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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…

Pick Your Poison: The Fracking Industry’s Wastewater Injection Well Problem

Pick Your Poison: The Fracking Industry’s Wastewater Injection Well Problem

Oklahoma fracking industry site

The first known oil well in Oklahoma happened by accident. It was 1859 and Lewis Ross was actually drilling for saltwater(brine), not oil. Brine was highly valued at the time for the salt that could be used to preserve meat. As Ross drilled deeper for brine, he hit oil. And people have been drilling for oil in Oklahoma ever since.

Lewis Ross might find today’s drilling landscape in the Sooner State somewhat ironic. The oil and gas industry, which has surging production due to horizontal drilling and fracking, is pumping out huge volumes of oil but even more brine. So much brine, in fact, that the fracking industry needs a way to dispose of the brine, or “produced water,” that comes out of oil and gas wells because it isn’t suitable for curing meats. In addition to salts, these wastewaters can contain naturally occurring radioactive elements and heavy metals.

But the industry’s preferred approaches for disposing of fracking wastewater — pumping it underground in either deep or shallow injection wells for long-term storage — both come with serious risks for nearby communities.

In Oklahoma, drillers primarily use deep injection wells for storing their wastewater from fracked shale wells, and while the state was producing the same amount of oil in 1985 as in 2015, something else has changed. The rise of the fracking industry in the central U.S. has coincided with a rise in earthquake activity.

From 1975 to 2008, Oklahoma averaged from one to three earthquakes of magnitude 3 or greater a year. But by 2014, the state averaged 1.6 of these earthquakes a dayIt now has a website that tracks them in real time.

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

We Are Seeing Heat And Drought In The Southwest United States Like We Haven’t Seen Since The Dust Bowl Of The 1930s

We Are Seeing Heat And Drought In The Southwest United States Like We Haven’t Seen Since The Dust Bowl Of The 1930s

Despite all of the other crazy news that is happening all around the world, the top headlines on Drudge on Monday evening were all about the record heatwave that is currently pummeling the Southwest.  Of course it is always hot during the summer, but the strange weather that we have been witnessing in recent months is unlike anything that we have seen since the Dust Bowl days of the 1930s.  At this moment, almost the entire Southwest is in some stage of drought.  Agricultural production has been absolutely devastated, major lakes, rivers and streams are rapidly becoming bone dry, and wild horses are dropping dead because they don’t have any water to drink.  In addition, we are starting to see enormous dust storms strike major cities such as Las Vegas and Phoenix, and the extremely dry conditions have already made this one of the worst years for wildfires in U.S. history.  What we are facing is not “apocalyptic” quite yet, but it will be soon if the rain doesn’t start falling.

Large portions of Arizona, New Mexico, Colorado and Utah are already at the highest level of drought on the scale.  In Arizona, things are so bad that wild horses have been dropping dead by the dozens, and now authorities are trying to save those that are left

For what they say is the first time, volunteer groups in Arizona and Colorado are hauling thousands of gallons of water and truckloads of food to remote grazing grounds where springs have run dry and vegetation has disappeared.

Federal land managers also have begun emergency roundups in desert areas of Utah and Nevada.

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

Spooked by Quakes, Oklahoma Toughens Fracking Rules

Spooked by Quakes, Oklahoma Toughens Fracking Rules

Canadian regulators stick with less stringent regulations despite growing risks from mega-fracking.

After swarms of earthquakes caused by hydraulic fracturing, Oklahoma has introduced tougher regulations than those used by any Canadian energy regulator.

Last month the Oklahoma Corporation Commission ordered all drillers to deploy seismic arrays to detect ground motion within five kilometres of hydraulic fracturing operations over a 39,000-square-kilometre area in the centre of the state.

The commission, which regulates the industry, also lowered the minimum level of earthquakes at which operators must change practices from the current 2.5 magnitude to 2.

In addition, frackers must suspend their operations immediately for up to six hours after causing a 2.5 magnitude earthquake which can be felt at the surface.

The commission created the new earthquake protocol after hydraulic fracturing operations set off more than 70 earthquakes of at least 2.5 magnitude since 2016.

Canada’s energy regulators only make companies stop operations if they cause a magnitude 4 earthquake.

The Alberta Energy Regulator (AER), for example, doesn’t shut down an operation until it causes a magnitude 4 event. Even then the halt is temporary.

British Columbia’s Oil and Gas Commission requires operators “to immediately report” seismic events greater than magnitude 4 or unusual ground motion experienced by people within three kilometres of their operations.

