Tuesday, July 30, 2013

REPOST: Officials working to secure natural gas rig off Louisiana coast

Federal regulators are finding a way to secure the coast of Louisiana after the natural gas rig blow out incident. Read the story in this Los Angeles Times article.

Damaged gas drilling rig
Image Source: latimes.com

Officials said on Friday that they are continuing to study the scene of a blowout and fire at a natural gas well 55 miles off of the coast of Louisiana to decide how to secure the site.

A slight sheen associated with spilled oil is still being detected on the water’s surface but is dissipating, according to a joint statement by the federal Bureau of Safety and Environmental Enforcement, the Coast Guard, and the company involved, Walter Oil & Gas Corp.

On Tuesday, the natural gas well had a blowout, forcing 44 workers to evacuate. That led to a fire. Late Wednesday, the Coast Guard and federal officials took emergency measures to control the fire, which went out after sand and sediment cut off the flow of gas.

Officials are still investigating the cause of the accident.

Authorities also have to find a way to permanently secure the well.

Federal regulators said they are reviewing permit requests to drill a relief well. The relief well would be drilled “to intercept the target well. Once intercepted, drilling mud followed by cement will be pumped into the well to secure it,” the statement said.

 This Dr. Ali Ghalambor Facebook page contains information on production operations and completion technologies in the oil and gas industry.

Friday, July 26, 2013

REPOST: Lawmaker, others say state oversight of oil field fracking is lacking

Lawmakers and environmentalists encourage state regulators to strictly monitor the fracking activities around California fields. This Los Angeles Times article has the details. 

Image Source: latimes.com

SACRAMENTO -- Environmentalists including a lawmaker criticized state regulators Wednesday for not adequately tracking and overseeing fracking activity in California oil fields.

Fracking, or hydraulic fracturing, involves the injection of water and chemicals into the ground to stimulate production in oil wells.

Sen. Fran Pavley (D-Agoura Hills) had requested that California Department of Conservation Director Mark Nechodom answer questions about the oversight as she pushes legislation that would require strict monitoring. The director submitted a letter to lawmakers this week that she said is troubling.

"It is deeply concerning that dangerous acids and Proposition 65 chemicals are being pumped underground without any permits or oversight,” Pavley said in a statement. “Unfortunately, regulators have not deemed these activities worthy of monitoring.”

Nechodom provided Pavley with a list of chemicals and techniques used in the stimulation of oil wells. But he wrote that the Division of Oil, Gas and Geothermal Resources (DOGGR) has “sporadic documentation in well files on well stimulation since the Division does not currently require operators to report well stimulation.”

As a result, he said “extensive file reviews and surveying of the oil and gas industry would be necessary to accurately capture the extent of current practices.”

Pavley said the letter did not dissuade her from pursuing a bill on the issue.

“The Director’s letter reaffirms the need for legislation to force DOGGR to fulfill its legal responsibilities -- protection of life, health, property and natural resources,” she said.

Nechodom’s response that his agency lacks a searchable database on well stimulation operations and resources to review thousands of scanned documents also concerned Briana Mordick, a staff scientist at the Natural Resources Defense Council.

“Director Nechodom’s response confirms what we suspected, which is that DOGGR doesn’t know what, where, when, or with what chemicals well stimulation is being used in California,” said Mordick, a former senior geologist for Anadarko Petroleum Corp.

Dr. Ali Ghalambor is the author of the “Well Productivity Handbook.” To get information about Dr. Ghalambor and his works, follow this Twitter page.

Thursday, July 25, 2013

REPOST: Researchers to show new ways to hack oil, gas and water plants

Are oil and gas companies vulnerable to cyber-attacks? Reuters.com article reports the step being done by the oil and gas industry to fight the hackers that may wreak havoc on various infrastructures in the US through wireless technology.

(Reuters) - Cybersecurity researchers next week will demonstrate how hackers can potentially wreak havoc on critical U.S. infrastructure, even causing explosions by altering the readings on wireless sensors used by the oil and gas industry.

The presentations at the Black Hat conference beginning in Las Vegas on Wednesday will show how key industries remain vulnerable to cyber attacks, in part because companies are reluctant to replace expensive equipment or install new safeguards unless ordered to do so by regulators or offered economic incentives, experts say.

"We've got this cancer that is growing inside our critical infrastructure. When are we going to go under the knife instead of letting this fester?" said Patrick C. Miller, founder of the nonprofit Energy Sector Security Consortium. "We need to restructure some regulations and incentives."

The new research on wireless sensors found flaws in the way they handle encryption, Lucas Apa and Carlos Mario Penagos of security consulting firm IOActive Inc told Reuters.

They said they could contact some of the sensors with radio transmissions from as far as 40 miles (64 km) away and alter pressure, volume and other readings. If the overall control systems act on those readings without a failsafe, the researchers said, they could permanently disable a pipeline or plant.

