Eagle Ford

New and Improved Bomb Trains? Oil Industry Plans to Ship Even More Dangerous Light Oils

As oil train protests continue across North America to mark the two-year anniversary of the Lac-Megantic disaster, trouble is brewing in Texas. At the recent Crude Markets and Storage Summit energy conference in Texas, Pat McGannon, vice president of Rangeland Energy, made the following statement.

Rail provides a solution for high-gravity condensates.” 

High gravity condensates are the result of the industry’s fracking for oil. Much of the product that comes out of the ground in the Eagle Ford shale formation in Texas is condensate which is also referred to as ultra light oil. So why does rail provide the solution for moving this ultra light oil?

Open for Business: First Major Deal Since Energy Reforms Will Bring Fracked Gas to Mexico

For the first time in 76 years, a piece of Mexico’s oil and gas infrastructure has been sold to a foreign investor, and the deal will help bring fracked gas from Texas’s Eagle Ford shale region into Mexico. In this first major deal since the country’s landmark energy reforms, Pemex—the state-owned oil company that had kept domain over the country’s vast petroleum and natural gas reserves since they were nationalized back in 1938—sold a 45-percent stake of a prospective natural gas pipeline project to the United States-based investment funds BlackRock and First Reserve.

Monster Wells: Hundreds Of Fracking Wells Using 10-25 Million Gallons of Water Each

While the oil and gas industry likes to claim that fracking is not an especially water intensive process, a new report has found that there are more than 250 wells across the country that each require anywhere from 10 to 25 million gallons of water.

The American Petroleum Institute suggests that the typical fracked well uses “the equivalent of the volume of three to six Olympic sized swimming pools,” which works out to 2-4 million gallons of water.

But using data reported by the industry itself and available on the FracFocus.org website, Environmental Working Group has determined that there are at least 261 wells in eight states that used an average of 12.7 million gallons of water, adding up to a total of 3.3 billion gallons, between 2010 and 2013. Fourteen wells used over 20 million gallons each in that time period (see chart below).

According to EWG, some two-thirds of these water-hogging wells are in drought-stricken areas. Many parts of Texas, for instance, are suffering through a severe and prolonged drought, yet the Lone Star State has by far the most of what EWG calls “monster wells” with 149. And 137 of those were found to be in abnormally dry to exceptional drought areas.

Texas also has the dubious distinction of having the most wells using fresh water in the fracking process. In 2011 alone, more than 21 billion gallons of fresh water were used for fracking Texas wells. Increased pumping by companies seeking to extract the oil and gas in the Eagle Ford shale formation, meanwhile, has been cited as a major cause of the state’s rapidly declining groundwater levels.

Oil-by-Rail Fuels Record U.S. Imports of Canadian Oil

Oil by rail

In September, many of the major railroad stocks hit new all-time highs.

Investors Business Daily attributed much of the increase to the business of moving oil-by-rail.

While the majority of the oil moving by rail has been fracked light sweet crudes from places like the Bakken and Eagle Ford shale basins, the railroads are telling investors that to keep increasing profits they are looking to expand the business of tar sands by rail.

This past week, the Wall Street Journal reported Canadian Pacific’s chief operating officer Keith Creel’s optimistic position about the growth prospects of moving tar sands by rail.

The growth is shifting from the light sweet Bakken crude which is the more volatile and sensitive, to the heavy crude in northern Alberta,” Creel said. “It’s safer, less volatile and more profitable to move and we’re uniquely positioned to connect to the West Coast as well as the East Coast.”

‘Wild West’ Approach to Regulation in Bakken Shale Means Bomb Trains Continue to Roll

Wild west Bakken

Prepare yourself for a rare moment of honesty from the oil industry.

It happened on Sept. 23 at a hearing of the North Dakota Industrial Commission during a discussion on ways to make Bakken crude oil less flammable for transportation.

The flammable characteristics of our product are actually a big piece of why this product is so valuable. That is why we can make these very valuable products like gasoline and jet fuel,” said Tony Lucero of oil producer Enerplus.

So, there you have it: making Bakken crude safer to transport by rail via oil stabilization, which removes flammable natural gas liquids such as butane, means making it less valuable to the refineries.

This profit motive is at least part of the reason why the American Petroleum Institute has made it clear it will not accept mandatory oil stabilization as part of the new oil-by-rail regulations.

Safety of Citizens in Bomb Train Blast Zones in Hands of North Dakota Politicians

Lac Megantic train explosion

When North Dakota Congressman Kevin Cramer was asked recently if it was scientifically possible to make Bakken crude oil safer by stripping out the explosive natural gas liquids with a process like oil stabilization, his response was quite telling.

So scientifically can you do it? Sure, but you have to look at it holistically and consider all of the other elements including economics, and is the benefit of doing something like that does that trump other things like speed of trains, and what kind of cars,” he said.

This is very similar to the comments made by Lynn Helms of the North Dakota Department of Mineral Resources according to the July 29 meeting minutes provided to DeSmogBlog by the Industrial Commission of North Dakota.

In response to a question regarding other mechanisms besides oil conditioning in the field, Mr. Helms stated there are other mechanisms — none of them without a significant downside….It makes sense to do the conditioning in the field. There are other options to do it downstream somewhere in a very large and very expensive operation.”

Shale Oil Drillers Deliberately Wasted Nearly $1 Billion in Gas, Harming Climate

In Texas and North Dakota, where an oil rush triggered by the development of new fracking methods has taken many towns by storm, drillers have run into a major problem.

