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BC Looks like an LNG Loser: Report

BC Looks like an LNG Loser: Report

Prospects have been battered by global competition, volatility, delays and cost overruns.

Once touted as an economic powerhouse, the liquified natural gas industry is on the rocks, according to a worldwide survey of LNG terminals from the Global Energy Monitor, a non-profit research group responding to climate change.

LNG terminals are among the largest capital projects attempted in modern industry, costing up to $30 billion per project. Gas is extracted from underground deposits, piped to LNG plants where it is compressed by cooling to liquid form, loaded onto ships and transported to other markets.

“The sheer size of the projects has exposed investors to catastrophic losses,” said Lydia Plante, lead author of the just-released report.

The survey found that planned projects representing 38 per cent of global export capacity are facing delayed final investment decisions and other serious hold-ups. Cost overruns are common.

Canadian LNG is particularly bad off, Ted Nace, executive director of the Global Energy Monitor, told The Tyee. “The problem with the Canadian LNG expansion is that it’s especially vulnerable because Canada is a high-cost producer on a world basis.”

That’s because Canada plans to produce its LNG from fracking — an energy and capital-intensive process to access gas hidden deep inside shale rock.

Canadian LNG comes up short on the global market, said Nace, particularly when it competes against countries where conventional gas sources make LNG cheaper to produce.

And global competition is only getting fiercer. Qatar and Russia, for example, have vast supplies of cheap natural gas. “These super low cost producers,” said Nace, “are not giving up market share without a fight.”

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Worst Drought in 91 Years Turns Brazil Into Hot Spot for LNG

  •  State-run oil company is seeking liquefied natural gas cargoes
  •  Water crisis curbs hydropower supplies across South America

As hydropower output declines, South America’s most populous nation is turning to the super-chilled fuel to keep lights on for its 212 million people. Brazil has already imported a record number of LNG cargoes just from the U.S. this year while state-run oil company Petrobras SA is tapping the spot market for another four.

The drought comes as the nation — which boosted its ability to import LNG in 2014 to avoid blackouts during soccer’s World Cup — is facing declining gas production from major supplier Bolivia. The conditions are also affecting other countries in South America, with Chile seeking to buy LNG and traders speculating Argentina could be next.

Brazil's Thermal Power Rises as Hydro Slides

“South America is running out of hydropower because of dry weather, and I wouldn’t be surprised if buyers all across the region were buying more LNG,” said Henning Gloystein, global director of energy and natural resources at consultants Eurasia Group. “Besides Southeast Asia and India, South America is a growth area for gas demand.”

Hydropower currently accounts for about 70% of Brazil’s electricity mix, and the lack of rainfall has forced the country to import 34 U.S. LNG cargoes over the past six months to bridge the power-supply gap, shipping data compiled by Bloomberg show. That eclipses the 17 sent to Chile and four to Mexico, which has long been the top buyer of U.S. LNG in the Western Hemisphere. Brazilian imports are approaching levels typically seen only from buyers in Asia and Europe.

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LNG in BC Is a ‘Losing’ Bet, Report Finds

LNG in BC Is a ‘Losing’ Bet, Report Finds

New analysis calls out rosy job projections for industry ‘misleading’ and unrealistic.

A respected U.S. energy group has criticized a rosy Conference Board of Canada report championing more liquefied natural gas development in British Columbia as “a lobbying effort for government subsidies, support and flexibility.”

The scathing critique by the Institute for Energy Economics and Financial Analysis characterized the Conference Board report as “misleading,” short on facts and unrealistic.

“The Conference Board, a non-profit economic research organization based in Ottawa, believes Asian, or more specifically, Chinese demand growth can sustain a further leap in British Columbian LNG capacity growth, despite corporate investors already folding their hands,” said the institute in its highly-critical paper.

The Ohio-based institute is funded by a variety of philanthropic organizations and examines issues related to energy markets, trends and policies. Its mission is “to accelerate the transition to a diverse, sustainable and profitable energy economy.”

The Conference Board’s July report, titled “Rising Tide,” estimated that if the government boosted LNG development to export 56 million tonnes of liquefied natural gas a year the industry would create 100,000 jobs based on an imaginary growth scenario.

