen, the largest breast cancer organization in America with more than 100,000 volunteers and partnerships in more than 50 countries, has teamed up with Baker Hughes, one of the world’s largest oilfield service companies with employees in more than 80 countries. Susan G. Komen hands out pink ribbons for breast cancer awareness, and Baker Hughes fracks. So, there you have it: a pink, fracking, drill head.  That’s Susan G. Komen pink, by the way. It’s special. Like John Deere green. And that signature color has been painted by hand on a thousand drill bits, which will soon be shipped by Baker Hughes to well pads all over the world, thus facilitating a thousand fossil fuel extraction projects just in time for Breast Cancer Awareness Month. Which is this month. (But please don’t confuse Baker Hughes pink drill bits with Chesapeake Energy’s “even-rigs-can-rally-for-a-cure” pink drill rigs. That was so 2012).

Pink Washing Breast Cancer - October is Breast Cancer Awareness month; it is also fundraising month for the Susan G. Komen Foundation. In what may be one of the most blinded by the shiney campaigns, the Komen Foundation has teamed up with Baker Hughes, one of the world’s largest fossil fuel services companies. - Baker Hughes Expands Commitment to Susan G. Komen - Company supports mission to end breast cancer forever. HOUSTON — Baker Hughes Incorporated (NYSE: BHI) announced today that for the second consecutive year, it will contribute $100,000 to support Susan G. Komen®, the world’s leading breast cancer organization, in its efforts to end breast cancer forever. It’s ironic that Baker Hughes has painted drill bits “Pink” when those very drill bits are part of a process which has been linked to breast and other cancers, something the fossil fuel industry continues to deny. We all know fossil fuel corporations are about profits and not people, so exploiting something like cancer for the PR value isn’t surprising. Baker Hughes isn’t the only fossil fuel corporation trying to be Pretty in Pink.  Chesapeake Energy and its subsidiary Nomac Drilling wrapped a new drilling rig in pink. What should be making you see RED is the Komen Foundation embracing the fossil fuel industry. This is a foundation which professes to save lives and end breast cancer forever. In accepting $100,000 from Baker Hughes, Chesapeake Energy (et al.) and lending their name to a PINK WASH campaign is beyond belief.

Pennsylvania told to release info on oil trains: The Pennsylvania Office of Open Records has told state emergency officials to release details on trains carrying crude oil from the Northern Plains following multiple explosive accidents. Friday's order came after railroads had argued the information should be kept secret. Norfolk Southern Railway and CSX Transportation cited potential security risks and business confidentiality. But the open records office said the information was neither proprietary nor likely to endanger public safety if released. The railroads were given 30 days to appeal. A May 7 U.S. Transportation Department order requires railroads to give state emergency officials details on the frequency and volumes of crude shipments from the Bakken region of Montana and North Dakota. A July, 2013 derailment of Bakken crude in Quebec caused an explosion and fire that killed 47 people.

Air quality officials sued over crude oil trains: An environmental group is suing Sacramento air quality managers for failing to require an environmental review of a crude oil transfer station. The Sacramento Bee reports the complaint was filed Monday by Earthjustice against the Metropolitan Air Quality Management District. The suit accuses the district of quietly approving permits for InterState Oil Company, allowing it to use McClellan Business Park as a site for transferring crude oil from trains into tanker trucks headed to refineries. It charges that air quality officials and InterState failed to review the potential hazards of running crude oil through neighborhoods, and asks the court to halt the transfer operations.