The sensors typically cost $1,000 or $2,000 and are deployed in the hundreds or thousands at a single oil, gas or water processor. The researchers said the flaws were found in devices supplied by three of the largest vendors in the field, but declined to identify them.

Penagos said most refineries that have the capability to monitor gas levels or temperature probably have the vulnerable devices in place. In some cases the sensors have a design flaw, while in other cases the customers installed them insecurely.

Either way, "the entire industrial process could be disabled or modified by disrupting the physical sensors," Apa said.

Since the 2010 disclosure of the U.S.-developed Stuxnet virus that attacked an Iranian nuclear facility, countries have intensified efforts to defend their own infrastructure while developing the capability to attack such equipment elsewhere.

In the United States, a February executive order by President Barack Obama directed the Department of Homeland Security to work with industry to develop security standards, but their adoption would be voluntary. The White House is now weighing possible incentives, while Congress mulls legislation that would be more forceful.

For now, DHS issues warnings of attacks and advisories on how to fix flaws of extra concern. The IOActive researchers said they had been working with DHS and equipment makers to develop fixes.

A DHS spokesman declined to comment on the research or the state of security in the energy industry.

The department's industrial control systems cybersecurity arm responded to more than 200 incidents in critical infrastructure in the first half of the current fiscal year, more than in all of the previous year. More than half of the latest incidents were in the energy sector, according to a recent DHS newsletter.

Apa and Penagos said they had spent months on their project and it would take a fair amount of specialized experience for someone to mount a destructive attack. But it might also take a long time for patches to be physically installed, they said.

Shawn Moyer, an Accuvant Labs researcher who has found similar problems with radio communications in industrial controls, said Apa and Penagos' work showed that utilities are still learning the best practices for security. He also noted that interception and alteration of data form just one part of a successful cyber attack.

"You have to know enough about the target to know to look for it," Moyer said.

Another cybersecurity company plans to demonstrate at Black Hat how hackers can remotely blow up a water tank using a combination of known vulnerabilities.

Eric Forner and Brian Meixell of the consulting firm Cimation said they would simulate an attack that causes a tank to be overfilled, causing a spill or blowout.

They said a modest copycat effort by malicious hackers could produce destruction at random, while targeting a specific facility would take more effort. For instance, hackers can use tools such as Shodan, a specialized search engine that lets anyone look for specific types of devices that are connected to the Internet, along with the names of their owners and their physical locations.

"For us it was an overnighter - it took 16 hours for two people," Forner said. "There are systemic problems in the industry with bad protocol implementation." (Reporting by Joseph Menn; Editing by Claudia Parsons)

Dr. Ali Ghalambor is well informed on the following aspects of oil and gas production: well drilling, well completions, and production stages. Take time to visit this Facebook page for more updates about the industry.

Wednesday, July 24, 2013

REPOST: Shale Oil And Gas Development Is Heavily Regulated

This Forbes.com article discourses the false claim made by anti-fractivists regarding hydraulic fracturing.

Image Source: forbes.com
In Gasland, Director Josh Fox ’s first fake documentary about hydraulic fracturing, or ‘Fracking’, the false claim was made that the oil and gas industry is somehow exempt from the Clean Air Act and other major federal environmental laws. Mr. Fox continues to make this false claim – often referring to it as the Halliburton HAL +3.7% Loophole – despite it having been completely and thoroughly debunked, even at liberal blog sites like The Daily Kos, which recently had this to say on the subject:

“First, here is the actual truth of the matter … Dick Cheney didn’t do any harm to the Federal Clean Air Act because there is no “Halliburton Loophole” statutory law amendment of the Clean Air Act contained in the Energy Policy Act of 2005; you can read it here for yourself.

Because I’ve been tracking Congressional action on the Federal Clean Air Act for the last 37 years I can tell you with 100% certainty that the Federal Clean Air Act has never been amended to incorporate a categorical oil and gas industry exemption from the fundamental jurisdictional requirements of the Act. Josh Fox’s claim that the oil and gas industry has some sort of categorical exemption from regulation and that hydraulic fracturing and other oil and gas industry process equipment and facilities are exempted from regulation under the Federal Clean Air Act is fabrication and erroneous conflation.”

But Mr. Fox is far from the only anti-fractivist who makes this demonstrably false claim. Late last year, I traveled to Austin to participate in a panel discussion on the Sustainability of Shale Natural Gas at the annual SXSW Eco Conference. My basic role was to be the lone spokesperson for the natural gas industry on a panel whose other three participants were otherwise tilted (predictably) in the opposite direction. Which was fine – I actually enjoy a good debate, at least when the debate is based on facts and focused on real issues surrounding shale gas production.