In an attempt to reduce seismic activity, once thought to be solely caused by waste water injection, Oklahoma shut down wells and ordered the reduction of fluid volumes in 700 waste water disposal wells by 800,000 barrels per day between 2014 and 2015.

They also stipulated that if a waste water injection site triggered a 3.5 magnitude quake, it had to shut down operations.

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

Oklahoma Bolsters Earthquake Protocol For Frackers

Oklahoma Bolsters Earthquake Protocol For Frackers

OK rig

Oklahoma has witnessed a surge in earthquakes over the past decade. Regulators and scientists largely agree that the higher seismic activity is associated with the injection of wastewater from oil and gas production into wastewater wells.

Now Oklahoma is tightening its seismic protocol for the oil and gas operations in the state in an effort to reduce the chances of induced earthquakes. The oil industry welcomed the move, describing it reasonable and data-driven.

Earlier this week, the Oil and Gas Conservation Division (OGCD) at the Oklahoma Corporation Commission announced changes in the seismic protocol to “further address seismicity” in the state’s largest oil and gas play.

Under the tougher seismic protocol, all operators conducting hydraulic fracturing operations are now required to monitor real-time seismicity readings during active operations by using a seismic array, a system of linked seismographs arranged in a regular geometric pattern to increase sensitivity to earthquake detection.

Oklahoma is also lowering the minimum level at which operators must take action, from a 2.5 magnitude (ML) to 2.0 ML. Generally, the minimum level at which people can feel earthquakes is about 2.5 ML.

The third key change in the seismic protocol is that some operators will have to pause operations for 6 hours at 2.5 ML, with the magnitude level now lowered from the 3.0 ML minimum level at which operators had to pause operations under the previous protocol.

“The overall induced earthquake rate has decreased over the past year, but the number of felt earthquakes that may be linked to well completion activity, including hydraulic fracturing, in the SCOOP and STACK has increased,” OGCD Director Tim Baker said.

“Ultimately, the goal is to have enough information to develop plans that will virtually eliminate the risk of a felt earthquake from a well completion operation in the SCOOP and STACK,” said the Director of the Oklahoma Geological Survey (OGS), Dr. Jerry Boak.

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

Oklahoma Governor Signs Anti-Protest Law Imposing Huge Fines on ‘Conspirator’ Organizations

A STATUTE AIMED at suppressing protests against oil and gas pipelines has been signed into law in Oklahoma, as a related bill advances through the state legislature. The two bills are part of a nationwide trend in anti-protest laws meant to significantly increase legal penalties for civil disobedience. The Oklahoma law signed this week is unique, however, in its broad targeting of groups “conspiring” with protesters accused of trespassing. It takes aim at environmental organizations Republicans have blamed for anti-pipeline protests that have become costly for local governments.

The statute Oklahoma governor Mary Fallin approved Wednesday was rushed into immediate effect under a provision that declared the situation “an emergency.” It will dramatically increase penalties against protesters who trespass on property containing a “critical infrastructure facility.”

Under the newly signed trespassing law individuals will face a felony and a minimum $10,000 fine if a court determines they entered property intending to damage, vandalize, deface, “impede or inhibit operations of the facility.” Should the trespasser actually succeed in “tampering” with the infrastructure, they face a $100,000 fine or ten years of imprisonment.

Significantly, the statute also implicates any organization “found to be a conspirator” with the trespasser, threatening collaborator groups with a fine “ten times” that imposed on the intruder — as much as $1 million in cases involving damage.

A section of the law defining “critical infrastructure” includes various types of fossil fuel facilities. Oklahoma is a center of the oil and gas industry and home of the self-styled “Pipeline Crossroads of the World” in Cushing. The state has seen a dramatic increase in earthquakes since the nation’s fracking boom began, as companies began pumping wastewater produced from hydraulic fracturing underground. The Oklahoma Oil and Gas Association is a supporter of the legislation.

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

Geophysicist Ole Kaven on Man-Made Earthquakes

Geophysicist Ole Kaven on Man-Made Earthquakes

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OleKavenApparently things are moving and shaking in Oklahoma, literally. In the past 8 years earthquakes in the “Sooner State” have increased from 2 a year to 2 a day. Is the expansion of gas and oil exploration during that same period of time a mere coincidence? This week on Sea Change Radio, we hear from Ole Kaven, a geophysicist with the US Geological Survey. Kaven’s area of expertise is human-induced seismicity, in other words, how human activity contributes to earthquakes. He talks about the work he has been doing studying the effects of carbon sequestration on seismic events, the sharp increase in  Oklahoma’s seismicity, and what the government and the public should know about how oil and gas industry practices could be making the earth move under our feet.

