Coast Guard Issues Interim Rule for Offshore Supply Vessels

Source: US Coast Guard | 25 August 2014

The US Coast Guard issued an interim rule regarding regulations to mitigate the risk created by the removal of the statutory size limit previously placed on offshore supply vessels. The regulations were effective immediately upon publication in the Federal Register on 18 August.

The Coast Guard Authorization Act of 2010 removed the statutory size limit previously placed on offshore supply vessels and required the Coast Guard to issue regulations to mitigate the risk created as a result, noting the need to ensure safe carriage of oil, hazardous substances, and individuals other than crew on offshore supply vessels of at least 6,000 gross tonnage as measured under the Convention Measurement System.

Administration Studies Arctic Requirements

Source: FuelFix | 19 August 2014

The Obama administration is closer than ever to imposing the first minimum standards for oil and gas activity in US Arctic waters, as Shell pursues permits that could allow it to resume drilling in the region next year.

The Interior Department sent a draft of those Arctic regulations to the Office of Management and Budget (OMB) on 15 August, marking the launch of an interagency review process that typically spans months. The rule’s arrival at OMB was disclosed online by 17 August.

Conservationists say the standards are urgently needed to ensure oil and gas companies working in the remote and unforgiving Arctic use ice-worthy vessels and have enough emergency equipment stashed nearby. A government advisory panel offered similar recommendations in 2013.

Shell’s Washington Oil-by-Rail Plan Gets Streamlined Permitting

Source: Reuters | 19 August 2014

Royal Dutch Shell’s proposal to move by rail up to 60,000 B/D of North American crude to its Washington state refinery will not have to undergo a lengthy environmental review, local planners said.

The plan still awaits multiple permit approvals before construction can start, but the Skagit County Planning and Development Services division’s decision that a full-fledged environmental review is not required eliminates what could have been a lengthy delay of up to a year.

Shell’s project could now start up by early 2015, but the company has not disclosed when.

“Construction timing will depend on when all of the permits are approved. We are still too early in the overall permit process to forecast when we will start construction,” Shell spokeswoman Destin Singleton said.

Shell is the last of the state’s refiners to seek approvals to move cheaper US and Canadian oil by train to their plants to replace more expensive imports. Tesoro Corp was the first, starting shipments of up to 50,000 B/D to its 120,000 B/D Anacortes refinery in September 2012. Shell’s 145,000 B/D refinery sits right next to the Tesoro plant.

Report Says At Least 33 Companies in US Are Fracturing Illegally

Source: Shale Energy Insider | 15 August 2014

The illegal injection of diesel fuel during hydraulic fracturing has continued over the last 4 years, despite repeated denials by the drilling industry, according to a report by the Environmental Integrity Project (EIP).

In its investigation, EIP also found evidence that drilling companies have been changing and eliminating their disclosures of past diesel use from the industry self-disclosure database of chemicals used in hydraulic fracturing.

Injecting diesel fuel into the ground to fracture shale and extract gas or oil is a potential threat to drinking water supplies and public health because diesel contains toxic chemicals, such as benzene, that cause cancer or other serious health problems, even at low doses.

EIP’s report, “Fracking Beyond the Law,” uses self-reported data from drilling companies and federal records to document at least 33 companies fracking at least 351 wells across 12 states with fluids containing diesel from 2010 through early August 2014. Diesel fuels were used to fracture wells in Texas, Colorado, North Dakota, Arkansas, Oklahoma, Wyoming, New Mexico, Utah, Kansas, Pennsylvania, West Virginia, and Montana without required Safe Drinking Water Act permits.

“EPA and the states have an obligation to protect the public from the potential health hazards of fracking by enforcing the Safe Drinking Water Act,” said report author Mary Greene, Managing Attorney for EIP and a former EPA enforcement attorney. “We urge EPA and the states to exercise their legal authority by immediately investigating the compliance status of these 351 wells and taking all necessary steps to make sure they are properly permitted. Companies that inject diesel without permits should be fined for ignoring the law.”

