Investors prefer “Drill, baby, drill!” — even over profits


Click to enlarge

Investors sent a surprising message to U.S. shale producers as crude fell almost 20 percent in August: keep calm and drill on.

While most oil stocks have fallen sharply this month, the least affected by the slump share one thing in common: they don’t plan to slow down, even though a glut of supply is forcing prices down. Cimarex Energy Co. jumped more than 8 percent in two days after executives said Aug. 5 that their rig count would more than double next year. Pioneer Natural Resources Co. rallied for three days when it disclosed a similar increase.

Shareholders continue to favor growth over returns, helping explain why companies that form the engine of U.S. oil — the frackers behind the boom — aren’t slowing down enough to rebalance the market. U.S. production has remained high, frustrating OPEC’s strategy of maintaining market share and enlarging a glut that has pushed oil below $40 a barrel.

Output from 58 shale producers rose 19 percent in the past year, according to data compiled by Bloomberg. Despite cutting spending by $21.7 billion, the group pumped 4 percent more in the second quarter than in the last three months of 2014…

Growth has been a key pillar of the revolution that helped transform the U.S. into the world’s largest producer of oil and gas. Frenzied drilling often distinguished the new technology’s winners, while profits or free cash flow were less important.

Even amid the worst price crash in a generation, that continues to be true for some companies. Pioneer is expected to spend $735 million more this year than it generates in cash. Cimarex, which lost almost $1 billion from January to June, has fallen just 6.4 percent so far in 2015 even as U.S. crude declined by more than a quarter.

Gee. If drillers run out of storage facilities for their overproduction – I can suggest a few dry reservoirs formerly used for water in the Southwest.

Increase in quakes from fossil fuel boom prompts new USGS hazard maps


Drilling in Weld County, Colorado

Earthquakes of magnitude 3 or greater are 100 times more likely now than in 2008 in regions of Colorado and seven states that are hotbeds for oil and gas drilling, federal geologists said Wednesday.

This has prompted the government to prepare new seismic-risk maps for construction, insurance and public safety.

The question of who bears the costs of possible damage and quake-resistant construction has yet to be decided. But a U.S. Geological Survey team, based in Colorado, also has started a series of meetings with engineers and designers…

“If you live in one of these areas of induced seismicity, you should educate yourself and those around you for protective actions you can take,” Mark Petersen, chief of the agency’s National Seismic Hazard Modeling Project said…

While most industry-induced quakes result from disposal of wastewater, the scientists said they’ve documented quakes caused by hydraulic fracturing, or fracking, the process used to stimulate release of oil and gas from deep shale rock formations.

USGS scientist Bill Ellsworth said quakes linked to fracking are short-lived…

USGS researchers are investigating whether industry-triggered quakes could spur bigger earthquakes along natural geological fault lines.

There’s no evidence that industry could cause quakes up to magnitude 7, the level associated with catastrophic natural quakes. “But we cannot rule that out,” USGS scientist Justin Rubinstein said…

Insurance companies see quakes in Colorado as an emerging risk. There’s no claims history, said Carole Walker, director of the Rocky Mountain Insurance Industry Association.

“We hope people will purchase insurance if there’s an increased risk. If insurance isn’t purchased, you don’t have the coverage for it and it can become a litigation issue,” Walker said. “A business or homeowner could sue for damages, and they would have to prove the causation of the risk.”

While the insurance industry statement sounds like a copout turned into a sales pitch, they have the bucks to carry forward a lawsuit against oil and gas drillers. Even if they charge penurious rates – and I have no idea what earthquake insurance in the Rocky Mountains would cost – they will be likely to attempt to recoup their expenses by suing whoever is handy.

And that establishes the baseline for future suits.

Texas bill will forbid towns and cities from banning fracking


Click to enlargeSpencer Platt/Getty ImagesTrucks near a fracking site in Odessa, Texas

Last time I was in Odessa I commented on the absence of birds on the prairie – dotted with pumpjacks and pipelines. Bubba said, “Smell that air. That’s the smell of money. Of course, it killed all the birds.”