Opposition to drilling elevated to an art form: Artist Peter von Tiesenhausen puts his imagination to work overtime when oil companies try to enter his northwestern Alberta sanctuary. He suspects he made himself as well known to industry as art markets with novel but effective methods of peaceful resistance. Von Tiesenhausen has kept wells, compressors and pipelines off his three square kilometres of fields and trees -- a notable feat for his location that has attracted quiet visits from pillars of corporate Alberta. Guests have included ConocoPhillips Canada president Henry Sykes, an art collector, lawyer and son of former Calgary mayor and provincial Social Credit leader Rod Sykes. The spread von Tiesenhausen inherited from his parents, a former family farm 80 kilometres west of Grande Prairie, sits atop a natural gas hot spot known as the "deep basin." Industry has been in aggressive growth mode in the area since Calgarian Jim Gray's Canadian Hunter Exploration (now part of Burlington Resources, soon to merge with ConocoPhillips) discovered rich geological formations in the early 1970s. The artist's peaceful method of fending off gas production is a basic right as well established in his field -- copyright -- as the legal underpinnings of Alberta's energy industry. To fortify his changed livelihood on his family legacy, he has copyrighted his spread as a work of art. The action mimics strong legal foundations of pharmaceutical, computer software and publishing corporations, he pointed out. Around his home and studio, his property is studded with artwork such as a 33-metre-long ship sculpted with willow stalks, winter ice forms, nest-like structures in trees, statuesque towers and a "lifeline" or visual autobiography composed as a white picket fence built in annual sections left to weather naturally.

Intense Industry Pressure Causes E.U. To Stop Calling Tar Sands Dirty -- After years of intense lobbying from Canadian fossil fuel interests and government officials, the European Union has abandoned plans to label Canadian tar sands, or oil sands, as dirtier than other forms of crude oil. A European Commission proposal released on Tuesday would make it so that no transportation fuel used in the E.U. would be penalized for the carbon intensity of its production. This redefinition would make it easier for oil suppliers to export energy intensive tar sands to the 28-country block, whereas in previous proposals the fuel was designated as 25% more carbon intensive than conventional crude oil.  This change could lead to GHG intensity of European fuels actually increasing by around 1.5% in 2020, according to an analysis by the Natural Resources Defense Council (NRDC).
Environmentalists blamed the concession on leaders valuing trade over the environment and saw it as a blotch on the path towards the major United Nations’ climate summit scheduled for Paris next year where hopes of a new climate treaty are high.   The decision could also add momentum to the recently proposed Energy East pipeline from Transcanada, which would link Alberta’s tar sands with ports on the Canadian east coast. The pipeline would be able to transport 1.1 million barrels of tar sands crude oil per day, with Europe being considered as a priority destination.  The proposed law would apply to fuels used for transport, such as cars and trucks, and is part of a 2009 fuel quality directive aiming to cut lifecycle greenhouse gas emissions of road vehicles six percent by 2020 compared to 2010 levels. The original proposal, which would have singled tar sands out as significantly more polluting, incited a “vigorous lobbying effort” from the Canadian government, according to The Globe And Mail, a Canadian newspaper.

Keystone Be Darned: Canada Finds an Oil Route Around Obama -  So you’re the Canadian oil industry and you do what you think is a great thing by developing a mother lode of heavy crude beneath the forests and muskeg of northern Alberta. The plan is to send it clear to refineries on the U.S. Gulf Coast via a pipeline called Keystone XL. Just a few years back, America desperately wanted that oil. Then one day the politics get sticky. In Nebraska, farmers don’t want the pipeline running through their fields or over their water source. U.S. environmentalists invoke global warming in protesting the project. President Barack Obama keeps siding with them, delaying and delaying approval. From the Canadian perspective, Keystone has become a tractor mired in an interminably muddy field.  In this period of national gloom comes an idea -- a crazy-sounding notion, or maybe, actually, an epiphany. How about an all-Canadian route to liberate that oil sands crude from Alberta’s isolation and America’s fickleness? Canada’s own environmental and aboriginal politics are holding up a shorter and cheaper pipeline to the Pacific that would supply a shipping portal to oil-thirsty Asia. Instead, go east, all the way to the Atlantic. Thus was born Energy East, an improbable pipeline that its backers say has a high probability of being built. It will cost C$12 billion ($10.7 billion) and could be up and running by 2018. Its 4,600-kilometer (2,858-mile) path, taking advantage of a vast length of existing and underused natural gas pipeline, would wend through six provinces and four time zones. It would be Keystone on steroids, more than twice as long and carrying a third more crude.