“There’s A Feeling Of Bits Of Ice Cracking All At Once” – This Is The ‘Big New Threat’ To Oil Prices

“There’s A Feeling Of Bits Of Ice Cracking All At Once” – This Is The ‘Big New Threat’ To Oil Prices

One week ago, we reported that even as traders were focusing on the daily headline barrage out of OPEC members discussing whether or not they would cut production (they won’t) or merely freeze it (at fresh record levels as Russia reported earlier today) a bigger threat in the near-term will be whether the relentless supply of excess oil will force Cushing, and PADD 2 in general, inventory to reach operational capacity.

As Genscape added in a recent presentation, when looking specifically at Cushing, the storage facility is virtually operationally full (at 80%) with just 4-5 more months at current inventory build left until the choke point is breached, and as we have reported previously, storage requests for specific grades have already been denied.

Goldman summarizes the dire near-term options before the industry as follows:

The large builds in gasoline and crude stocks have brought PADD 2 storage utilization near record high levels. While the recent decline in Midcontinent refining margins should help avoid breaching storage capacity, by finally bringing gasoline back into deficit, this will likely only exacerbate the build in crude inventories in coming months and should require further weakness in PADD2 crude prices to spread this build to the USGC. Weaker gasoline demand/exports, or higher margins/runs or finally resilient crude imports/production, could create binding storage issues beyond the intermittent Cushing WTI cash price weakness observed so far, which would require another large leg lower in crude prices to shut production in the Midcontinent and Canada. As we have argued, this continued testing of storage constraints should keep price and margin volatility elevated.

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

Lawsuit Filed Over Oklahoma’s ‘Fracking’ Earthquakes as Its Third Largest Quake Is Felt in 7 Other States

Lawsuit Filed Over Oklahoma’s ‘Fracking’ Earthquakes as Its Third Largest Quake Is Felt in 7 Other States

The Sierra Club and the public interest law firm Public Justice have filed a federal lawsuit Tuesday against three energy companies engaged in hydraulic fracturing, aka fracking, in Oklahoma.

The suit against New Dominion, Chesapeake Operating and Devon Energy Production Company alleges that wastewater from fracking and oil production have contributed to the state’s alarming spike in earthquake activity.

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Map of Oklahoma. The orange dots represent the number of earthquakes with a magnitude of 3.0 and higher from 2010 to date. The blue dots represent the state’s wastewater disposal wells. Photo credit: Earthquakes in Oklahoma

The lawsuit demands the companies, as a first step, to “reduce, immediately and substantially, the amounts of production waste they are injecting into the ground.”

The lawsuit was filed the same day that the Oklahoma Corporation Commission made their largest push yet to curb the state’s seismic activity. According to the Associated Press, the state’s oil and gas regulator ordered operators of nearly 250 injection wells to reduce the amount of wastewater they inject underground.

The commission released a plan that covers more than 5,200 square miles in northwest Oklahoma and called for a reduction of more than 500,000 barrels of wastewater daily, or about 40 percent less than previous levels, the AP reported.

The commission’s measure comes three days after a 5.1 magnitude earthquake shook northwest Oklahoma. Not only was the quake felt in seven other states, it’s the third-strongest temblor ever recorded in the state, the U.S. Geological Survey (USGS) said.

“Without knowing more specifics about the wastewater injection and oil and gas production in this area, the USGS cannot conclude whether or not this particular earthquake was caused by industrial-related, human activities,” the agency said. “However, we do know that many earthquakes in the area have been triggered by wastewater fluid injection.”

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

The Most Ominous Warning That Oil Storage Is About To Overflow Has Arrived

The Most Ominous Warning That Oil Storage Is About To Overflow Has Arrived

It was just last week when we said that Cushing may be about to overflow in the face of an acute crude oil supply glut.

“Even the highly adaptive US storage system appears to be reaching its limits,” we wrote, before plotting Cushing capacity versus inventory levels. We also took a look at the EIA’s latest take on the subject and showed you the following chart which depicts how much higher inventory levels are today versus their five-year averages.

graph of difference in inventory levels as of January 22, 2016 to previous 5-year average, as explained in the article text

And now with major US refiners dumping crudeas we detailed overnight, those fears are surging.

U.S. Energy Information Administration data on Wednesday showed inventories at the Cushing, Oklahoma delivery hub hit a record 64.7 million barrels last week – just 8 million barrels shy of its theoretical limit – stoking concerns that tanks may overflow in coming weeks.

And now, given the “super-contango” in 3-month it is extremely clear that storage concerns are at their highest in 5 years…

Simply put, as one trader noted, speculators are now “making the leap to Cushing storage never being more full… will actually overfill, or even stop taking crude oil deliveries outright.”