A bill supported by energy companies that prevents cities and counties from banning the practice of fracking on their land has been passed by the first tier of state legislators in Texas and is on course to become law.

The proposed law would stop municipalities and other local authorities from enacting their own bans on the practice of hydraulic fracturing and drilling for crude oil and natural gas. The state would have the power to override any such efforts and give gas and oil companies the access they desire to extract resources, against the wishes of voters and politicians at local level if necessary.

The bill was approved by the Republican-controlled Texas House…and will now proceed to the Senate, where it is expected to be approved, and then to Governor Greg Abbott. Abbott has previously decried the level of regulation placed on such companies by local authorities.

Abbott fears democracy as much as any of his peers. As much as Republicans lie about reining in the power of the state – using that power to benefit corporate greed is OK.

The move came in response to a recent decision by Denton, a college town about 30 miles from Dallas, to ban fracking inside its city limits over concerns about recurring small earthquakes and other safety worries linked to deep gas wells. Denton sits on a gas-rich shale formation that stretches across 24 counties in north Texas…

Moves by local authorities to try to keep fracking out of their backyards are afoot in other parts of Texas. Opponents of the bill now going through the Texas legislature complain that the state is grabbing power from local government and say the new law will jeopardise safety close to homes and schools.

Some of the most archaic laws this side of sharia are still on the books in this land of freedom, the American West. They were written by the owners of extractive industries like mining and logging, by the patrons of Spanish land grants who wished sole governance over access to water.

The best any ordinary mortal can generally hope for is a pittance of the profits or an even smaller fraction of water rights, surface water or ground water. Our bought-and-paid-for politicians – especially at the state level – play all the traditional games, dance the traditional dances. Hallowed ancestors, freedom-loving settlers is one of the most hypocritical concepts – generally describing someone who stole this land from Native Americans.

Just one more trick bag Americans have to get mad enough to tear up and scatter to the wind – like all baronial declarations.

Obama tightens regulations on fracking chemicals disclosure – sort of

The Obama administration said Friday it is requiring companies that drill for oil and natural gas on federal lands to disclose chemicals used in hydraulic fracturing operations.

A rule to take effect in June also updates requirements for well construction and disposal of water and other fluids used in fracking, a drilling method that has prompted an ongoing boom in natural gas production.

The rule has been under consideration for more than three years, drawing criticism from the oil and gas industry and environmental groups. The industry fears the regulation could hinder the drilling boom, while some environmental groups worry that it could allow unsafe drilling techniques to pollute groundwater.

What crap writing/editing. It’s the absence of regulations that allows unsafe drilling techniques to pollute groundwater.

The final rule hews closely to a draft that has lingered since the Obama administration proposed it in May 2013. The rule relies on an online database used by at least 16 states to track the chemicals used in fracking operations. The website, FracFocus.org, was formed by industry and intergovernmental groups in 2011 and allows users to gather well-specific data on tens of thousands of drilling sites across the country.

Companies will have to disclose the chemicals they use within 30 days of the fracking operation.

While the new rule only applies to federal land – which makes up just one-tenth of natural gas drilling in the United States – the Obama administration is hoping the rule will serve as a model and set a new standard for hydraulic fracturing that states and other regulators will follow.

Brian Deese, a senior adviser to President Barack Obama, said…“Ultimately, this is an issue that is going to be decided in state capitals and localities as well as with the industry,” he said…

Thomas Pyle, president of the pro-industry Institute for Energy Research, said blah, blah, blah.

The League of Conservation Voters called the bill an important step forward to regulate fracking.

Even so, the group was disappointed with the continued reliance on FracFocus, which a spokeswoman described as an industry-run website.

Participation in FracFocus is voluntarily. So, the creeps using deleterious chemicals simply don’t participate.

FracFocus, right now, displays info on fewer than 95,000 oil and gas wells. The industry admits to approximately 441,000 fracked gas wells alone.

After three years of introspection, investigation and time-wasting the White House proposes tightening of regulations based on info from a single voluntary website. No requirements for compliance. And the regulations only apply to federal lands.

Window dressing.