Cramer: The bear market in oil is real - Is the oil thesis, the great American renaissance boom in oil, in trouble? You know that I am a huge believer in every aspect from the oil in the ground to the drilling and pipelines. But this sudden decline in oil prices is worrying some of the big oil-exploration companies, and not just because we have too much supply here, but because of what Saudi Arabia's doing. Last week the Saudis lowered the official cost of its crude, which marks the fourth straight month that they've cut the price, not the production. What does this mean? One could argue that the Saudis want to maintain their market share. I get that, and it makes sense, but I think it's something else. I think that the Saudis want to make our oil too expensive to keep drilling for. They recognize that there is a price where we will cut back operations. They are not afraid to drive oil down to that price to make the U.S. more dependent on the Saudis--we still use a lot of their oil. In short, they are trying to price us out of the game. There's plenty of cushion in all the big shale plays--Bakken, Niobrara, Eagle Ford and Permian--at these levels. This isn't a price where there's panic. The trajectory, however, is menacing, as is the velocity of the decline. It's a real bear market in oil. If the Saudis are just going to follow the price down, they will make it less economic to drill here, and some of the independents will have to think twice about adjusting their long-term budgets if they were based on ever-rising oil prices, as we know some of them are.

Fracking Firms Get Tested by Oil’s Price Drop - WSJ: Tumbling oil prices are starting to frighten energy companies around the globe, especially drillers in North America, where crude is expensive to pump. Global oil prices have fallen about 8% in the past four weeks. The European oil benchmark closed Thursday at $90.05 a barrel, its lowest point in 29 months. The price of a barrel in the U.S. closed at $85.77, its lowest since December 2012. Weakening oil prices could put a crimp in the U.S. energy boom. At $90 a barrel and below, many hydraulic-fracturing projects start to become uneconomic, according to a recent report by Goldman Sachs Group Inc. While fracking costs run the gamut, producers often break even around $80 to $85. “There could be an immense amount of pain,” said energy economist Phil Verleger. “As prices fall, you will see companies slow down dramatically.” The fundamental problem is that the world is awash with oil, but demand for energy is growing more slowly amid tepid economic growth around the globe, especially in China. Companies are always reluctant to be the first to cut their energy output, hoping that others flinch first. And hedging can help companies weather temporary drops. The overall U.S. economy, and especially industries such as refining and air travel, would benefit from lower oil prices.

Oil price drop puts fracking to the test: A further slump in oil prices may dampen shale drilling's profitable run, according to a report from Goldman Sachs. In the past four weeks, global oil prices plunged 8%. And a barrel in the U.S. is below $90, the first time in two years. On Thursday, shares of companies centered in North Dakota's Bakken Shale dropped more than 5%. If prices drop any further, the Wall Street Journal reports, drilling activity would slow down drastically. The key issue lies in the overabundance of oil, with sluggish global demand to match it. Texas, Colorado and North Dakota shale-drilling has increased U.S. production by nearly three million barrels a day since 2011.  And companies are playing a game of chicken—who will be the first to cut back? The least productive fringes of the Bakken would be the first drillers to react to price drops, said Paul Sankey, an energy analyst with Wolfe Research, to Wall Street Journal. Other analysts said it's still too early—a sustained, long-term drop in prices is required to convince companies to cut back on supply.