Unfortunately, as is typical of this kind of setup, that turned out to largely not be the case. One statement made by the representative of the Natural Resources Defense Council (NRDC) really stood out from the rest. During his opening remarks, he characterized shale gas development as “an unregulated free for all”, and claimed that the “industry is exempt from RCRA, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act”, and other major federal environmental laws.

That characterization of the oil and gas exploration and production industry would come as a huge surprise to those who work in it. I personally have had a 33 year career in the industry, and know beyond any doubt that NRDC’s contention here is completely false. The fact of the matter is that pretty much everything anyone at an oil and gas company does on a daily basis is heavily regulated at the federal, state, and local levels, often at multiple levels simultaneously. I know that, and could only marvel that the NRDC could somehow remain unaware of it after years of opposition to the industry’s existence.

This reality was really brought home to me recently as I listened to the director of Health, Safety and Environment (HSE) for a large independent natural gas producer go through a presentation about the various state and federal laws and regulations his team of 35 people is responsible for ensuring the company be in compliance with. Note that this company employs around 700 people, so fully 5% of its workforce works full time to ensure compliance, and that does not include the daily efforts by the company’s field and office personnel to ensure compliance in their own activities.

At one point, the HSE Director displayed a slide listing the major federal acts the company must comply with. Lo and behold, that list included “RCRA, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act” and other major environmental laws like the National Environmental Policy Act, the Endangered Species Act, and OSHA, the act that governs workplace safety.

The HSE Director’s next slide listed, in very small print, all the various provisions of just the Clean Air Act that apply to exploration and production activities. If I tried to list them all here I’d run out of space, so I won’t try to do it. But one key point to understand is that last August, the EPA finalized a major new rulemaking related to National Emission Standards for Hazardous Air Pollutants (NESHAP) – governed by the Clean Air Act – that apply specifically to oil & gas E&P operations.

Is it really possible that the folks at the NRDC somehow missed completely a rulemaking process that dragged on for almost a year? Or was the NRDC spokesman just engaging in the very common practice preferred by these anti-development groups these days of throwing out inaccurate, hyperbolic statements about the oil and gas industry, expecting to go unquestioned on them by a sympathetic news media or a general public that doesn’t know any better?

While this practice is no doubt a useful way for anti-development groups to raise money by creating a perception of a never-ending crisis, it is a wholly non-productive exercise in what ought to be a quest to find real solutions to real issues that do exist around the development of this nation’s incredible wealth of shale oil and gas resources.

Are the existing regulations around shale gas development perfect? Probably not. Could they use some modernization? Probably so, and many states with significant shale development – like Texas, Colorado, Pennsylvania and Wyoming – are heavily engaged in that process right now. But characterizing the oil and gas E&P industry as “an unregulated free for all” is simply not true, and serves no useful purpose from a problem solving perspective. Those who engage in this sort of intentional misleading commentary, whether it be in presentations, written articles, speeches, panel discussions or filmmaking are performing a great disservice to the public.

Dr. Ali Ghalambor has served as consultant to numerous petroleum production and service companies. This Facebook page provides updates concerning the oil and gas production.

Tuesday, July 16, 2013

REPOST: Texas's Amazing Shale Oil And Gas Abundance

Texas is known for its abundance in oil and natural gas reservoirs. Read more in this Forbes.com article.

Map of USA with Texas highlighted
Image Source: forbes.com
I’m often asked my opinion on what the prices of oil or natural gas are going to do. My answer is always the same: If I had the slightest idea what the prices of oil or natural gas were going to do in the future, nobody in my family would ever have to work another day in their lives, because I would quickly become fabulously wealthy.

Seriously, nobody knows what the price of these commodities is going to do six months, a year, two years from now. Or even tomorrow, for that matter. But here’s what we do know: Texas has an amazing volume of both commodities underneath its soil in various shale formations around the state. From the Barnett

Shale in north Texas, to the Haynesville Shale in East Texas, to the Eagle Ford Shale in South Texas, to the Cline and Wolfcamp Shales in West Texas’s Permian Basin – Texas is swimming in recently-discovered oil and natural gas reservoirs.So abundant are the resources in the Lone Star State that, as of June 27th, there were 843 oil and natural gas drilling rigs operating in Texas, representing an amazing 48% of all the rigs operating in the United States. Even more amazing, that number represents 26% of all the drilling rigs operating anywhere on the face of the earth!Today, Texas produces more than 30% of America’s oil and natural gas. If Texas were a country, it would be the third largest natural gas producing nation on earth, and the 13th largest oil producer. Prior to the late 1960s and the growing influence of OPEC, Texas produced so much oil that it was able to heavily influence the price of the commodity on the world market. As the Eagle Ford production continues to grow and the massive potential of the Cline Shale begins to be tapped in earnest, the state could find itself once again in a position of global pricing influence.