The rest is left in the hands of state legislatures who will use their God-given states rights – and motivational handouts from oil and gas lobbyists – to do absolutely nothing.

High levels of a carcinogen found in fracking waste water

Hoping to better understand the health effects of oil fracking, the state in 2013 ordered oil companies to test the chemical-laden waste water extracted from wells.

Data culled from the first year of those tests found significant concentrations of the human carcinogen benzene in this so-called “flowback fluid.” In some cases, the fracking waste liquid, which is frequently reinjected into groundwater, contained benzene levels thousands of times greater than state and federal agencies consider safe.

The testing results from hundreds of wells showed, on average, benzene levels 700 times higher than federal standards allow, according to a Times analysis of the state data.

The presence of benzene in fracking waste water is raising alarm over potential public health dangers amid admissions by state oil and gas regulators that California for years inadvertently allowed companies to inject fracking flowback water into protected aquifers containing drinking water.

The federal Environmental Protection Agency called the state’s errors “shocking.” The agency’s regional director said that California’s oil field waste water injection program has been mismanaged and does not comply with the federal Safe Drinking Water Act.

Read it and weep, folks. Shocking, I say – shocking.

Except I’m not shocked. BITD, I worked in and around oil fields in Louisiana and there is no other class of business [in my experience] that spends 24 hours a day looking for ways to circumvent regulations. Especially requirements for environmental health and safety.

The article is the sort of thing LA Times journalists are thorough about. They don’t skimp on excellence. And, no, I don’t think the Feds have any right to be shocked. They should have been watching these sharks like tuna on toast.

Fracking banned in New York State as public health risk

Gov. Andrew M. Cuomo’s administration has announced…that it would ban hydraulic fracturing in New York State because of concerns over health risks, ending years of uncertainty over the disputed method of natural gas extraction.

State officials concluded that fracking, as the method is known, could contaminate the air and water and pose inestimable dangers to public health.

That conclusion was delivered during a year-end cabinet meeting Mr. Cuomo convened in Albany. It came amid increased calls by environmentalists to ban fracking, which uses water and chemicals to release oil and natural gas trapped in deeply buried shale deposits…

Mr. Cuomo, a Democrat who has prided himself on taking swift and decisive action on other contentious issues like gun control, took the opposite approach on fracking. He repeatedly put off making a decision on how to proceed, most recently citing a continuing — and seemingly never-ending — study by state health officials.

On Wednesday, six weeks after Mr. Cuomo won re-election to a second term, the long-awaited health study finally materialized.

In a presentation at the cabinet meeting, the acting state health commissioner, Dr. Howard A. Zucker, said the examination had found “significant public health risks” associated with fracking.

Holding up scientific studies to animate his arguments, Dr. Zucker listed concerns about water contamination and air pollution, and said there was insufficient scientific evidence to affirm the long-term safety of fracking.

Dr. Zucker said his review boiled down to a simple question: Would he want to live in a community that allowed fracking?

He said the answer was no.

“We cannot afford to make a mistake,” he said. “The potential risks are too great. In fact, they are not even fully known.”

Good enough for me. I still have a few reservations about environmental reservations. Those mostly reflect the paucity of studies on fracking and health. Everything raised by Dr. Zucker can be raised about every form of drilling for fossil fuels. And I think if we’re to ban one technique – we may as well ban them all.

Incidentally, that wouldn’t upset me, either.

Thanks, Mike — GMTA

Denton, Texas won Round One of the fight against fracking


Denton folks Michael Hennen and Susan Vaughan campaign to ban fracking

The fracking ban that came into effect on Tuesday in the heart of Texas might never have happened at all, if industry had not insisted on fracking beside a local hospital, a children’s playground, and the 100-year-old farmhouse that was Cathy McMullen’s retirement dream.

That brought fracking a step too far. McMullen believes such overreach – typical under the Texas regulatory framework – helped turn a ruby-red Republican town against fracking.

Despite industry objections – and death threats for McMullen and other activists, Denton voted by 60% to ban fracking last month. The victorious activists like to call their fight David v Godzilla, because the oil industry is so powerful in Texas. That fight is not over yet.