With Oil Prices in Freefall, Morgan Stanley Can’t Close on an Oil Deal - In July 2013 and again this past January, the U.S. Senate’s Subcommittee on Financial Institutions and Consumer Protection, part of Senate Banking, convened hearings to get a handle on the extensive physical commodity holdings of Wall Street banks. At the January hearing, Senator Sherrod Brown, chair of the Subcommittee, told hearing participants that “the six largest U.S. bank holding companies have 14,420 subsidiaries, only 19 of which are traditional banks.”  At the time of the July 2013 hearing, Morgan Stanley, one of the nation’s largest retail brokerage firms, an investment bank, as well as an FDIC insured depository bank, owned sprawling crude oil operations. Congress had been aware of Morgan Stanley’s foray into the oil business since at least 2009 when 60 Minutes reported that Morgan Stanley had acquired the capacity to store 20 million barrels of oil. Ostensibly as a result of the scrutiny, Morgan Stanley announced last December that it was selling its Global Oil Merchanting unit to a 100% subsidiary of Rosneft Oil Company, a large Russian crude oil producer. According to the press release Morgan Stanley issued at the time, the sale was to include an “international network of oil terminal storage agreements; inventory; physical oil purchase, sale and supply agreements; equity investments; and freight shipping contracts.” According to Morgan Stanley, it was also transferring to Rosneft its 49% stake in Heidmar Holdings LLC, which manages pools consisting of a fleet of 100 oil tankers. The deal was originally set to close in this year’s second quarter, then it moved to the third quarter. Now it’s the fourth quarter and the deal still hasn’t closed. In July the U.S. government imposed sanctions on Rosneft as a key player in the Russian economy, hoping to send a message to Moscow over its actions in the Ukraine.  Being stuck in an oil deal that can’t close is not an ideal situation with crude oil in freefall and Saudi Arabia making overtures of waging an oil price war.

We're Sitting on 10 Billion Barrels of Oil! OK, Two - Lee Tillman, chief executive officer of Marathon Oil Corp., told investors last month that the company was sitting on the equivalent of 4.3 billion barrels in its U.S. shale acreage. That number was 5.5 times higher than the proved reserves Marathon reported to federal regulators. Such discrepancies are rife in the U.S. shale industry. Drillers use bigger forecasts to sell the hydraulic fracturing boom to investors and to persuade lawmakers to lift the 39-year-old ban on crude exports. Sixty-two of 73 U.S. shale drillers reported one estimate in mandatory filings with the Securities and Exchange Commission while citing higher potential figures to the public, according to data compiled by Bloomberg. Pioneer Natural Resources (PXD) Co.’s estimate was 13 times higher. Goodrich Petroleum Corp.’s was 19 times. For Rice Energy Inc., it was almost 27-fold.   Investors poured $16.3 billion in the first seven months of the year into mutual funds and exchange-traded funds focused on energy companies, including drillers that create fractures in rocks by injecting fluid into cracks to enable more oil and gas to flow out of the formation. That’s almost twice as much as in the same period last year, bringing total assets to $128.2 billion, according to New York-based Strategic Insight.

Is the U.S. Really on Track to Energy Independence? - I have been covering shale development since 2005, and it looks like we are on track for energy independence by 2020 or so. However, we’re never going to stop importing oil because supply diversity is prudent. Depletion rates are significant in every shale play. Some of the depletion rates are quite steep in the early years of a play, but wells tend to produce for 20 years or so at a lower rate, so overall production rates are still growing. The monthly U.S. Energy Information Administration (EIA) reports show that in H1/14, U.S. gas natural production alone increased by more than 4 billion cubic feet a day (4 Bcf/d). The bulk is coming from the Northeast, from the Marcellus and Utica plays in Pennsylvania, Ohio and West Virginia. Also, a lot of new natural gas is coming on, in association with oil production in West Texas, in the Permian Basin, and in south Texas, in the Eagle Ford play. While some gas areas might be declining, we’re getting enough new natural gas to offset that decline. In fact, both oil and natural gas production in this country are the highest they’ve been in about 35 years. Natural gas in storage was down last year, and now we’re refilling. Every summer and fall, you refill storage to prepare for winter. It looks like we’re going to have a lot of gas in storage. We’ve had a fairly mild summer and haven’t had a huge call for natural gas for air conditioning, compared to what it could have been. Between the production and the weather factors, it looks like we’ll have plenty of gas in storage for the fall.