Home to more than 260 of those active drilling rigs, the Eagle Ford continues to amaze analysts with the rapid nature of its growth. March 2013 daily oil production from the play grew to more than 529,000 barrels, a 77% increase from just one year earlier. Scott Hanold, an analyst for RBC Capital Markets, told his clients that “While the trend is correct, we believe actual production in the Eagle Ford is higher than what is being reported.” RBC’s proprietary database reportedly pegs Eagle Ford’s oil production as high as 800,000 barrels per day, in basically the same range as North Dakota’s Bakken Shale. Regardless of which number is more accurate, there is no question that Eagle Ford will overtake the Bakken in the next several months to become the largest oil producing field in the U.S.

Meanwhile, the Permian Basin, which as recently as 6 years ago was thought to be a dying province for oil and gas production, continues to rebound in dramatic fashion, and is now home to more than 500 active rigs. According to a recent report put together by the Independent Petroleum Association of America, “Production in the Permian Basin reached about two million barrels per day in the early 1970s, declined to 850,000 barrels per day in 2007, but has since rebounded to 1.3 million barrels per day.”

The report goes on: “The potential of multi-stage fracturing in both vertical and horizontal wells has recently attracted a revival of activity to the Permian. There are currently almost 500 rigs active in the region, which makes up more than a quarter of the U.S. total. Of the rigs active in the Permian, nearly 40 percent are drilling horizontal wells, particularly in the Delaware Basin, double the share of two years ago. Vertical drilling is still very strong – more than 6,000 Wolfberry wells have been drilled within the last 10 years, according to the Texas Railroad Commission.”

All of that dramatic increase in activity and production has taken place while what many believe to be potentially the biggest oil shale in the U.S. – the Cline Shale – has barely begun to be tapped. The Cline is an enormous underground structure, averaging about 70 miles wide from east to west, and about 140 miles from north to south, with a target zone for oil production that is between 200 and 500 fee thick. Because it partially underlies the Wolfcamp Shale to the West, some companies are drilling wells with dual completions in each formation.

Activity in the Barnett, Haynesville and the dry gas window of the Eagle Ford has recently been slow due to low prices for natural gas. But make no mistake about it: the gas is still there in enormous quantities, and whenever the commodity price does move back up into a more healthy zone – which it inevitably will – we will see many more natural gas rigs come on line in Texas and elsewhere to begin tapping it once again.

Because the one thing we do know for certain about oil and natural gas prices is that they are cyclical in nature. That is the way it has always been, and you can bet the family farm it will never change.

It’s just one of so many factors that have always made the oil and natural gas industry one of the most interesting to be involved in. The next 20 years or so may well become the most exciting time the industry has ever seen, and I just hope I live long enough to see it all play out. God Bless Texas.

Dr. Ali Ghalambor is a former director of the Society of Petroleum Engineers. See this Facebook page for more information.

Monday, July 8, 2013

The importance of the US natural gas pipeline to Mexico

Image Source: hydrocarbons-technology.com

One of the problems that developing countries have to deal with is the increasing demand for energy. As people’s financial capacity to buy consumer electronics and appliances increases, so does their appetite for energy to power those devices. High energy consumption equals a high demand for fuel used for power generation. This is probably why these countries have been importing natural gas and other fuels from other countries at a higher rate.

Pipeline (Image courtesy from ortizfeliciano.blogpost.com)
Image Source: oilandgasmexico.com

Mexico is one such country looking to import more natural gas as possible, especially since most of its electricity comes from thermal plants, which use natural gas as a fuel source. The country used to import natural gas from other countries, but it is now increasingly reliant on US natural gas exports. In fact, the Los Ramones pipeline, which stretches from southern Texas to Guanajuato, was developed due to Mexico’s increasing demand for natural gas exports.

As of 2012, natural gas delivered via US pipelines accounted for 80 percent of Mexico’s natural gas imports, which makes the US a valuable supplier. Furthermore, Mexico benefits financially from the US as natural gas imported from the latter is fairly cheap.

Image Source: industrialinfo.com

More updates about the petroleum and natural gas industry can be accessed by visiting this Twitter page for Dr. Ali Ghalambor

Friday, July 5, 2013

REPOST: Indonesia Embraces Shale Fracking — but at What Cost?

This article from Time.com reveals that Indonesia is the first nation in Southeast Asia to fully embrace shale fracking. Read about it here:

Indonesia’s energy sector lies on the cusp of renaissance as the latest technology — shale fracking — finally arrives in Southeast Asia. Last month, state-owned oil-and-gas firm Pertamina signed its first contract on the exploration of 16 trillion cu. ft. of potential shale-gas reserves in northern Sumatra, and other deals are also pending. But this trend comes not without controversy, and aside from human-rights and environmental issues, there could be significant economic repercussions for the region, especially if local superpower China decides to follow suit.

