Energy Week in Review

Headlines for the week ending March 29, 2013:

Oil Spills Mount on Tracks

Labor Union Blasts Rep. Ed Markey’s Opposition to Keystone XL Pipeline

Eagle Ford Shale provided $61B economic boost to South Texas

E.P.A. Plans Stricter Limit for Sulfur in Gasoline

Israel Faces Geopolitical Tangle with Natural Gas

Shell’s Arctic Woes Continue

Excerpts and commentary below the fold…

Minnesota Rail Mishap

Scott Marquardt/The Parkers Prairie Independent

Scott Marquardt/The Parkers Prairie Independent

A Canadian Pacific Railway Ltd. train carrying crude oil to Chicago derailed in western Minnesota on Wednesday and spilled up to 714 barrels, state officials said, the biggest recent accident in a growing number of railroad leaks of crude.

As energy companies have turned to trains to move crude from booming North American oil fields not adequately served by pipelines, such railroad-related incidents have risen sharply in the past few years, according to federal data analyzed by The Wall Street Journal.

From 2010 to 2012, 112 oil spills were reported from U.S. rail tanker cars, up from just 10 in the previous three years, according to the Pipeline and Hazardous Materials Safety Administration, a part of the Department of Transportation that tracks most releases of hazardous materials. But the amount of crude leaked in spills has declined since 2008, when a big accident in Oklahoma released more than 1,900 barrels. On August 22, 2008, a BNSF Railway Co. train carrying crude derailed northeast of Oklahoma City; five tanker cars leaked oil that caught fire, leading to an evacuation of nearby residents.(Wall Street Journal. Link requires subscription.)

The estimated size of the spill has been revised downward from 714 barrels (30,000 gallons) to about half that amount. This reporting is a violation of Vladimir’s First Rule of Oil Spills: The volume of the spill is always reported by the press in gallons, making the number 42 times bigger. Maybe if an oil company had been responsible…

Also this week, Shell Pipeline reported a spill in a 16-inch crude oil pipeline with capacity of 170,000 barrels per day. The reported volume of that spill was less than 1 gallon. Vladimir’s Second Rule of Oil Spills: If you’re going to spill oil, spill it from a pipeline. Pipelines are the cheapest, safest and most efficient way to move crude oil and refined products around. Yes, pipelines can leak, but the leaks are almost always of limited volume. The Good Lord did not intend for oil to be moved around in rail cars, barges or boats.

The boom in the Bakken Oil Shale of western North Dakota has greatly increased the volume of crude oil being moved by rail. According to the St. Paul Pioneer Press:

Since 2009, the number of train cars carrying crude hauled by major railroads has jumped from about 10,000 a year to a projected 200,000 in 2012. Much of that has been in the Northern Plains’ Bakken crude patch, but companies say oil trains are rolling or will be soon from Texas, Colorado and western Canada.

Hmmm. I wonder why we don’t have more pipelines?

Union Blasts Markey (D-MA) Over Keystone XL

In callous and dismissive comments to the Progressive Change Campaign Committee Thursday, Massachusetts Congressman Ed Markey highlighted his ignorance of a key driver of the U.S. economy – the construction industry – and showed his disregard and disrespect for workers in the sector, who are trying to put food on their tables for themselves and their families.

Congressman Markey once again stated his opposition to the Keystone XL Pipeline, which would create thousands of good jobs. According to media reports, the Congressman said, “What’s in it for us except a few thousand temporary jobs building the pipeline?”

Congressman Markey should understand that many construction jobs, by their nature, are temporary. When workers complete a construction project, they are finished. However, what they build – such as the Keystone XL – remains behind to benefit communities and our country for generations to come. (LiUNA Press Release.)

Solidarity, man. Heh.

Eagle Ford Economic Impact

Last year, the Eagle Ford Shale had a $61 billion impact and supported 116,000 jobs across a 20-county swath of South Texas – a once sleepy region increasingly defined by an oil and gas boom. …

The direct impact alone is enormous: the study counts more than 46,000 people directly employed thanks to the oil field last year. …

The oil and gas field already is sending money to state and local coffers.

Oil and gas producers in the 14 counties sent an estimated $374 million in severance taxes, taken as oil and gas are extracted, to the state last year.

Under a “moderate” projection, the study estimates that in 2022, the field will generate $1.8 million a year in local taxes [? billion? – Ed.] and over $1.9 billion in state taxes, including severance taxes approaching $1 billion.(FuelFix blog/Houston Chronicle)

EPA Set to Change Sulfur Content of Gasoline

The Environmental Protection Agency will propose a rule on Friday [3/29] that will cut the amount of sulfur allowed in gasoline by two-thirds to improve the performance of the catalytic converters in engines that fight smog, the agency has told refiners and clean-air advocates.

The proposal has been ready for about 15 months but was delayed until after the election because opponents will argue that it will raise the price of gasoline, according to people familiar with its history.

“They didn’t want to have a big fight during an election year,” said S. William Becker, executive director of the National Association of Clean Air Agencies.

The rule will essentially move the country to the sulfur standards now in place in California, Mr. Becker said. (NY Times)

Would the Obama Administration let political considerations get in the way of implementing a bureaucratic move to save the planet/save the children/achieve economic justice? Is your Easter ham pork?

Israel and Energy Geopolitics

Israel discovered two large fields, Tamar and the heftier Leviathan, in 2009 and 2010. Tamar, which holds an estimated 8.5 trillion cubic feet, is set to begin pumping to the Israeli market in the coming days, while Leviathan, which boasts an estimated 16 to 18 trillion cubic feet of gas, is expected to go online in 2016, the approximate time when exports are expected to begin. …

The challenges are many. Cooperating with Cyprus risks antagonizing Turkey, an important one-time ally whose relations with Israel have greatly cooled in recent years. The neighboring Arab countries Egypt and Jordan might provide opportunity, albeit with some political risk. Europe is a potentially larger and more stable market, but reaching the continent is a logistical challenge and risks angering Russia.

Israel has already broached volatile turf by opening talks with Cyprus. The two countries, whose territorial waters border each other, are looking into how best to jointly exploit their mineral reserves. One option is to pipe the gas to Cyprus, where it could be processed for export to Europe and beyond.(FuelFix blog/Houston Chronicle)

In any case, the gas should make Israel self-sufficient and a net exporter of gas. How that gas will make it to market is still up in the air, and the answer could realign Israel’s historical relationship with its neighbors, as well as Cyprus and Turkey.

Shell’s Arctic Woes

A fourth government probe is under way into Royal Dutch Shell’s mishap-prone 2012 Alaska drilling season, this time for possible violations of international marine environmental rules, a U.S. Coast Guard official said on Wednesday.

The Coast Guard has asked federal prosecutors to consider taking action on possible violations of the International Convention for the Prevention of Pollution from Ships (MARPOL) committed in the operations of Shell’s Kulluk drillship, said Rear Admiral Thomas Ostebo, head of the Coast Guard in Alaska.

Shell, which had planned to drill up to five wells offshore Alaska in 2012 and a similar number this year, has previously said it will pause its Alaska operations to regroup due to complications faced in the harsh northern environment, but it expects to resume drilling next year. (Fox News/Reuters)

In related news:

A Shell executive in charge of oil exploration across the Americas has stepped down from his post after 29 years with the company.

Shell said the move by David Lawrence, the executive vice president of exploration and commercial for upstream Americas “was made by mutual consent” and that he was not fired. But skeptics have fostered a different view: that Lawrence was fired and made the scapegoat for Shell’s problem-plagued 2012 Arctic drilling season. (FuelFix blog/Houston Chronicle)

Cross-posted at RedState.com.

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