Is the US economy finally about to break free of the Oil choke collar?: If you've read my Weekly Indicator columns, you know that I have frequently mentioned the Oil choke collar. By that I mean, in the aftermath of the Great Recession, every time the economy appeared to pick up steam, gasoline prices would rocket toward $4 a gallon. This slowed the economy down, as a result of which gas prices would fall, starting the cycle again. In other words, gas prices acted as a governor regulating the speed of the economy. Or, like a choke collar. To put this in perspective, here is how oil prices rose in the 1970s and early 1980s (blue) vs. in the 2000s (red):  Now there are signs that the US may finally be breaking free, at least for awhile, of the Oil choke collar. On Monday, the E.I.A. reported that regular gas prices in the US were slightly under $3.30 a gallon, In 2011-12, gas prices were only lower than this for 5 weeks in December and January. In 2012-13, they were only lower than this for 3 weeks. Last year the lowest gas prices got was $3.19 on a weekly basis, in November. Here's how gasoline prices from 2011 to the present look: Back in early 2011, I wrote a piece entitled, How Oil's Choke Hold on the economy will end.  In that article, I identified 3 trends that I expected to contribute:
  • 1.  alternative fuels and technology
  • 2.  conservation
  • 3.  increased exploration.

Now is a good time to re-examine how each of these trends is affecting the supply and price of energy:

Kuwait invites oil majors back to develop key fields -- Kuwait is in talks with five major oil companies to help boost crude production and develop some of its oilfields including Burgan, the world’s second largest, a move that has faced fierce political opposition in the past. Kuwait has invited Britain’s BP, France’s Total, Royal Dutch Shell, ExxonMobil and Chevron to bid for a so-called enhanced technical service agreement for the northern Ratqa heavy oilfield, Hashem Hashem, chief executive of state-run Kuwait Oil Co. told Reuters Thursday. “We’ve invited the major five international oil companies to show interest. This is our approach,” Hashem said in a phone interview, adding Exxon might not be interested in this bid. “We are trying by first or second quarter of next year to conclude this contract.” The plan is part of efforts to meet Kuwait’s target of producing 4 million barrels of oil per day by 2020. The OPEC member currently produces around 3 million bpd and exports around two thirds of that. KOC also plans to open up other oilfields, such as its North Kuwait fields and areas of the giant Burgan field, for foreign oil companies to develop, and will send a letter to the five majors seeking their interest in bidding, Hashem said. “We are starting first with the heavy oil and then will continue with north Kuwait and south-east Kuwait. We will take it in stages, one-by-one,” he said. It will be the first time KOC has developed such a big heavy oil reservoir and the plan is to produce 60,000 bpd from Ratqa, which lies close to the Iraqi border, by 2018-2019 in the first phase, and then ramp it up to 120,000 bpd by 2025.

Islamic State Battles Kurds Over Border Town To Maintain Oil Trade: Islamic State militants have been fighting for the past week for control of a key town straddling the Syrian-Turkish border. A victory by IS in Kobani, better known in the Arab world as Ain al Arab, would be a setback for the U.S.-Saudi-led alliance fighting the world’s most dangerous and most powerful terrorist organization. More importantly, a victory for IS would give the group prestige among the dozens of groups lined up in the fight against Syrian President Bashar Assad. It would also secure the terror organization’s flow of oil to a lucrative market – its link to the outside world via Turkey, as I reported last week.  Proof that this conflict is far from being a religious war, as IS would have the world believe, is the current battle to the finish between the Sunni militant group and the Kurds in Kobani. The Kurds are overwhelmingly Sunni Muslim, yet IS is going after them with a vengeance. It’s a revealing detail about who’s in power in IS: former members of the regime led by Saddam Hussein, who, it should be recalled, used chemical weapons against the Kurds, gassing entire villages.