George P Bush, the nephew and grandson of the former presidents, will soon take charge of the General Land Office – one of two Texas state agencies that have joined an industry lawsuit to overturn the ban.

But McMullen and the small group of mainly female activists behind the ban are already inspiring towns in Texas and elsewhere that are looking for ways to rein in an industry that so far has enjoyed supreme rights to frack.

The oil and gas companies probably would be fracking still in Denton if they had not completely dismissed McMullen’s concerns, she said.

They underestimated us completely,” she said. “I think they all just thought: ‘Oh, it’s just Cathy.’ I don’t think they saw the storm clouds on the horizon, and that industry was creating this storm, and that it was going to blow into town, and everybody was just sick of it.”

RTFA. It’s a great tale of ordinary folks not especially political in their daily life – until they asked questions, tried as citizens of the United States and that supersized state of Texas to bring back the quality of life they had – before fracking started in the city limits of Denton, Texas.

Their victory has inspired others. Something the Godzillas of fossil fuel hate as much as an individual like Cathy McMullen winning her fight in Denton. Now, Reno, Texas, is cranking up the alarm of opposition to fracking in their small Texas town.

And they have to get things done on their own – just like in Denton. If there’s anything that the Oil Patch Boys own in Texas – it’s politicians.

Thanks, Mike — GMTA

Fracking fluids not any more toxic than common household products

wyoming-jonah-oil-and-gas
Click to enlarge — The Jonah natural gas field in Wyoming

The chemicals found in fracking fluid collected in five states — including Colorado — were no more toxic than common household substances, according to a newly released study by researchers at the University of Colorado.

The study…found that chemicals in the fracking fluid samples also were found in everyday products such as toothpaste, detergent, ice cream and laxatives.

Michael Thurman…said, “At least so far, we’re finding chemicals that are more friendly to the environment,” Thurman said. “The compounds are not the kinds of things we consider toxic.”

The study examined samples from Colorado, Nevada, Louisiana, Pennsylvania and Texas. According to the researchers, fracking fluid is comprised mostly of water and sand, but oil and gas companies add a variety of other chemicals such as anti-bacterial agents, corrosion inhibitors and surfactants — chemicals that reduce the surface tension between water and oil…

There have been concerns about the chemicals used by oil and gas companies in fracking. Recent state and federal regulations require companies to disclose what is being used in their fracking fluids, but companies typically use broad chemical categories to describe the actual ingredients to avoid revealing what they consider proprietary information.

The researchers cautioned that individual well operators might use different chemicals based on location, and said there are still other concerns about fracking, including air pollution, the antimicrobial biocides used in fracking fluids, wastewater disposal triggering earthquakes and the large amount of water used.

But Thurman said water pollution from surfactants in fracking fluid may not be as concerning as some people had thought, with the really toxic surfactants, such as endocrine disruptors, not being used in the wells that were tested.

“Not finding those chemicals is really important,” he said.

Thurman said he plans to continue analyzing the surfactants used in fracking and wants to look at more samples to determine if those he identified in the study are in fact used widely. If they are, he said, they could be used as markers to determine if a well or other groundwater source has been contaminated by fracking fluid.

A pleasant surprise. Well drillers are gunshy because of the number of times they’ve been caught and found guilty of environmental degradation. They’ve actually increased the perception of wrongdoing by their secrecy fetish.

I’ve worried less about the process of fracking than most of my enviro peers because I have at least a minimal comprehensions of geology. Looking at aquifers here in Santa Fe County I get lots of chuckles from panic-stricken water dweebs who don’t know what an aquifer really is, how many we have in the region and how thoroughly they are separated. Plus – I admit – I’m a little smug from living at the dead end of the major Ancha aquifer – watching the water table rise because everyone upstream is diligently working at using less water. 🙂

The most important points Michael Thurman raises remain – and should guide opposition to more oil well-drilling in general – especially air pollution, wastewater disposal triggering earthquakes and the large amount of water used. Methane is going to continue to work its way into the atmosphere from every kind of oil well/oil field on the planet. Most of the industry’s production is from fields with lower standards than the United States. And you might remember that we’re only 6% of the land mass on the planet.