“B.C. is becoming the focal point for a new Canadian industry — liquefied natural gas,” claimed the report, which failed to mention that 13 LNG projects have already been cancelled or suspended in B.C. and other parts of Canada due to bad economics, global oversupply and high extraction costs based on hydraulic fracturing.

At the moment, Shell’s LNG Canada is the only active project in B.C.

…click on the above link to read the rest of the article…

Shell’s Colossal Miscalculation in 2011 of Today’s LNG Price: Largest-Ever $12-$17-Billion “Floating Facility” Shut Down, Months After Shipping First LNG. Done in by Long Price Collapse

Shell’s Colossal Miscalculation in 2011 of Today’s LNG Price: Largest-Ever $12-$17-Billion “Floating Facility” Shut Down, Months After Shipping First LNG. Done in by Long Price Collapse

Built to profit from sky-high LNG Prices in Japan. Sunk by surging US LNG Exports, multi-year collapse in LNG prices, global LNG glut.

The Great East Japan Earthquake and subsequent tsunami in March 2011 triggered a series of events at the Fukushima power plant that led to catastrophic meltdowns in three of its six reactors, which led Japan to take the remaining of its 54 operating reactors offline, as a new regulatory and safety regime was established for reactors to come back on line. This caused a mad scramble to switch to other forms of power generation, including power plants fired by natural gas, which Japan has to import as liquefied natural gas (LNG), which triggered a blistering spike in LNG prices that caused all kinds of enormous long-term investments to be commenced around the world, including in the US and in Australia, in order to export super-lucrative LNG into booming Asian demand.

But in 2014, the price of LNG started sinking, and in 2015, it plunged, and those investments became huge money pits – including perhaps the largest of them all, Shell’s floating LNG-factory, the Prelude FLNG, at a length of 1,600 feet, the largest floating facility ever built, and at an undisclosed cost estimated to have been in the range between $12 billion and $17 billion, now languishing off the coast of Australia (the red hull is the Prelude, the smaller ship in front of it is a huge LNG tanker; image by Shell):

In April 2014, the average spot price of LNG at arrival in Japan was $18.30 per million Btu, according to Japan’s Ministry of Economy, Trade, and Industry (METI). This is as far as its data series goes back.

…click on the above link to read the rest of the article…

By Many Calculations, LNG Is a Fail for BC: Report

By Many Calculations, LNG Is a Fail for BC: Report

The math for liquefied natural gas is bad on emissions, revenues, jobs, even offsetting coal in China, finds a new study.

JohnHorganInvestingCanada.jpg
Go figure. BC NDP Premier John Horgan announcing in 2018 a $40-billion investment by the consortium LNG Canada in its Kitimat terminal for processing and export. Photo: BC Government.

David Hughes, one of the nation’s foremost energy analysts, has a simple message for the governments of British Columbia and Canada when it comes to advocating for LNG projects.

“Do the math.”

Hughes has parsed the numbers and they don’t add up on methane emissions, climate change targets, resource royalties, job benefits or even basic economics.

“The math is clear,” says Hughes, whose latest 57-page report on LNG exports highlights a long pipeline of damning figures.

Emissions targets: Won’t LNG help hit them? The numbers say noThe Tyee is supported by readers like you Join us and grow independent media in Canada

The province’s CleanBC plan, for example, demands an 80-per-cent reduction in greenhouse gas emissions by 2050 from 2007 levels.

But Hughes, who was a scientific researcher for 32 years at the Geological Survey of Canada, checked the math on emissions based on energy production forecasts made by the Canada Energy Regulator.

His math is conservative. It excluded any LNG exports. It assumes current major reductions in methane leaks from gas extraction might be plugged. And it further assumes the electrification of some upstream projects. Still, Hughes found that “emissions from oil and gas production would exceed B.C.’s 2050 target by 54 per cent.”

(A group of scientists writing in Nature found the same thing on a global scale last year: just using existing fossil fuel infrastructure takes the world into climate change hell.)