Michael Klare: Obama’s Oil Weapon -  Naked Capitalism; Yves here. It really is remarkable to see the degree to which the Administration tries to, and succeeds in, convincing the public that our efforts to remake the Middle East are anything other than oil wars (well, maybe also about assuring that all guns vs. butter budget fights go as much in favor of guns as possible). For instance, do you really think the failed effort of summer 2013 to go into Syria was really about our tender concern about Assad’s purported gassing of opponents? Or (if you weren’t paying attention all that closely) how about the way our intervention in Kurdistan seemed to be about the noble desire to protect religious sects no one had ever heard of before? How about looking at a map? Heard about the Mosul Dam? Controlling it gives ISIS the ability to flood a huge chunk of Iraq down to Baghdad. But the coverage of the rescue of the Yazidi refugees in Kurdistan occurred at roughly the same time that ISIS got control of the Mosul Dam and got vastly more attention in the Western media. And let us not forget that Iraq has the second largest supply of oil reserves, and like Saudi Arabia’s, it’s highly prized sweet crude.  Here Michael Klare argues that the use of energy as a weapon has become even more central in US foreign policy under Obama.

Saudi Arabia Goes Rogue, Risking Oil Price War - Typically, cartels like OPEC are supposed to act in unison on prices. But last Wednesday, Saudi Arabia’s state-owned oil company, Saudi Aramco, stunned world oil markets by acting alone in cutting its official crude price by $1 per barrel for November deliveries to its Asian customers. It also dropped its price by approximately 40 cents per barrel to U.S. and European customers. If this is the opening salvo of a replay of 1986, be forewarned that crude oil prices plunged by over 50% in less than 8 months in that era. Fast forward to 2014. The new players are King Abdullah and Saudi Arabian oil minister Ali al-Naimi. U.S. domestic crude, known as West Texas Intermediate, or WTI, is at 17-month lows while Brent, the international benchmark, is trading near 27-month lows. In early morning trade, WTI was below $90 at $89.39 with Brent at $91.79. Making the situation even more volatile today, the International Energy Agency, which has cut demand prospects in its last three monthly reports, is due out later today with a new assessment. In its September 11 report, it called the slowdown in demand “nothing short of remarkable.” Adding to concerns of a growing supply glut are the economic woes in Europe and China.

It’s a super market price war! (in oil) - That Saudi Arabia and the Opec cartel were going to be “disrupted” by North Dakota millionaires was hardly difficult to foresee.  What was always harder to figure out, however, was how Saudi would react. Would Opec’s most important swing-producing state cave in and give up on market share for the sake of price control? Or, conversely, would it be more inclined to follow along the lines of the Great UK Supermarket Price War, and enter a clear-cut race to the bottom?  So far, it seems, the strategy is focused on the latter course. Which means people are finally beginning to wonder just how sustainable a path that really is. More so, to what degree does such a price war potentially disrupt the average break-even rate for the entire industry and compromise energy security more widely? What exactly happens to prices when the cartel effect is stripped out? Ladies and gentlemen, it’s time to take your sides in the great oil price war of 2014. Gunning for Team Saudi Arabia (just about), we have the analysts under Seth Kleinman at Citi. As they note on Wednesday, they feel confident that Saudi Arabia has the stamina to go the distance to come out triumphant. That said, it could prove a “painful, pyrrhic and short-lived victory” as the price floor from shale should continue falling. The key point, the analysts say, is that oversupply in light sweet crude is being driven by Algeria, Angola, Libya and Nigeria, not Saudi Arabia. Crude exports from the “OPEC 4” are up about 0.9m barrels per day since January, having topped 5m barrels per day first time since June 2013. Since then the US has added around 1.5m barrels a day of light sweet crude output. That basically means a cut in Saudi output (which is not light and sweet) would do very little to address the light sweet crude overhang, a new phenomenon.

Why Oil Is Plunging: The Other Part Of The "Secret Deal" Between The US And Saudi Arabia - Two weeks ago, we revealed one part of the "Secret Deal" between the US and Saudi Arabia: namely what the US 'brought to the table' as part of its grand alliance strategy in the middle east. What was not clear is what was the other part: what did the Saudis bring to the table, or said otherwise, how exactly it was that Saudi Arabia would compensate the US for bombing the Assad infrastructure until the hated Syrian leader was toppled, creating a power vacuum in his wake that would allow Syria, Qatar, Jordan and/or Turkey to divide the spoils of war as they saw fit. The full answer comes courtesy of Anadolu Agency, which explains not only the big picture involving Saudi Arabia and its biggest asset, oil, but also the latest fracturing of OPEC at the behest of Saudi Arabia which however is merely using "the oil weapon" to target the old slash new Cold War foe #1: Vladimir Putin.