The fight against fossil fuel has to be planet-wide – and dedicated. Not just this election cycle – not just because the Blue Meanie Republicans are obedient pawns of the Oil Patch Boys.

Thanks, Mike

Collateral damage – from Mike’s research: Sioux Nations oppose Keystone XL pipeline.

A turning point in the flow of oil


BW Zambesi loading crude oil in Galveston, TXPhoto Enterprise Products

The Singapore-flagged tanker BW Zambesi set sail with little fanfare from the port of Galveston, Tex., on July 30, loaded with crude oil destined for South Korea. But though it left inauspiciously, the ship’s launch was another critical turning point in what has been a half-decade of tectonic change for the American oil industry.

The 400,000 barrels the tanker carried represented the first unrestricted export of American oil to a country outside of North America in nearly four decades. The Obama administration insisted there was no change in energy trade policy, perhaps concerned about the reaction from environmentalists and liberal members of Congress with midterm elections coming. But many energy experts viewed the launch as the curtain raiser for the United States’ inevitable emergence as a major world oil exporter, an improbable return to a status that helped make the country a great power in the first half of the 20th century…

Like just about everything else in the oil and gas business, petroleum exports are contentious. The oil bounty is thanks to modern production techniques including hydraulic fracturing, or fracking, which involves injecting water and chemicals into the ground to crack oil-saturated shale. Exports would mean more of that. Many environmentalists say fracking operations endanger water supplies or create other hazards, including air pollution. Ramping up exports of fossil fuels, critics will surely note, is inconsistent with the Obama administration’s push for a global climate deal.

Independent refiners argue that exports could mean more expensive domestic oil for them, which they say could mean higher prices for American consumers.

The article goes on from there. I think it’s pretty clear where the TIMES and the rest of our news-as-entertainment, corporate PR reprints, is handling this qualitative change. We the consumers will be screwed. Big oil will lap up increasing profits. Environmental concerns go down the crapper along with everything but the pretense of sensible economic regulation.

Thanks, Mike

What Halliburton fracking chemicals polluted an Ohio waterway?

On the morning of June 28, a fire broke out at a Halliburton fracking site in Monroe County, Ohio. As flames engulfed the area, trucks began exploding and thousands of gallons of toxic chemicals spilled into a tributary of the Ohio River, which supplies drinking water for millions of residents. More than 70,000 fish died. Nevertheless, it took five days for the Environmental Protection Agency and its Ohio counterpart to get a full list of the chemicals polluting the waterway. “We knew there was something toxic in the water,” says an environmental official who was on the scene. “But we had no way of assessing whether it was a threat to human health or how best to protect the public.”

This episode highlights a glaring gap in fracking safety standards. In Ohio, as in most other states, fracking companies are allowed to withhold some information about the chemical stew they pump into the ground to break up rocks and release trapped natural gas.

The oil and gas industry and its allies at the American Legislative exchange Council (ALEC), a pro-business outfit that has played a major role in shaping fracking regulation, argue that the formulas are trade secrets that merit protection. But environmental groups say the lack of transparency makes it difficult to track fracking-related drinking water contamination and can hobble the government response to emergencies, such as the Halliburton spill in Ohio.

This was true when I worked along the Gulf of Mexico decades ago. Ain’t nothing changed especially.

Trade secrets claims are a ruse to keep folks concerned with a living in a safe environment from finding out what crap the drilling companies are pumping into Mother Earth. Industry competitors will find out what they’re using for drilling and fracking if it appears to provide an advantage. Believe me.

No – the scumbags all the way up to the top of Halliburton and the American Petroleum Institute consider nothing to be as critical as optimizing the profits they suck from the ground. Whatever crap they leave behind, which poisons remain behind or pose a danger above-ground like the Monroe County fire – is only a concern if it makes a difference in dollar$ in their quarterly report to Wall Street and shareholders.

Worried about hobbling government response to emergencies? Go high enough up the state and federal food chain and the only handicap you’ll run into is making the mistake of thinking that hand is out to greet you. That palm is there to be greased with green.