…click on the above link to read the rest of the article…

From Hurricane Maria to COVID, Gas Lobbyist-turned-Trump Energy Lawyer Uses Crises as ‘Opportunity’

From Hurricane Maria to COVID, Gas Lobbyist-turned-Trump Energy Lawyer Uses Crises as ‘Opportunity’

Bill Cooper being sworn in by Rick Perry

Among a string of recent environmental rollbacks, President Donald Trump’s U.S. Department of Energy (DOE) aims to vastly narrow the scope of environmental reviews for those applying for liquefied natural gas (LNG) export permits. The proposal has been guided by Bill Cooper, a former oil and gas industry lobbyist who’s now a top lawyer for the DOE.

On May 1, the DOE issued a proposal to limit environmental reviews for LNG export permit proposals so that the review applies to only the export process itself — literally “occurring at or after the point of export.” The rule would take off the table for consideration lifecycle greenhouse gas analyses, broader looks at both build-outs of pipelines and power plants attached to the export proposals, and other potential environmental impacts.

It comes as many larger forces up the pressure on LNG projects: The oil and gas industry is facing financial crisis, exports of fracked gas to the global market are steeply waning, and the COVID-19 pandemic and accompanying economic nosedive are marching on in the United States.

The DOE’s Bill Cooper, an oil and gas attorney by background with a long history of navigating the industry through crises both inside and outside of the federal government, signed off on the regulatory proposal.

Now DOE General Counsel, Cooper has proven instrumental in creating today’s U.S. regulatory regime both for fracking for natural gas and exporting it. This attempted rule change is just the latest chapter in that story. For Cooper, crisis has consistently served as an opportunity to implement regulatory change to favor the oil and gas industry.

As DeSmog has reported, Cooper played a critical role in getting regulatory exemption language now known as the “Halliburton Loophole” inserted into the 2005 energy bill

…click on the above link to read the rest of the article…

The LNG Market Is “Imploding”

The LNG Market Is “Imploding”

LNG tanker

While everyone is understandably watching the meltdown in the crude oil market, the global market for natural gas is also cratering.

At least 20 cargoes of U.S. liquefied natural gas (LNG) have been cancelled by buyers in Asia and Europe, according to Reuters. The global pandemic and the unfolding economic crisis have slashed demand for gas worldwide. Cheniere Energy, one of the main exporters of U.S. LNG, has seen an estimated 10 cargoes cancelled by buyers halfway around the world, Reuters said.

The price for LNG in Asia was already crashing before the pandemic, owing to a substantial increase in supply last year. Prices for LNG in Asia for June delivery have recently traded at $2/MMBtu, only slightly higher than Henry Hub prices in the U.S.

As recently as October, LNG prices in Asia traded at just under $7/MMBtu.

The problem for American gas exporters is that after factoring in the cost of liquefaction and transportation, gas breakeven prices for delivering to Asia are around $5.56/MMBtu, according to Reuters. But prices are trading at less than half of those levels.

Gas exports tend to be conducted under rigid contracts, but cargoes are now facing cancellation.

“The financial prospects for [LNG] ? once one of the globe’s hottest energy commodities – seem to be imploding before our eyes,” Clark Williams-Derry wrote in a new report for the Institute for Energy Economics and Financial Analysis (IEEFA). He noted that LNG prices in the fall of 2018 were at around $12/MMBtu.

The oil majors have made large bets on LNG in recent years. Royal Dutch Shell spent more than $50 billion to buy BG Group in 2015. The move back then was made with an eye on surging demand for natural gas. “We will now be able to shape a simpler, leaner, more competitive company, focusing on our core expertise in deep water and LNG,” Shell’s CEO Ben van Beurden said after closing on the acquisition of BG Group more than four years ago.

The deal remade Shell into one of the largest traders of LNG on the planet. Several other oil majors – Total SA, ExxonMobil and Chevron, for instance – have also made massive bets on LNG.

Coronavirus Could Crush Natgas Market Amid Collapsing Chinese Demand

Coronavirus Could Crush Natgas Market Amid Collapsing Chinese Demand

Last week we warned that the drop in Chinese petroleum consumption could spark one of the “biggest shocks to oil markets since the Lehman crisis.” Now it seems the fast-moving contagion has spread to liquefied natural gas (LNG) markets, Fitch Ratings detailed in a new report. 

LNG markets in Europe and Asia could experience a shock as Chinese imports of LNG are expected to plunge. The hopes for a rebalanced market have been delayed thanks to the coronavirus outbreak. 