While their shale wells extract valuable oil, natural gas also rises from the wells alongside that oil. That gas could be sold for use for electrical power plants or to heat homes, but it is harder to transport from the well to customers than oil. Oil can be shipped via truck, rail or pipe, but the only practical way to ship gas is by pipeline, and new pipelines are expensive, often costing more to construct than the gas itself can be sold for.

So, instead of losing money on pipeline construction, many shale oil drillers have decided to simply burn the gas from their wells off, a process known in the industry as “flaring.”

It's a process so wasteful that it's sparked class action lawsuits from landowners, who say they've lost millions of dollars worth of gas due to flaring. Some of the air emissions from flared wells can also be toxic or carcinogenic. It's also destructive for the climate – natural gas is made primarily of methane, a potent greenhouse gas, and when methane burns, it produces more than half as much CO2 as burning coal.

Much of the research into the climate change impact the nation's fracking rush – now over a decade long – has focused on methane leaks from shale gas wells, where drillers are deliberately aiming to produce natural gas. The climate change impacts of shale oil drilling have drawn less attention from researchers and regulators alike.

Shale Rush Hits Argentina as Oil Majors Spend Billions on Fracking in Andes Region

While many countries, including France, Germany and South Africa, have banned or delayed their embrace of fracking, one country is taking a full-steam-ahead approach to the unconventional drilling technology: Argentina.

The country is welcoming foreign shale companies with open arms in the hope that oil and gas drilling will help combat one of the world’s highest currency inflation rates. But the government there is also facing violent clashes over fracking in arid regions of the Andes mountains and allegations from locals of water contamination and health problems.

Argentina’s Vaca Muerta shale formation — estimated to hold an amount of oil and gas nearly equal to the reserves of the world’s largest oil company, Exxon Mobil — has already attracted billions in investment from the major oil and gas company Chevron.

In April, the government drew global attention when it announced plans to auction off more acreage. “Chevron, Exxon, Shell have shown interest in Vaca Muerta. They will compete for sure,” Neuquen province Energy Minister Guillermo Coco told potential investors on a road show in Houston on April 30th.

Argentina, which the EIA estimates could hold even more shale gas than the U.S., already has over 150 shale wells in production, more than any country in the world aside from the U.S. and China. California-based Chevron, in partnership with Argentina’s state-owned oil company YPF, invested $1.24 billion in a pilot program last year. Last month, Chevron announced an additional $1.6 billion effort for 2014, part of Chevron's overall investment plan that could top $15 billion. The company is hoping that this plan will allow it to extract 50,000 barrels a day of shale oil plus 100 million cubic feet of shale gas per day from the country’s Andes mountain region.

American drillers have talked up Argentine shale as the next big thing. “Vaca Muerta is going to be an elephant compared to Eagle Ford,” Mark Papa, CEO of EOG Resources told the Argentine press in 2012, referring to a major oil-producing shale formation in Texas.

Should CEOs Get Jail Time For Oil-By-Rail Accidents Like Lac Megantic?

Lac Megantic train explosion

On May 12th, a heavily armed SWAT unit stormed the home of Thomas Harding and threw Harding, his son and a visitor to the ground. Harding was then handcuffed, arrested and taken for interrogation.

Harding was the engineer for the oil train that caused the explosion in Lac-Megantic, Quebec. He had cooperated with authorities and was expecting to be charged. The excessive force used to arrest Harding was criticized for being a “politically motivated stunt” in The National Post.

No one is claiming that Harding intentionally caused the accident — however, he is the one facing charges that could result in life in prison.

Meanwhile, the oil industry has knowingly shipped explosive Bakken crude oil and, in the case of Lac-Megantic, misclassified the oil to make it appear less explosive than it actually was.

Irving Oil has been identified by Canada's Transportation Safety Board as the party ultimately responsible for insuring the proper classification of the oil it had purchased. No one from Irving Oil has been charged with any crime.

"No Turning Back:" Mexico's Looming Fracking and Offshore Oil and Gas Bonanza

After generations of state control, Mexico’s vast oil and gas reserves will soon open for business to the international market.

In December 2013, Mexico’s Congress voted to break up the longstanding monopoly held by the state-owned oil giant Petroleos Mexicanos — commonly called Pemex — and to open the nation’s oil and gas reserves to foreign companies.

The constitutional reforms appear likely to kickstart a historic hydraulic fracturing (“fracking”) and deepwater offshore oil and gas drilling bonanza off the Gulf of Mexico.

“This reform marks a major breakthrough in Mexico’s economic history only comparable to the signing of the North America Free Trade Agreement (NAFTA) in 1992,” international investing and banking giant Banco Bilbao Vizcaya Argentaria (BBVAwrote in a January 2014 economic analysis.

What does this mean for the oil and gas industry in Mexico? And for the workers and those who live above these oil and gas plays or along the pipeline routes that will funnel the liquids to refineries? And how about for the Earth’s atmosphere?

Can Mexico’s fossil fuel infrastructure handle the boom? Can the country spare the precious freshwater supplies needed for thirsty fracking operations in an era of increasingly severe droughts and drinking water shortages? Can environmental, safety and public health regulations possibly keep up with this industrial boom?

DeSmogBlog will examine all these issues and more as Mexico opens its fossil fuel reserves to international exploitation in the weeks and months ahead. But, first, an overview of the state of play in Mexico’s energy reforms.

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