It was just last week when we said that Cushing may be about to overflow in the face of an acute crude oil supply glut.

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

Negative Oil Prices Arrive: Koch Brothers’ Refinery “Pays” -$0.50 For North Dakota Crude

Negative Oil Prices Arrive: Koch Brothers’ Refinery “Pays” -$0.50 For North Dakota Crude

Do you have some extra space in your garage or attic? Or perhaps you own an oil tanker you aren’t currently using. Or maybe you have a storage unit that’s got a little extra room next to an old mattress and box springs.

If so, you may want to call up oil producers in North Dakota and ask if they’d care to send you some free oil, because the crude glut is now so acute that the Koch brothers are actually charging $0.50/bbl to take low grade oil at their Flint Hills Resources refining arm.


North Dakota Sour is a high-sulfur grade of crude and “is a small portion of the state’s production, with less than 15,000 barrels a day coming out of the ground,” Bloomberg notes, citing John Auers, executive vice president at Turner Mason & Co. in Dallas. “The output has been dwarfed by low-sulfur crude from the Bakken shale formation in the western part of the state, which has grown to 1.1 million barrels a day in the past 10 years.”

High-sulfur grades are more expensive to refine and thus fetch lower prices at market. As Bloomberg goes on to note, “Enbridge stopped allowing high-sulfur crudes on its pipeline out of North Dakota in 2011, forcing North Dakota Sour producers to rely on more expensive transport such as trucks and trains [and] the price for Canadian bitumen — the thick, sticky substance at the center of the heated debate over TransCanada Corp.’s Keystone XL pipeline — fell to $8.35 last week, down from as much as $80 less than two years ago.”

So there you have it. The global deflationary supply glut has now reached the point that the market is effectively forcing producers to pay to give their oil away or else see it sit in bloated storage facilities until Riyadh decides enough is enough and until the world comes to terms with the return of Iranian supply.

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

Stunning Drone Footage Of The Midwest Flooding Wreaking Havoc On US Oil

Stunning Drone Footage Of The Midwest Flooding Wreaking Havoc On US Oil

After the first deadly winter storm this season, now come the floods: the near-record water level across the U.S. Midwest has disrupted everything from oil to agriculture, forcing pipelines, terminals and grain elevators to close. This is the worst flood in the region since May 2011, when rising water on the Mississippi and its tributaries deluged cities, slowed barge traffic and threatened refinery and chemical operations and is just shy of the worst flood of breaking 30-year records.

According to Bloomberg, the floods have killed at least 20 people and shut hundreds of roads across Missouri and Illinois, according to AccuWeather Inc. Rain-swollen rivers will set records in the Mississippi River basin through much of January. Fifty miles (80 kilometers) of the Illinois River remain closed, according to the U.S. Coast Guard, as well as five miles of the Mississippi River.

Additionally, the Coast Guard issued a high-water safety advisory for 566 miles of Mississippi River between Caruthersville, Missouri, and Natchez, Mississippi. It also instituted high-water towing limitations near Morgan City, Louisiana, for vessels heading south that are 600 feet or shorter, it said in a statement.

And while water levels have started to recede in some areas, closures and restrictions remain in place for safety, said Jonathan Lally, a spokesman for the U.S. Coast Guard. “The high water is kind of moving in a big glob and it’s on its way down,” he said Friday in a telephone interview from New Orleans.

The impact of the flood has hit farmers, with hog producers in southern Illinois calling other farmers, hoping to find extra barn space to relocate pigs. Processors are sending additional trucks to retrieve market-ready pigs, she said. In one case, an overflowing creek took out electricity and made roads impassable, causing 2,000 pigs to drown.

But the flood’s most adverse economic impact may be on oil,  which may see an even greater increase in stockpiles as a result, pushing the price of oil even lower.

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

 

Oklahoma Leads The World In Seismic Activity As 2015 Quake Count Tops 5,000

Oklahoma Leads The World In Seismic Activity As 2015 Quake Count Tops 5,000

With geologists having confirmed the link between fracking and earthquakes in Oklahoma (and energy executives trying to get those geologists fired), the news this week that The Sooner State leads the world in seismic activity will likely see more uproar from residents.. and more lobbying dollars spent to ‘calm’ the politicians. As KFOR reportsthis year, more than 5,000 earthquakes have been recorded and experts say earthquakes in Oklahoma will likely increase in magnitude over time warning that it’s only a matter of time before the state gets a big one that will change life for those of living there.