The decline in Chinese energy consumption is a severe event risk that needs to be monitored. 

Already, commodity spot prices and shipping rates have fallen, suggesting world trade growth could take a big hit in Q1. 

LNG importers in China have announced they could cut 70% of seaborne imports in February. Tanker rates for LNG to Europe to the Asia Pacific to the Middle East to the Americas have dropped in the last 30 days. 

Fitch notes that Chinese LNG imports account for 17% of global purchases in 2018 and 50% of global demand growth in 2016-2018. Any lapse in demand from China could be devastating for the global LNG markets and commodity-based economies. 

Massive demand loss from China will weigh on spot natgas prices this year. It could lead to lower business activity and force some companies into a credit crisis. 

The global LNG market was already oversupplied in 2019 amid additional output from Australia, Russia, and the US, which is coming at a time when the global economy is decelerating. Warmer weather in the US, Europe, and Asia has undoubtedly led to an uptick in gas storage. Spot prices for natgas have plunged 40% in the last three months.

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Green Myths Canada’s LNG Sales Force Tells the World

Green Myths Canada’s LNG Sales Force Tells the World

No, methane’s no fix for global coal-fired energy. Here’s why.

Trudeau-Horgan-Handshake-Cover.jpg
Prime Minister Justin Trudeau and B.C. Premier John Horgan shake hands as LNG Canada CEO Andy Calitz, back right, watches during a news conference in October 2018. Photo by Darryl Dyck, the Canadian Press. 

Representatives of the British Columbia, Alberta and federal governments are making the global rounds these days to sell the notion that liquefied natural gas exports can help the climate crisis.

Dave Nikolejsin, deputy minister of the B.C. Ministry of Energy, Mines and Petroleum Resources, for example, flew to Japan last September along with members of the Canadian Society for Unconventional Resources.

There they tried to impress upon the Japanese attendees “the role of Canadian LNG in meeting global climate policy objectives and reducing emissions of carbon dioxide.” 

The pitch goes like this: According to LNG Canada, the big Shell project now under construction in northern B.C., could replace 20 to 40 coal-fired plants in countries like China and India with Canadian methane, and reduce their emissions by 60 to 90 million tonnes.

That’s impressive, says LNG Canada, because 90 million tons equals about 80 per cent of Canada’s car pollution. Or all of B.C.’s annual greenhouse gas emissions. The Tyee is supported by readers like you Join us and grow independent media in Canada

In fact, Darren Gee, president and CEO of Peyto Exploration, which fracks for gas in B.C., believes Canada has a “moral obligation to provide the rest of the world with the country’s clean, responsibly-developed energy to improve lives and preserve the environment.”

And so, while the blockaders of northern B.C.’s LNG Canada pipeline await police eviction while claiming to stand up for Indigenous sovereignty and climate protection, backers of the project lay claim to their own moral high ground.

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Trump Loses More than Just the Battle Over Nordstream 2

Trump Loses More than Just the Battle Over Nordstream 2

For the past three years the U.S. has fought the construction of the Nordstream 2 pipeline from Russia to Germany every inch of the way.

The battle came down to the last few miles, literally, as Denmark has been withholding the final environmental permit on Nordstream 2 for months.

The U.S., especially under Trump, have committed themselves to a ‘whole of government approach‘ to stop the 55 bcm natural gas pipeline from making landfall in Germany.

I’ve literally documented every twist and turn of Nordstream 2 over the past few years here (check the archives), at Seeking Alpha and my former Newsletter at Newsmax. 

Never once did I think this day wouldn’t come where the U.S. would eventually shut the pipeline down. The reason is simple. Europe, and specifically Germany, need the gas and there is no compelling reason for Germany to cave in the end if it wants to survive the 21st century a first world economy.

Russian piped gas is simply too cheap for any LNG to compete with. 

In a sense, this pipeline is Germany’s declaration of independence from seventy-plus years of U.S. policy setting. Never forget that Germany is occupied territory with more than 50,000 U.S. troops stationed there.

So it is supremely rich of President Trump call Nordstream 2 something that could make Germany a “hostage of Russia” when it’s been a hostage of the U.S. sinced 1945.

