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Tue, 2014-10-14 13:35Steve Horn
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Tar Sands Trade: Kuwait Buys Stake in Alberta As It Opens Own Heavy Oil Spigot

Chevron made waves in the business world when it announced its October 6 sale of 30-percent of its holdings in the Alberta-based Duvernay Shale basin to Kuwait Foreign Petroleum Exploration Company (KUFPEC) for $1.5 billion.

It marked the first North American purchase for the Kuwaiti state-owned oil company and yields KUFPEC 330,000 acres of Duvernay shale gas. Company CEO and the country's Crown Prince, Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah, called it an “anchor project” that could spawn Kuwait's expansion into North America at-large. 

Kuwait's investment in the Duvernay, at face-value buying into Canada's hydraulic fracturing (“fracking”) revolution, was actually also an all-in bet on Alberta's tar sands. As explained in an October 7 article in Platts, the Duvernay serves as a key feedstock for condensate, a petroleum product made from gas used to dilute tar sands, allowing the product to move through pipelines. 

And while Kuwait — the small Gulf state sandwiched between Iraq and Saudi Arabia — has made a wager on Alberta's shale and tar sands, Big Oil may also soon make a big bet on Kuwait's homegrown tar sands resources.

“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,” explained an October 2 article in Reuters. “It is the first time KOC will develop such a big heavy oil reservoir and the plan is to produce 60,000 bpd from Ratqa, which lies close to the Iraqi border [in northern Kuwait]…and then ramp it up to 120,000 bpd by 2025.”

In the past, Kuwait has said it hopes to learn how to extract tar sands from Alberta's petroleum engineers.

Sat, 2014-10-11 09:01Justin Mikulka
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Air Quality Concerns Raised By Albany Residents Living Along Oil-By-Rail Tracks

Ezra Prentice apartments

Residents of the Ezra Prentice apartments in Albany, N.Y., have been complaining about air quality issues ever since the oil trains showed up in the Port of Albany two years ago.

And recent testing by the New York State Department of Environmental Conservation (DEC) has confirmed their fears. In 20 out of 21 air samples taken by the department, benzene levels exceeded the long-term benzene exposure standard. Benzene is a known human carcinogen.            

What happened next is puzzling. The department reached a shocking conclusion, relayed to the residents of Ezra Prentice by research scientist Randi Walker at an August meeting: “The bottom line is that we didn't find anything that would be considered a health concern with these concentrations that we measured.”

The finding was so bizarre that David O. Carpenter, the director of the Institute for Health and the Environment at the State University of New York at Albany, wrote a report about it. In that report, Carpenter calls the Department of Environmental Conservation’s conclusion “irresponsible.”

Tue, 2014-10-07 10:41Justin Mikulka
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‘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.

Thu, 2014-09-25 14:49Justin Mikulka
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U.S. Oil Imports From Canada Hit All-Time High Despite Opposition

Oil tankers

While the battle against TransCanada’s Keystone XL pipeline rages on and oil-by-rail faces increased scrutiny, U.S. oil imports from Canada have quietly hit a record high of 2.99 million barrels per day.

That number — from the week ending Sept. 12, 2014 — marks a 20 per cent increase from a year earlier.

While rail is still handling only a small amount of crude oil compared to pipelines, it continues to rapidly expand.

In a May 19, 2014 meeting between the American Petroleum Institute (API) and the White House Office of Information and Regulatory Affairs (OIRA), API indicated the oil industry estimated it would need 12,000 rail cars to move Western Canadian crude, which is predominantly tar sands oil.

And in the second half of this year, it is becoming evident that the API’s prediction was a pretty good one. Rail is going to play an increased role alongside pipelines in getting tar sands oil to market despite opposition from activists across North America.

Tue, 2014-09-09 05:00Justin Mikulka
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Goldman Sachs Warns Investors About Tar Sands By Rail Challenges While Investing in Tar Sands By Rail

Oil by rail

In 2009, Matt Taibbi wrote a piece in Rolling Stone in which he described the investment bank Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” 

Apparently tar sands oil smells like money. And thus the vampire squid has found another target. As Reuters reported on August 29:

A Goldman Sachs-led rail terminal operator, USD Group LLC, announced on Friday plans to form a Master-Limited Partnership this year to trade publicly on the New York Stock Exchange.

This new company will be based around a tar sands rail loading facility in Hardisty, Alberta. That is the same place where the proposed Keystone XL pipeline would begin. USD Group already owns a crude-by-rail terminal in the town, with capacity to load two 120-car unit trains per day.

And with the success of this first phase of development, the company has announced plans to double the capacity of the terminal, which would allow it to load 280,000 barrels per day (bpd). The company has also announced plans to add another 70,000 bpd, which would bring its capacity to 350,000 bpd, or roughly half the proposed capacity of TransCanada’s Keystone XL pipeline.

Fri, 2014-04-18 12:05Steve Horn
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Keystone XL Review Extended, Delaying Final Decision Until After 2014 Elections

Reuters and Politico broke a major story today that TransCanada's northern leg of the Keystone XL tar sands pipeline will not be decided on until after the 2014 mid-term elections.

“The U.S. State Department will…extend the government comment period on the Keystone XL pipeline, likely postponing a final decision on the controversial project until after the November 4 midterm elections,” Reuters explained.

Secretary of State John Kerry and President Barack Obama have final say over whether the pipeline will be built because it crosses the U.S.-Canada border.

Reporters learned of the decision after a call between high-level congressional staff and State Department officials. 

“The justification is the need to wait on continued litigation over a Nebraska court decision earlier this year, which threw part of the project’s route in doubt, two sources said today after a call between the State Department and congressional staff,” reported Politico.