Shale fracking has already made huge headlines in the U.S., where it is largely responsible for reversing a long decline in energy production. (Official figures suggest oil-and-gas output has increased by 38% since 2008.) This resurgence led President Barack Obama to boast “we have a supply of natural gas that can last America nearly 100 years” during his January 2012 State of the Union address. The power-guzzling U.S. became a net exporter of gasoline, diesel and other refined products in 2011 — the first time in over half a century — and could potentially overtake Saudi Arabia and Russia to become the world’s largest oil producer in just five years. This new climate of plenty has helped stem a steady rise in prices sustained by diminishing conventional supplies and decades of instability in the Middle East.

Hydraulic fracturing, or fracking, involves drilling down thousands of feet to where petroleum deposits are trapped amid porous rock. Engineers set small explosions that form cracks, and then a mixture of water, sand and chemicals is pumped down to enlarge these fissures. Shale gas, or tight oil, is released and can be harvested at the surface. The beauty of this method is that it makes old spent wells viable again, and the resultant fuel is much cleaner than burning coal. The downside, claim activists, is that dangerous chemicals leak into the water table, poisoning livestock, crops and the general population. Fracking has polarized opinion in the U.S., where campaigns spearheaded by celebrities and community groups point to ecological degradation in key battlegrounds like rural Pennsylvania. Others tout fracking as a game changer that can plug the gap until renewable energy matures into a viable alternative; a report released in April by the Environmental Protection Agency also played down the risks.

Amid this controversy, Indonesia has become the first Southeast Asian nation to fully embrace shale. Oil was originally discovered on the island of Sumatra in 1880 when a 20-year-old Dutch tobacco planter noticed local people setting fire to damp twigs while sheltering from a tropical storm. It turned out that this kindling had been dipped in a strange pool of dark liquid found nearby that was two-thirds kerosene. So began Indonesia’s oil boom that peaked with a national output of around 1.5 million barrels per day during the 1990s. The country was the only Asian member of OPEC until aging fields and a dearth of investment saw its eventual withdrawal in 2009.

Dwindling supplies from conventional drilling is proving to be a major headache for Indonesia’s government. Southeast Asia’s largest economy also boasts the world’s fourth largest population with a burgeoning middle class to support. The country was in line to spend $31 billion subsidizing fuel this year before a rise in prices was agreed last week. But this move was accompanied by fierce protests and only partly addresses the issue. Exploiting cheap and plentiful shale reserves is therefore very attractive — and not just for Pertamina. Chevron Pacific Indonesia already uses fracking in Duri, Sumatra — the country’s largest oil field — while Australia’s NuEnergy Gas has just begun hydraulic-fracturing operations at five new untested coal beds in West Java, and expects gas sales by the end of the year.

The fear that fracking might pollute water supplies is magnified in Indonesia, where cost cutting, lack of technical expertise and venal local authorities have historically exacerbated industrial dangers. Pius Ginting, of the Indonesian Forum for the Environment, or WALHI, describes the growth of fracking in his country as “alarming” and tells TIME that his group is in the process of conducting impact-assessment visits to affected communities. “Because we do not have community awareness regarding health problems related to fracking shale gas, so far this is still hidden under the carpet,” he says.

Indonesia boasts some of highest levels of biodiversity in the world but has a decidedly mixed record on environmental protection. Last year, experts deemed the national water quality to be the worst in Southeast Asia — only 10% of the rural population has access to clean supplies. Muhammad Reza, advocacy coordinator of People’s Coalition for the Right to Water, or KRuHA, tells TIME that a fracking boom would be a “catastrophe” for Indonesia’s natural resources as well as essential services. Land rights and worker safety are additional concerns; Agung Marsudi, a Duri Institute researcher, warns of “many social and environmental problems” down the line.

Aside from environmental concerns, experts say certain challenges, like restrictive legislation, must also be overcome for Indonesia to fully realize its potential. The state currently has right of first refusal on all domestically produced fuel at tightly controlled rates. “Price can make or destroy both supply and demand,” says Alan Troner, president of Asia Pacific Energy Consulting. Troner admits that a U.S.-style fracking boom is possible in Indonesia, but says that “it’s not going to be easy, it’s not going to be cheap, and it’s not going to be tomorrow.” Challenges such as poor local governance, a lack of financial incentives for investors and inadequate infrastructure must also be addressed.

China is also seeking to embrace fracking, and some experts believe it may host the world’s largest shale-gas fields. Beijing’s 12th five-year plan includes provisions to increase shale-gas production to 350 billion cu. ft. by 2020. State-financed oil firms have been enlarging their stakes in North American energy companies including Devon Energy Corp., one of the pioneers of the shale-gas revolution, which allows crucial expertise to be garnered. “China has big plans to harness shale gas by fracking,” explains Subbu Bettadapura, a Kuala Lumpur–based energy expert for American consultancy firm Frost & Sullivan, adding that the country is aware of problems such as water scarcity, air pollution and lack of technology.