Then again, history isn’t one of Trump’s strong suits.

Poland had been the tip of the U.S. spear in this battle, first declaring the joint venture between Russian gas giant Gazprom and five European oil and gas majors — Wintershall, Uniper, Royal Dutch Shell, ENGIE and OMV — illegal and then forcing through changes to the European gas transit rules.

 …click on the above link to read the rest of the article…

A Perfect Storm Is Brewing For US LNG

A Perfect Storm Is Brewing For US LNG

LNG tanker

That the U.S. energy industry would be among those hardest hit by a full-blown trade war between Washington and Beijing was a no-brainer. Yet the extent of the fallout as the war continues is only becoming evident now, as some companies find it hard to secure the funding for their ambitious LNG projects.

According to the Bank of America Merrill Lynch, a number of companies may delay their final investment decisions on new LNG capacity to next year because of U.S.-Chinese trade tensions. Bloomberg reports these include Tellurian and NextDecade, as well as other companies focused exclusively on LNG.

“We see delays as likely given current pricing headwinds, no resolution yet on the U.S.-China trade war, and minimal contract announcements in recent months,” BofA analysts wrote in a recent note to clients, referring to Tellurian’s US$28-billion Driftwood LNG project in Louisiana.

While the companies themselves are not too talkative when it comes to possible obstacles to the so-called second wave of LNG projects in the U.S., the facts are not encouraging: China has imported no U.S. LNG since March, according to data from ClipperData. Bloomberg data is even gloomier: it suggests no U.S. LNG has made its way into China since February. No wonder, since Beijing first imposed a 10-percent tariff on the commodity and then upped this to 25 percent in retaliation for U.S. tariffs. 

Yet there is another aspect of the trade war that is more damaging to U.S. LNG producers. To secure funding for these projects that typically cost billions, U.S. companies need long-term commitments to convince banks the projects are viable. Chinese buyers were the natural choice for these long-term commitments but this is no longer the case as Chinese investors shun U.S. projects amid the war.

 …click on the above link to read the rest of the article…

‘Clean’ natural gas is actually the new coal, report says: Don Pittis

‘Clean’ natural gas is actually the new coal, report says: Don Pittis

Global investment of more than $1 trillion in planned LNG plants at risk

Employees work next to tanks for liquefied natural gas at a factory in Xian, China in June. China is a prime customer in a worldwide LNG expansion. (Reuters)

There’s no question that when you burn it, methane, the main component of natural gas, is much cleaner than coal.

With that in mind, you might think a newly released report titled The New Gas Boom should be cause for celebration.

Instead, the fresh analysis from Global Energy Monitor, a group well known in energy circles for keeping track of coal plant construction in Asia, sounds a warning, not just for the climate but for investors in what it calculates as a risky $1.3 trillion US worth of global gas infrastructure.

Effectively, the report warns that rather than being an environment-friendly product that can help solve our climate problems, gas is the new coal.

The explosion in spending on planned new liquefied natural gas (LNG) facilities — the vast majority in the U.S. and Canada — combined with new calculations for leakage from the LNG supply chain called fugitive gas — means the world may soon turn against gas in the same way it turned against its solid fuel relative.

“New studies have shown there is significantly more fugitive gas than studies showed five years ago, and the gas is also a bigger contributor to climate change than was understood,” said James Browning, one of the report’s authors.

A 34,000-ton heavy lift vessel carries barges for LNG Canada completing pre-construction work at Kitimat, B.C., last fall to prepare the port for larger vessels once the new $40-billion natural gas export facility is constructed.(YouTube/LNG Canada)

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Latest Weapon of US Imperialism: Liquified Natural Gas

Latest Weapon of US Imperialism: Liquified Natural Gas 

One of the most important energy battles of the future will be fought in the field of liquid natural gas (LNG). Suggested as one of the main solutions to pollution, LNG offers the possibility of still managing to meet a country’s industrial needs while ameliorating environmental concerns caused by other energy sources. At the same time, a little like the US dollar, LNG is becoming a tool Washington intends to use against Moscow at the expense of Washington’s European allies.