In the end, the decision came down to politics, according to Politico, though there are no shortage of climate change and ecological concerns for the prospective pipeline.

“A delay past November would spare Obama a politically difficult decision on whether to approve the pipeline, angering his green base and environmentally minded campaign donors — or reject it, endangering pro-pipeline Democrats,” they reported.

Tue, 2013-08-27 05:00Graham Readfearn
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Reuters Boss Accused Of Climate Scepticism Denies Agency Has Cut Climate Reporting

Paul Ingrassia

At Thomson Reuters, we’re in the business of turning change into opportunity,” say the owners of one of the world’s biggest and most influential news agencies.

But the commitment of Reuters to reporting on arguably the most pressing issue in human history – climate change – is now being questioned.

In January, after almost 20 years working for Reuters, the agency’s Asia climate change correspondent David Fogarty was told his role was being axed, but that he could be the correspondent for the shipping industry. He resigned. While Fogarty’s position has apparently not been filled, the agency in late July appointed a dedicated “Gaming Correspondent” to “drive casino coverage in Asia”.

Fogarty had spent four and a half years as the agency’s climate change correspondent for Asia. But things started to change in early 2012. He was told that climate and environment stories were “not a priority” and as time went on, he says it became harder and harder to get climate change stories published.

In a blog post for the Reuters-focussed The Baron website, Fogarty recalled meeting Reuters boss Paul Ingrassia, who at the time was deputy editor-in-chief and is now managing editor.

Wed, 2013-08-21 05:00Steve Horn
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Exclusive: Ousted Chesapeake Energy CEO Aubrey McClendon Launching Ohio Land Grab

Aubrey McClendon's penchant for “land grab” as a business model made the recently-ousted Chesapeake Energy CEO infamous - and he's at it again for his new start-up hydraulic fracturing (“fracking”) company in Ohio's Utica Shale basin. It's a formation he once hailed as the “biggest thing to hit Ohio since the plow.”

Under Securities and Exchange Commission investigation for sketchy business practices, McClendon departed Chesapeake with a severance package including $35 million, access to the company's private jets through 2016 and a 2.5% *return on ownership stake in* every well Chesapeake fracks through June 2014.

Since then, he launched three new start-ups: McClendon Energy PartnersAmerican Energy Partners and Arcadia Capital LLC.

American Energy Partners' headquarters are just half a mile down the road from Chesapeake's, the number two U.S. producer of shale gas behind ExxonMobil. Some of those in McClendon's Chesapeake inner circle have left Chesapeake and joined him (or reportedly intend to join him) at his new ventures.**

Though former Chesapeake employees are barred from working for McClendon, this excludes “any employee assigned to Mr. McClendon as an assistant,” “any employee who has been terminated by the Company,” “any employee who elects (or has elected) to accept any voluntary severance or retirement program offered by the Company,” or “any employee for whom the Company consents in advance to the soliciting and hiring by Mr. McClendon.” 

In other words, the scandal-ridden AKM Operations has shape-shifted into McClendon Energy Partners, American Energy Partners and Arcadia Capital LLC.

McClendon's playing the same business plan game using a different company name, with Ohio serving as the first pit stop. Although his business plans were held close to the chest since his Chesapeake departure, recent stories indicate that McClendon's Ohio “land grab” has now begun in earnest.

Tue, 2012-10-23 05:00Steve Horn
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As You Sow: Coal Investments, Shale Gas, a Bad Bet

In a missive titled “White Paper: Financial Risks of Investments in Coal,” As You Sow concludes that coal is becoming an increasingly risky investment with each passing day. The fracking boom and the up-and-coming renewable energy sector are quickly superseding King Coal's empire as a source of power generation, As You Sow concludes in the report.

As You Sow chocks up King Coal's ongoing demise to five factors, quoting straight from the report:

1. Increasing capital costs for environmental controls at existing coal plants and uncertainty about future regulatory compliance costs

2. Declining prices for natural gas, a driver of electric power prices in competitive markets

3. Upward price pressures and price volatility of coal

4. High construction costs for new coal plants and unknown costs to implement carbon capture and storage

5. Increasing competitiveness of renewable generation resources

Wed, 2012-08-01 08:05Brendan DeMelle
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A "War on Shale Gas"?

Since late 2009, there’s been a slowly-growing wave of attacks from the unconventional oil and gas industry on media outlets that cover the controversies surrounding hydraulic fracturing (fracking) and other shale gas practices. Reporters who write for publications ranging from Rolling Stone to Reuters to the New York Times have had their professional bona fides called into question after unearthing documents and facts that challenge claims that fracked shale gas is cheap, abundant, and clean.

These industry attacks on media occur against the backdrop of a larger campaign to establish unconventional oil and gas at the forefront of the nation’s energy options.

Only a few years ago, it seemed likely that gas would increasingly be a mainstay of power generation, especially in the wake of high profile disasters like the Massey Upper Big Branch coal mine disaster and the BP oil gusher in the Gulf of Mexico. The industry (at the time) received support from surprising allies like the Sierra Club and the Center for American Progress. Fukushima tarnished the nuclear industry, further shifting momentum towards shale gas for utility-scale electricity generation.

But a popular movement fueled by growing concerns about water contamination and public health impacts posed by fracking, coupled with a clearer look by press and by Wall Street analysts at the industry’s claims, has threatened to derail the ascendency of unconventional gas.

Quite often, rather than responding to the issues raised in a responsible fashion, industry PR shops have questioned the motives and qualifications of journalists who investigate the problems with shale gas development, and especially those who delve into the industry’s economic prospects.

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