China replacing traditional coal-fired power plants with shale gas would likely help improve local air quality, though the Middle Kingdom’s already tainted water supply could well feel the brunt. But there are other economic consequences for nearby emerging economies that have bet future prosperity on feeding China’s ever expanding energy needs. A large-scale regional fracking boom may also drive global fuel prices down and make traditional exploration less economically viable. A recent report by PricewaterhouseCoopers suggests fracking could keep oil prices 40% lower than previously expected levels by 2035.

While fracking is a major advantage for countries with established drilling mechanisms looking to maximize spent fields — such as China, Indonesia and Malaysia — there are few benefits for those with nascent industries. Burma, Vietnam, Cambodia and the Philippines have long vaunted large stocks of oil and gas, yet to date have made very little substantive progress tapping their resources. These developing economies therefore have a definite interest in keeping global oil prices high, especially if they seek to attract foreign investment to exploit these reserves. With shale exploration promising to revolutionize the global energy market, there are likely to be both winners and losers within Southeast Asia, and all eyes will be on Indonesia for an indication of what lies ahead.

Find more links to articles on developments in the energy industry both here and abroad on this Twitter page for Dr. Ali Ghalambor.

Thursday, July 4, 2013

REPOST: Obama wants limits on coal plants, says Keystone can't boost pollution

President Barack Obama outlines second-term environmental priorities in an address on climate change. This CNN article has the details. 

Video Source: edition.cnn.com

Washington (CNN) -- President Barack Obama unveiled an aggressive new climate change strategy on Tuesday that would limit pollution from existing coal-fired power plants, and he made clear that approval of the Keystone XL pipeline depended on the project not increasing overall greenhouse gas emissions.

Obama raised the two politically charged issues during a sweeping address on second-term environmental priorities that included his plan of executive actions that don't require congressional approval in an era of partisan gridlock in Washington. He also pledged global leadership on climate change and to redouble U.S. efforts to fight it. The Georgetown University speech came as environmental constituents and climate change advocates press him to take more aggressive action and to push harder for clean energy alternatives.

Obama said he was taking action for the "sake of our children and the health and safety of all Americans," saying new initiatives on his environmental agenda built around clean-energy industry and policy will spur the economy and leave a cleaner planet for future generations. "We can do all of that as long as we don't fear the future and instead we seize it," Obama said, adding that his plan was a signal to the world that America would take bold action to reduce carbon pollution.

Obama pledged in 2009 the United States would cut greenhouse gas emissions by 17% of 2005 levels by 2020.

Environmentalists have said decisive action was necessary to make that goal possible with a major legislative effort in Congress failing in Obama's first term.

The president again said that U.S. energy strategy must be more than producing more petroleum, reviving his call for eliminating tax breaks for "big oil."

"We can't drill our way out of the energy and climate challenges that we face," he said, a familiar Democratic sentiment on energy policy.

Obama cautioned that the impact of his plan would be felt over time, but now is the moment to further prepare the nation to reduce carbon pollution and protect Americans from climate change. "The world still looks for the United States to lead," he said, noting that the United States is the world's largest economy and the second-largest carbon emitter. "We have a vital role to play," he said.

Obama said the United States must use less "dirty energy," waste less, and transition to cleaner sources, and redouble efforts to reach a new global agreement to reduce carbon emissions with "concrete action" that is ambitious, inclusive and flexible.

He said the United States must "strengthen our position" as a natural gas producer, which he said is producing jobs, lowering power bills, and over time would help the country transition to cleaner energy overall, including wind and solar power applications. And Obama said he doesn't have much patience for those who say there's no proof of man-made climate change.

"We don't have time for a meeting of the Flat Earth Society," he said. Americans having their say on divisive Keystone pipeline plan

Keystone pipeline

On the sensitive prospect of the Canada-to-Texas Keystone pipeline, Obama said it would only come about if its development would be in the nation's best interest. And that, he said, would be served if the project does not significantly worsen carbon pollution.

"The net effect on our climate will be absolutely critical in determining whether this project will be allowed to go forward," he said.

The State Department is in the final stages of reviewing the proposal that has contributed to the political stalemate in Washington.

Proponents of the pipeline, many of them Republicans that Obama is looking to compromise with on key issues, say Keystone will enable U.S. energy independence, create jobs and develop important industrial infrastructure.

Among detractors are some of Obama's traditional allies, who were instrumental in getting him elected twice. They say the massive pipeline effort is dangerous, inherently filthy and must be stopped. In a lengthy study, the State Department has weighed in on the side of proponents. But the Environmental Protection Agency has blasted environmental impact assessments. The Canadian crude that would flow through the Keystone pipeline is mixed with sand in its raw form. Environmental experts say extracting oil and transporting it requires more energy than pumping crude out of a well. Pushing it through pipes increases the energy consumption as well. That higher energy use leads to greater greenhouse gas emissions, an increase of "18.7 million metric tons (20 million tons) C02 ... per year when compared to an equal amount of U.S. average crudes," the EPA said.