To understand the rise of LNG in global strategies, it is wise to look at a graph (page 7) produced by the International Gas Union (IGU) where the following four key indicators are highlighted: global regasification capacities; total volumes of LNG exchanged; exporting countries; and importing countries.

From 1990 to today, the world has grown from 220 million tons per annum (MTPA) to around 850 MTPA of regasification capacity. The volume of trade increased from 20-30 MTPA to around 300 MTPA. Likewise, the number of LNG-importing countries has increased from just over a dozen to almost 40 over the course of 15 years, while the number of producers has remained almost unchanged, except for a few exceptions like the US entering the LNG market in 2016.

There are two methods used to transport gas. The first is through pipelines, which reduce costs and facilitate interconnection between countries, an important example of this being seen in Europe’s importation of gas. The four main pipelines for Europe come from four distinct geographical regions: the Middle East, Africa, Northern Europe and Russia.

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5 Things To Watch In Natural Gas

5 Things To Watch In Natural Gas

A new report from Rystad Energy identifies five vital themes that will shape global gas markets in 2019.

Significant LNG production growth, the rise of US gas to challenge Russian dominance in Europe, insatiable demand in Asia, price pressure in selected regions, and a need for final investment decisions on planned liquefaction plants are the key market-movers identified in the report.

“The global market for liquefied natural gas (LNG) is geared for substantial supply growth this year, mirroring a major increase in US liquefaction capacity. Asia’s appetite for LNG – while vast – is not likely to consume all of the additional volumes,” said Rystad Energy head of gas market research Carlos Torres Diaz.

“With increasing export capacity, US LNG might be in a position to pose a serious challenge to Russian gas on the European market this year. Prices will come under pressure due to the healthy supply situation but the market is expected to tighten again after 2022, meaning that investment decisions for new liquefaction projects are needed this year in order to satiate future demand,” Torres-Diaz added.

Theme 1: Ramp up in US and Australian LNG production

Global LNG production is expected to rise 11% and reach 350 million tonnes per annum (tpa) this year, as fresh liquefaction capacity is added, leading to a looser market. Total liquefaction capacity is set to increase to 434 million tpa in 2019, up almost 10% from 2018.

“This is mostly driven by the commissioning of US projects. The US is expected to see capacity more than double in 2019, thereby making it the country with the third-largest exporting capacity and pushing Malaysia into fourth place. Australia could also overtake Qatar as the world’s largest LNG exporter this year,” Torres-Diaz remarked.

(Click to enlarge)

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Will BC’s Budding LNG Industry Spark More Quakes and Shake Northeast Housing Prices?

Will BC’s Budding LNG Industry Spark More Quakes and Shake Northeast Housing Prices?

Look at Oklahoma as a possible preview of things to come.

HouseDamageOklahoma.jpg
House damage in central Oklahoma from a magnitude 5.6 earthquake on Nov. 6, 2011. The cause was wastewater disposal in the oil and gas industry. Photo by Brian Sherrod, USGS.

B.C. Premier John Horgan and Prime Minister Justin Trudeau could barely contain their glee last year when LNG Canada declared its $40-billion Kitimat export terminal and related pipeline were going ahead.

But neither leader mentioned the dramatic surge in horizontal drilling and fracking in northeastern B.C. that will be required to extract the natural gas (or methane) needed by LNG Canada. The plant will take methane, process it into liquefied natural gas and then export it overseas.

What Trudeau called the largest capital project in the nation’s history will initially process two billion cubic feet of methane a day — almost half B.C.’s current production. It has the capacity to scale up and gobble four billion cubic feet a day. That’s more than one-third of Canada’s total demand.

According to energy analyst David Hughes, the project will require the drilling of an additional 400 gas wells a year for 40 years, in addition to the almost 500 wells now being drilled annually.

If you want a preview of what that kind of rapid industry expansion brings, look at Oklahoma.

In that state, America’s fifth largest oil producer, earthquakes caused by industry wastewater injection have damaged homes, sparked lawsuits and a regulatory scramble, and even depressed housing prices.

The state and northern B.C. share a well-studied geological phenomenon: unprecedented earthquake activity caused by fluid injection into the ground — mostly wastewater injection in Oklahoma and massive fracking operations in B.C.

 …click on the above link to read the rest of the article…

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