World on the brink of an oil price war -- A group of the world’s most powerful oil ministers will soon gather in Vienna to take arguably one of the most important decisions that could affect the still fragile world economy: whether to cut production of crude to defend prices at $100 (Dh367) per barrel, or keep open the spigots as winter looms among the biggest energy-consuming nations? A sudden slump in the price of crude has exposed deep divisions within the Organisation of Petroleum Exporting Countries (Opec) ahead of its final scheduled meeting of the year next month to decide on how much oil to pump. Some members, led by Iran, have called for immediate action to stem the drop in oil prices, while Arab Gulf countries have so far argued that it could be another three months before it becomes clear whether the group should cut production for the first time since December 2008. Whatever they decide, oil remains the lifeblood of the global economic system due to its direct impact on inflation and input prices. Brent crude — a global benchmark of oil drawn from 15 fields in the North Sea, dipped last week to multi-year lows below $92 per barrel as a perfect storm of a strong US dollar, oversupply in the system and declining demand shattered confidence in the market. Brent has tumbled 20 per cent in the last three months after touching $115 per barrel in June. In the US — the world’s biggest consumer — crude for November delivery at one point last week dropped below the psychologically important $90 pricing level, raising fears that a prolonged slump could put many of America’s shale drillers out of business. Shale oil, which can cost up to $80 per barrel to produce, has spurred an energy revolution in the US, which has started to threaten the dominance of producers in the Middle East. However, at current price levels many of these new so called “tight oil” wells are approaching the point when they will soon become unprofitable.

Some Assembly Required: SAR #14283: Oil at the current +/- $90 a barrel ((splitting WTI at $86 and Brent just over $90) is or is not a good thing depending on its cause (above) and its effects: It is certainly good at the US gas pump. But $90 a barrel would make about 9% of US shale production unprofitable and if that level held for very long could drive many American fracking/shale operators out of business with their highly leveraged operations and $80/barrel production costs. Oil at $80 would put about 40% of fracking producers out of business. Ditto for the hoped-for expansion offshore of the Shetland Islands in the North Sea – and the British government is not prepared to take the budget hit that declining production tax revenues would yield.  OPEC would seem immune because of their low production costs – with a Middle Eastern cost average of just over $16 a barrel. But most OPEC nations have budgets based on oil prices near or over $100: The UAE needs about $70 a barrel, the Saudi Arabia budget calls for $93, Iraq planned on $106 a barrel, Iran needs $130 a barrel (and isn't going to get it). (and isn't going to get it). How much swing does OPEC have? With about 30% of the world's traded production (ignoring domestic consumption), they have a strong influence but do not control prices unless they shut off their spigots which they cannot afford to do for long even though they have immense reserves of both cash and petroleum. The tensions within OPEC – the richer and better prepared vs the rest – will certainly add to the drama. Iraq is in the latter camp. How will OPEC enforce quotas when budgets need sales? How much longer can the shale industry survive? Does the price of oil still control the US economy? Will the dollar's strength continue? How far will China's economy fall? Will Europe go into recession? Place your bets.