Oil Regulators, Executives Complain Bakken Crude Is Unfairly Singled Out

Source: The Jamestown Sun | 11 August 2014

North Dakota oil regulators and industry officials expressed bewilderment over why a federal agency has singled out Bakken crude oil as more volatile than other US crudes when an industry analysis yielded data similar to a government study but deemed the oil as safe as other crudes.

“They really do seem to be picking on us,” said Attorney General Wayne Stenehjem, who received the industry report on 6 August along with his two fellow members on the state Industrial Commission, Gov. Jack Dalrymple and Agriculture Commissioner Doug Goehring.

Dalrymple said he’s “puzzled” by the focus on the light, sweet crude from the Bakken shale formation and he plans to ask US Department of Transportation (DOT) Secretary Anthony Foxx about it when Foxx and US Energy Secretary Ernest Moniz visit Bismarck for a discussion on national energy policy.

The DOT’s Pipeline and Hazardous Materials Safety Administration released a report 23 July that found Bakken crude has a higher gas content, higher vapor pressure, lower flash point and boiling point “and thus a higher degree of volatility than most other crudes in the US, which correlates to increased ignitability and flammability.”

Judge Overturns Fort Collins, Colorado, Hydraulic Fracturing Ban

Source: Platts | 11 August 2014

For the second time in two weeks, a state judge in Colorado has overturned a city’s attempt to regulate hydraulic fracturing within its borders.

In a decision in the District Court of Larimer County, Judge Gregory Lammons ruled that the city of Fort Collins’ 5-year ban on the use of fracturing and the storage of fracturing waste was pre-empted by the state’s Oil and Gas Conservation Act.

Lammons’ ruling comes in a case brought by the Colorado Oil and Gas Association, following a vote last November in which voters called for the city to impose a 5-year moratorium on hydraulic fracturing and disposal of fracturing waste within the city’s boundaries.

On 24 July, District Judge D.D. Mallard of the Boulder County District Court overturned a hydraulic fracturing ban that the city of Longmont had instituted, ruling that it was pre-empted by the Colorado Oil and Gas Conservation Act, which gives the state primary authority over oil and gas operations.

Department of Environmental Protection Struggles To Keep Up With Shale in Pennsylvania

Source: Pennsylvania Department of the Auditor General | 28 July 2014

Pennsylvania Auditor General Eugene DePasquale said that a recent audit shows that the meteoric growth of the shale gas industry in the state caught the Department of Environmental Protection (DEP) unprepared to effectively administer laws and regulations to protect drinking water and unable to efficiently respond to citizen complaints.

“There are very dedicated hard-working people at DEP, but they are being hampered in doing their jobs by lack of resources—including staff and a modern information technology system—and inconsistent or failed implementation of department policies, among other things,“ DePasquale said. “It is almost like firefighters trying to put out a five-alarm fire with a 20-foot garden hose. There is no question that DEP needs help and soon to protect clean water.”

The audit covered the period of 2009 through 2012 and was launched by DePasquale in January 2013 immediately after he became auditor general. The audit’s purpose was to assess DEP’s ability to protect the water quality in the wake of greatly escalated shale gas well drilling.

The audit revealed that DEP failed to consistently issue official orders to well operators who had been determined by DEP to have adversely affected water supplies. After reviewing a selection of 15 complaint files for confirmed water supply impact, auditors discovered that DEP issued just one order to a well operator to restore or replace the adversely affected water supply.

Maryland Recommends Tight Restrictions on Gas Drilling

Source: The Washington Post | 14 July 2014

Maryland state regulators on 11 July recommended some of the nation’s tightest restrictions on shale gas drilling, aimed partly at protecting drinking water from being contaminated by methane leaking from drill sites in the western part of the state.

The best practices recommended by the departments of the environment and natural resources include a general, 2,000-ft buffer between hydraulic-fracturing drill rigs and private water wells. That’s twice the distance Maryland currently requires between gas wells and private water wells and a bigger setback than any other state mandates, said Brigid Kenney, a senior policy adviser with the state’s Department of the Environment.

Oil Trains Face Test in New Safety Rules

Source: Reuters | 21 July 2014

North Dakota’s Bakken oil patch has thrived thanks in large part to the once-niche business of hauling fuel on US rail tracks. New safety rules may now test the oil train model.

A worker climbs onto a crude oil train to set the handbrake at Eighty-Eight Oil’s transloading facility in Ft. Laramie, Wyoming, on 15 July 2014. Credit: Reuters/Rick Wilking

Within weeks, the Obama administration is expected to unveil a suite of reforms that will rewrite standards conceived long before the rise of the shale oil renaissance, at a time when crude rarely moved by rail and few Americans had ever seen the mile-long oil trains that now crisscross the nation.

Taken separately, the changes appear incremental—a question of a fraction of an inch of steel in tank cars, a few miles an hour of speed or rerouting trains; stripping explosive gases out of the oil would be costly but not complex.

But refiners, oil producers, traders, and even railroads have become so reliant on such shipments that the reforms, taken together, could upend a practice that has bolstered bottom lines across a wide swathe of industrial America. It may also complicate shipments of one-tenth of US crude to refineries.

Column: Germany’s Angst Over Hydraulic Fracturing and Emissions Reduction Targets

Source: Institute for Energy Research | 14 July 2014

Although the Germans can now call themselves World Cup champions, they may be headed for a losing energy proposition. Last week, Germany’s energy and environment ministers announced that they were considering a ban on shale oil and gas drilling. Barbara Hendricks, minister for the environment, went so far as to say that these would be the “strictest regulations [Germany has] ever set” and that “there will be no fracking for economic purposes in Germany in the near future.”

The dilemma Germany has created for itself is that the country has set ambitious carbon dioxide emissions reduction targets—40% reductions of 1990 levels by 2020 and 55% by 2030. Shale gas development could help with the emissions reduction because its production and displacement of coal in the generating sector has reduced emissions in the United States.

Kenya Wants Parliament To Approve New Energy Law by October

Source: Reuters | 26 June 2014

Kenya wants parliament to approve its revised petroleum law before October, its energy minister said on 25 June, clearing a hurdle to opening up more blocks to explorers.

Oil discoveries in Uganda and Kenya by Britain’s Tullow Oil and gas found off Tanzania and Mozambique have turned east Africa into a frontier for hydrocarbon exploration. Kenya aims to start production in 2016, with Uganda following in 2017.

Kenya said in January it would delay a licensing round for new exploration blocks until the law was ready.

The law, updating a 1986 code, would list new guidelines on natural gas exploitation not adequately covered now, allow for the creation of a sovereign wealth fund to save some revenue, and specify how local communities will benefit.

Study: Drillers Should Proactively Deal With Liability Risk

Source: Platts | 19 June 2014

Companies should take proactive steps to reduce the liability surrounding shale gas development, such as revealing the chemical composition of hydraulic fracturing fluid, the author of a research paper on the subject said.

Nathan Richardson, resident scholar at Washington-based think tank Resources for the Future, said that, while regulation of shale oil and gas drilling has become a hot issue recently, less attention has been paid to liability issues surrounding such development.

“There’s a lot of controversy about how to best regulate shale gas development,” he said. “We take no position on that. But, we shouldn’t just be talking about regulation. We should be talking about how to make the liability system work for shale gas development.”

The study—”Managing the Risks of Shale Gas Development Using Innovative Legal and Regulatory Approaches,” which Richardson co-authored with Sheila Olmstead, a researcher with The University of Texas at Austin—examines how the use of the current system for assigning legal liability for damages could be adapted to address many of the potential risks of shale development.