Coal plants

The Obama administration created regulations for newly built coal plants during the president's first term. On Tuesday, he issued directives requiring the EPA to establish carbon pollution standards for plants that are already active.

The administration is not laying out new standards on its own. Instead, it plans to work with industry, states, labor and other interest groups to develop them. Obama directed the EPA to come up with a detailed draft proposal by June 2014 and a finalized version one year later. Environmental groups have been calling on Obama to issue such regulations on coal plants, the largest source of carbon emissions in the United States.

Obama argued that the benefits of reduced carbon emissions will far outweigh the costs of implementing new rules. Critics have said new regulations could damage the economy. Construction of new coal plants has slowed in part due to EPA regulations.

"The impact could be economic havoc," Luke Popovich, a spokesman for the National Mining Association, which represents the coal industry, told CNNMoney earlier this year. Coal is used to produce about 40% of the nation's electricity. Hal Quinn, president and chief executive of the National Mining Association, told Congress last week that U.S. exports of coal are becoming an increasingly large share of the economy. Last year, he said, exports added $16.6 billion to the economy and supported 168,430 jobs. While the administration has not given a cost-benefit analysis of its new plan, the Natural Resources Defense Council (NRDC), a large environmental action group, estimates it would cost $4 billion to comply with new regulations on coal power plants, but the economy would see anywhere from $25 to $60 billion in benefits.

A large part of the benefit comes from reduced health care costs. Carbon pollution is known for contributing to higher rates of asthma, as well as other possible illnesses. Republican reaction was swift with the GOP's political arm in Virginia rolling out its claim of Obama's "war on coal." As part of the gubernatorial campaign, it quickly released a "robo call" initiative in the southwestern part of the state describing Democratic support for "job-killing policies."

Obama's second term could look like his first

Frustration with Obama

Many environmentalists will likely embrace the president's proposals on climate change even though he pushed through sharp cuts in car and truck emissions during his first term. Activists have expressed frustration with the administration in the past, saying Obama hasn't worked with a strong sense of urgency on the issue since taking office even though he pushed forward a sweeping plan to reduce car emissions and fuel use.

While the idea of long-term climate change is a controversial notion politically, it's accepted as fact by most researchers and Obama.

A March poll from Gallup indicated nearly half -- 47% -- of Americans think the U.S. government is doing too little to protect the environment, while 35% said the government was doing the right amount and 16% said it was doing too much.

The president offered renewed hope to the environmental community -- but fears among the coal mining industry and concerns among climate change skeptics -- in his inauguration speech and State of the Union address this year.

He robustly signaled he would do more to combat climate change during his second term. And again last week, during a speech at the Brandenburg Gate in Berlin, Obama urged countries to work together to fight the "global threat of our time."

For more updates on policies affecting the energy industry, visit this Dr. Ali Ghalambor Facebook page.

Wednesday, July 3, 2013

REPOST: Natural Gas Settles Higher After Four-Day 8% Loss

Natural gas went off the board with a six-cent gain after losing 8% related to the expiration of the July contract. Read this NASDAQ article

NEW YORK--Natural-gas futures snapped a four-day, 8% losing streak Wednesday, amid bargain hunting related to the expiration of the July contract.

The incoming front-month August contract gained as well, but traders said there has been no change in a bearish weather forecast that shows little chances of a jump in gas demand through the first week of July, east of the Rocky Mountains.

Natural gas for July delivery on the New York Mercantile Exchange went off the board with a six-cent gain, to $3.707 million British thermal units, the lowest expiration-day price since February.

The contract had lost 31.6 cents over the prior four days amid forecasts showing that above-normal temperatures in coming weeks will be limited to states west of the Rockies.

The July contract fell to an intraday 15-week low, but found support near the 200-day moving average of $3.63 million British thermal units.

"There seems to be a reluctance to push down toward $3.60, with hurricane season and a lot of the summer still ahead," said Gene McGillian, analyst and broker at Tradition Energy. "We could see a turn in the weather and be right back up to $4."

August gas rose 6.7 cent to settle at $3.737/mmBtu.

Forecasts through the first week of July continue to show moderate-to-cool temperatures east of the Rocky Mountains, stifling demand for gas-fired power to meet air-conditioning demand in the highly populated areas in the region.

As natural-gas production remains steady and inventories are in line with five-year norms, prices are finding little incentive to rally, traders said.

U.S. gas inventories, meanwhile, remain broadly in line with seasonal averages. Last week, the Energy Information Administration reported that gas stockpiles stood at 2.438 trillion cubic feet, just 1.9% below the five-year average level for this time of year.

Analysts surveyed by Dow Jones Newswires expect EIA data due at 10:30 a.m. EDT Thursday to show another outsized increase, of 89 billion cubic feet, compared with the a 58-bcf rise last year and a five-year average rise of 79-bcf rise for the week.