Oil: More About Supply than the Dollar - The US dollar's upside momentum has faded, but oil prices remain depressed. Many observers try, too hard perhaps, to link the decline in commodity prices in general, and oil in particular, to the appreciation of the dollar. Yet the situation is considerably more complicated. There is a case that can be made that the decline in commodity prices reflects slower world growth prospects in general. Demand in China, the key consumer of commodities, has softened, and its crackdown on using commodities to disguise capital flows, or use as collateral for loans, may also be weighing on demand. This weakness in the global economy stands in contrasts to the US economy, which grew 4.6% in Q2, and appears to have been around 3% in Q3. This contrast, or divergence, has helped bolster the dollar. However, this conventional narrative does not do justice to the supply side. From a high level, more often than not, dramatic moves in commodities seem to be a reflection of supply shocks more than demand shocks. For example, record harvests in the US explain the decline in grain prices more than the dollar or a slowing of the world economy can. Oil prices have fallen by 17-20% since mid/late June. There may be some role for the global slowdown and the appreciation of the dollar, but these are not the main drivers.  We see two main forces.  The first is Saudi Arabia.  It usually acts as the swing producer, cutting output when prices are low and increasing output when prices are high.  It is not cutting output presently.  To the contrary it looks to have stepped up its output. 

Steaming slowly toward the limits of growth - Mark Buchanan - A few days ago I wrote a column in Bloomberg exploring some ideas about possible physical (and biological/ecological) limits to economic growth. I pointed out that total global energy consumption continues to grow even as we learn to use energy ever more efficiently. And I suggested — based on empirical data from the recent past — that there’s little reason to believe, as many economists quite confidently do, that our energy use will soon “decouple” from economic expansion, enabling us to fly off into a future of unlimited betterment through increasing economic output, even as we come to use less and less energy. I also examined a few reasons why continuing to use ever more energy is a certain path to ever worsening ecological problems; it’s really not a wise option. Economist and prolific New York Times columnist Paul Krugman was irritated, even exasperated, and fired off an “acerbic rebuttal” (to use Noah Smith’s elegant description). He was aggravated that I, as a physicist, was weighing in on topics he thinks should be left to economists. He also suggested that I was just recycling an old argument originally put forth by other physical scientists, which his fellow economist William Nordhaus had completely demolished long ago. Now Krugman had to rise up to do it again! How tiring! But Krugman’s actual argument was surprisingly weak, and I think grossly misleading, so here’s an attempt to bring a little more clarity to the discussion. I do think Krugman is a brilliant columnist, and I agree with him on lots of things, maybe even most things. But he very much has the wrong end of the stick on this one.

Limits to Growth One More Time  - I’d like to respond to the dustup between Mark Buchanan and Paul Krugman over whether energy (and other resource) use can be decoupled from GDP growth.
1. I get the impression that Buchanan identifies GDP with “stuff,” at least subconsciously.  But GDP is value, what people are willing to pay for.  When I teach an econ class, that’s a component of GDP.  If an extra student shows up, that’s GDP growth.  Of course, a lot of GDP really is stuff, but as economies develop they tend to become less stuffy.  Overall not enough, but how unstuffy they could become is an empirical, not a theoretical matter.
2. But I agree with Buchanan that increases in energy efficiency alone are unlikely to accomplish what we need to contain climate change.  Absent changes on other fronts, the growth of demand for energy services will simply swamp the effect of greater efficiency.  This has been true in the past and any realistic projection puts it in our future as well.
3. And Buchanan is also right that there is no historical precedent for the kind of decoupling between economic growth and fossil fuel use (let’s be specific here) that we would need to meet both economic and climate goals.  The notion of foregoing most of our remaining supplies of extremely energy-dense minerals flies in the face of all of human history.  That’s why it will be a big challenge to bring it off.  The challenge begins with putting in place a policy that prohibits most fossil fuel development.  You can discuss the particulars, but there is no getting around the need for a binding constraint.  The reason is exactly the one that Buchanan pinpoints: increases in efficiency and even increases in renewable energy sources alone will not be sufficient by themselves to offset the energy demands stemming from global GDP growth.
Can we compel most fossil fuels to stay in the ground and still have economic growth?  Since this is about growth in value and not necessarily stuff, the answer still seems to be yes.  But we won’t have a sufficient shift away from stuffiness without measures that prohibit dangerous levels of fossil fuel extraction.  An unprecedented change in the trajectory of economic growth requires unprecedented policies.

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