“It’s unclear exactly how high we might go, and the predictions are upper 5-6 range for most things that I’ve seen,” Todd Halihan, a researcher from OSU, told KFOR NewsChannel4,

Halihan studies these quakes; his expertise is hydrogeophysics.

“Underneath any of these urban areas, whether it’s Stillwater, Cushing, Oklahoma City, Guthrie, these cities are not built to seismic standards. They’re not in L.A.” Halihan said.

“We have a lot of buildings that were built with earthquakes not even on the radar screen, so we would expect probably a fair bit of damage,” Halihan said.

“We’re not out ahead of it yet, we still have fires burning, and we’re trying to get ahead of those fires, but we’re not there yet,” Matt Skinner, spokesperson for the Oklahoma Corporation Commission, said.

“The changing point I think was the Prague quake, because as a result of that, we had a hearing as to how we should proceed in the Prague area for oil and gas exploration,” Skinner says.

Many people believe the commission is sitting back and watching the quakes happen, but they say that’s not the case.

Before…

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

 

2 More Fracking-Related Earthquakes Hit Oklahoma Despite New Rules Meant to Prevent Them

2 More Fracking-Related Earthquakes Hit Oklahoma Despite New Rules Meant to Prevent Them

Two earthquakes registering at a 4.5 and a 4.4 magnitude shook frack-happy Oklahoma on Saturday, some of the strongest felt in the state this year. The stronger quake occurred just a few miles from the city of Cushing, which holds one of the largest crude oil storage facilities in the world.

The recent quakes struck only a handful of weeks after the Oklahoma Corporation Commission (OCC), the state’s public utilities commission, shut down several disposal wells around Cushing and issued new regulations meant to prevent more earthquakes in the area, according to Al Jazeera.

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This map shows earthquakes with 2.5+ magnitudes within a 400-mile radius of Oklahoma City. On Saturday, a 4.5 quake hit the city of Cushing, a major crude oil storage hub. Photo credit: NewsOK

A local report said that the stronger 4.5 magnitude quake occurred around 5 p.m. Saturday evening and could be felt in the nearby cities of Stillwater, Guthrie, Sapulpa, Oklahoma City and other parts of the metro. There were multiple aftershocks in Cushing, recorded at 3.0, 3.2, 3.1, 2.8, 2.7 and 2.5.

Bob Noltensmeyer, Cushing Emergency Manager, told the Associated Press he had not received reports of significant damage in the area although there were “shattered nerves.”

“This one was pretty strong,” he added. “The whole house shook.”

A 4.4 was also recorded on Saturday at 4:20 a.m. about 18 miles southwest of Medford and about 100 miles northwest of Cushing.

America’s heartland used to register earthquakes from two a year to almost two a day. This year, roughly 700 earthquakes of magnitude 3 or higher has shook the state, compared to 20 throughout 2009, as the Associated Press pointed out.

The Sooner State’s seemingly never-ending earthquakes appear to be a man-made side effect of the country’s drilling boom. Scientists say that the injection of wastewater byproducts into deep underground disposal wells from fracking operations are very likely triggering the major increase of seismic activity in Oklahoma, which is not near any major fault lines.

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

Breaking: No Action Taken on a Proposal to Repeal Denton, Texas Fracking Ban

Denton’s city council decided not to vote on a repeal of the city’s fracking ban, after almost six hours of discussion on the topic at a public meeting last night.

The vote to repeal the ban was called for shortly after Texas Governor Greg Abbott singed HB40 into law, making Denton’s fracking ban illegal.

Oklahoma’s governor Mary Fallin signed a similar law on May 31, making bans on the fracking industry illegal there too.

The entire city council and Denton’s mayor Chris Watts expressed displeasure with HB40.

The mayor disclosed that the city’s legal counsel advised that repealing the fracking ban is necessary in order to defeat HB40.  They were told there are better ways to challenge the law than by defending the fracking ban, and that, if the ban isn’t repealed, both the Texas General Land Office and the Texas Oil and Gas Association, which have sued to block the ban, could ask for a judgment under HB 40 that could result in setting a legal precedent.

“It isn’t just about Denton, anymore,” Councilman Roden told DeSmog before the meeting. ”HB40’s reach goes way behind fracking, it threatens all local ordinances industry doesn’t like. Now every city with oil and gas activity has to grapple with basic questions like, ‘How can we defend a setback greater than 100 feet?’”


Councilman Kevin Roden before the Denton City Council meeting. © 2015 Julie Dermansky

Setbacks are the distance that industry must keep its operations from homes, schools and businesses. The Texas Railroad Commission, which regulates the oil and gas industry, has not enacted setback distance requirements, so many municipalities have established their own.

 

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