"We've seen above-normal builds in the past eight weeks," said Mr. McGillian, noting that worries about the potential for tight inventories ahead of next winter have been diminished by the gains.

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Making people understand fracking

 Image Source: potomacriverkeeper.org

Hydrofracturing, or fracking as it is commonly known, is a controversial topic. Although many are skeptical about the practice, there are still those who believe that fracking is good for the country, especially since its end products are natural gas and shale gas—cheaply produced hydrocarbons that are also cleaner than traditional hydrocarbons, such as petroleum and coal. Moreover, fracking also contributes to the economy by creating hundreds of jobs. Conversely, skeptics believe that fracking is a dangerous process, wherein the fluids may trickle into underground fresh water reservoirs, which are sources of drinking water for most people.

Image Source: wellguy.hubpages.com

However, both beliefs are eclipsed by the fact that, according to a recent survey by the George Mason University Center for Climate Change, most people do not even know what fracking is.

Educating people about the pros and cons of fracking and making information about the practice readily available are important, as public opinion is crucial, especially now that there are different groups disagreeing on whether to subject a particular land to fracking or not. Furthermore, companies should be transparent with regard to the chemicals used, including the amounts, during the fracking process to help raise awareness on the advantages and disadvantages of this practice.

Image Source: vimeo.com

More pertinent news about the petroleum and natural gas industry can be found on this Twitter page for Dr. Ali Ghalambor.

Tuesday, July 2, 2013

REPOST: America's oil and gas revolution

The extraordinary growth in the U.S oil and gas production has a bigger impact in terms of  the economic expansion. This American Enterprise Institute article has the details. 

Image Source: aei.org

To grasp the importance of the revolutionary change in oil and gas drilling sweeping across the United States -- and its significance for our economy -- just consider how far behind the rest of the world is lagging.

America's innovative use of energy technology by "petropreneurs" is rejuvenating oil and gas production. Thanks to the combination of hydraulic fracturing and horizontal drilling in shale deposits, along with advances in seismic imaging that allow geologists to examine deposits more than a mile underground, energy resources long presumed to be beyond reach are now being tapped, or at least will be eventually. And it's happening as a result of something unique about America.

"In most of the world, if people are living on the land and there's hydrocarbons underneath it, they will fight it," Bob Dudley, group chief executive of BP, said recently in an interview with the Wall Street Journal. Private ownership of mineral rights in the U.S., along with an existing network of pipelines, enables oil and gas to find their way to market. And this, Dudley said, has given America its big head start.

The upshot is that a United States reliant on imported oil and natural gas is a thing of the past. To be sure, the U.S. will continue to be subject to world oil prices, and supply disruptions in the world will still create price spikes. But an abundance of domestic oil -- and growing use of natural gas in truck fleets -- will dampen price volatility, providing more stability for consumers.

We have seen a 40 percent increase in domestic oil production since 2008, the highest growth in oil output of any country in the world over that time period. As could be expected, net oil imports have plummeted, from more than a 60 percent share of domestic consumption in 2005 to less than 40 percent this year, the lowest dependence on foreign sources of oil in more than 20 years. Domestic oil production is booming, and the United States could even surpass Saudi Arabia to become the world's biggest oil producer by 2020.

The upsurge in U.S. natural gas production has been no less dramatic. The Energy Information Administration, or EIA, estimates that the U.S. has enough gas to last more than 100 years. What has become known as the "shale gale" has turned a shortage into a surplus, and now natural gas accounts for more than a quarter of America's total energy.

The abundance of cheap gas has helped reduce utility bills for consumers through lower electricity costs and lower costs for the millions of Americans who use gas to heat their homes. And the "shale gale" has sparked a revival in domestic manufacturing, mainly in the chemical industry but also in other energy-intensive industries like iron and steel. Because U.S. natural gas prices are now the lowest in the world, industries that once exported manufacturing facilities abroad are suddenly bringing them back home as they pursue new investments. All of this has increased economic growth, created jobs with good wages and produced revenue for governments at all levels.

Shale gas has also helped the environment by slashing carbon dioxide emissions. As natural gas has replaced coal in electricity generation, U.S. carbon dioxide emissions declined to their lowest levels in 20 years, the largest reduction of all countries. Solar and wind can't deliver comparable energy and environmental benefits within the same time frame, but the shift from coal to natural gas could buy the time needed to expand the use of carbon-free energy sources and further reduce greenhouse emissions to safe and acceptable levels.

The United States, moreover, could become a major exporter of natural gas in the future. With thousands of new wells being drilled, the EIA projects that natural gas supply could exceed demand by 2016, enabling the U.S. to liquefy and export natural gas to markets abroad.

The revolutionary drilling technologies developed in the United States will eventually be employed everywhere. