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.

UK Minister Reveals Oil, Gas Regulator Details

Source: Rigzone | 16 June 2014

The new regulator for the UK’s oil and gas industry was named, and its Aberdeen headquarters confirmed, by Chief Secretary to the Treasury Danny Alexander at an industry event in Aberdeen on 12 June.

In a speech outlining the UK government’s vision of future of the oil and gas industry, Alexander noted that the North Sea is a “hugely important asset to our country” while revealing that the name of the new industry regulator would be the Oil and Gas Authority.

Government Issues Emergency Order on Crude Oil Trains

Source: Fuel Fix | 29 May 2014

The Transportation Department issued an emergency order on 28 May requiring that railroads inform state emergency management officials about the movement of large shipments of crude oil through their states and urged shippers not to use older model tanks cars that are easily ruptured in accidents, even at slow speeds.

The emergency order requires that each railroad operating trains containing more than 1 million gallons of crude oil—the equivalent of about 35 tank cars—from the booming Bakken region of North Dakota, Montana, and parts of Canada provide information on the trains’ expected movement, including frequency and county-by-county routes, to the states they traverse. The order also requires that railroads disclose the volume of oil being transported and how emergency responders can contact “at least one responsible party” at the railroad.

US Takes First Step Toward Fracturing Fluid Disclosure Rules

Source: Reuters | 11 May 2014

The Obama administration announced its first steps on 9 May toward possibly tighter regulation of hydraulic fracturing, seeking public input on whether companies should be required to disclose the contents of fluids used in the oil and natural gas drilling technique.

The US Environmental Protection Agency said it would gather public comment for 90 days on whether to require chemical manufacturers to disclose the contents of fluids they inject into shale seams to release trapped oil or gas.

Fracturing technology has sparked a boom in US energy production, but critics worry that it is polluting drinking water supplies. The environmental group Earthjustice petitioned the EPA to consider the rules on fracturing fluids.

“Today’s announcement represents an important step in increasing the public’s access to information on chemicals used in hydraulic fracturing activities,” said James Jones, EPA’s assistant administrator for the Office of Chemical Safety and Pollution Prevention.

UK Ministers Want To Change Trespass Law To Boost Shale Development

Source: BBC | 23 April 2014

UK ministers want to give energy companies the right to run shale gas pipelines under private land, Whitehall sources have confirmed.

The planned move—aimed at kick-starting the hydraulic fracturing industry—will be included in the Queen’s Speech as part of an Infrastructure Bill.

The companies will still need planning permission to drill for shale gas. But they will be able to install pipes to transport the gas under private land without fear of breaking trespass laws.

Prime Minister David Cameron has also indicated that the government could cut subsidies for land-based wind farms when it has “built enough to meet all our targets.”

Industry Opposes Push To Tighten Oilfield Safety Rules

Source: Fuel Fix | 17 April 2014

More than a dozen oil companies and trade groups have lined up to oppose plans to broaden the federal government’s oversight of safety practices at wells, saying existing standards are enough to protect workers nationwide.

The Occupational Safety and Health Administration would be foolish to force new and producing wells to satisfy process safety management standards that have governed other industrial operations for decades, said the American Petroleum Institute, Dallas-based Pioneer Natural Resources, the Texas Oil and Gas Association, and other groups in comments filed with the agency.

“Applying (process safety management) to the exploration and production segment of the oil and gas industry is like prescribing painkillers for a paper cut,” said Rick Muncrief, senior vice president of operations for Oklahoma City-based Continental Resources.

The possible new regulations—now at the beginning stages of government consideration—are driven by concerns that reported deaths in the industry nationwide reached a 10-year high in 2012, and that the ongoing domestic drilling boom is putting more workers in harm’s way.

Ohio Will Require Drilling Companies To Monitor Seismic Activity

Source: International Business Times | 15 April 2014

State geologists in Ohio have concluded that a bout of small but abnormal earthquakes in the northeast of the state last month probably rippled from nearby hydraulic fracturing operations, a conclusion that is likely to make waves in Texas, Oklahoma, and other states that are investigating whether fracturing is causing minor earthquakes.

Hydraulic fracturing involves pumping water, sand, and chemicals down into wells and horizontal pipes to crack open rock and extract oil and gas. Often, the wastewater created is dumped back into the ground, which, according to the US Geological Survey, is linked to a sixfold increase in earthquakes from 2000 to 2011.

Last month, Ohio regulators indefinitely shut down Hilcorp Energy’s fracturing operation near the Pennsylvania border after five earthquakes, one of 3.0 magnitude, rattled Ohioans.

In response to the geologists’ conclusion, the Ohio Natural Resources Department announced a new permitting policy on 11 April that requires companies to install seismic monitors before fracturing within 3 miles of a known fault or areas of seismic activity. If the monitors detect a seismic event greater than 1.0 magnitude, the company must halt drilling while regulators investigate whether the hydraulic fracturing caused the seismic quiver.

Methane Guidance Suggests EPA Considering Sweeping New Petroleum Regulations

Source: E&E Publishing | 31 March 2014

The entire natural gas system could be subject to new US Environmental Protection Agency (EPA) regulations under the White House interagency guidance on methane released on 28 March.

The 15-page document, which was called for under the president’s Climate Action Plan last year, instructs the agency to consider regulating the potent short-lived greenhouse gas at each of five stops along the natural gas supply chain. Opportunities for future rules include hydraulically fractured wells that produce oil along with gas, leaky production and transportation infrastructure, pneumatic devices, compressor stations and liquid unloading—the devises that keep oil and gas flowing from the wellhead.

The EPA has previously said it will release white papers to assess opportunities for methane reduction in each of these areas.

Those papers will be released this spring and will undergo independent technical review and public comment. The agency will then announce this fall whether it will move forward with any new regulatory actions in any of these areas. If it does, the guidance of 28 March commits the agency to finalize those rules by the end of 2016—before Obama’s second term draws to a close.

White House energy and climate adviser Dan Utech, who lead the interagency task force that produced the guidance, said the EPA will take steps to ratchet down methane from oil and natural gas regardless of whether it decides to develop regulations.

“We know that there are a lot of cost-effective reductions that are available out there,” Utech said on a call with reporters.

EU Votes on Oil and Gas Environmental Rules Aimed at Competitiveness

Source: ESI Africa | 20 March 2014

In mid-March 2014, the European parliament voted on new environmental impact assessment rules to make that region more competitive without compromising on the environment, the International Association of Oil & Gas Producers (OGP) says.

“While not imposing unnecessary requirements on the upstream oil and gas industry, the new rules will guarantee that any development, including exploration for shale gas, will be subject to strict environmental standards,” Roland Festor, OGP’s director for EU affairs, said.

The new rules confirmed the existing differentiation between exploration and production of hydrocarbons. It will ensure that the requirements for environmental protection become more stringent as a project progresses. This way, time and resources will be applied where they matter; on full environmental studies once a project’s economic potential is confirmed and its development is going ahead.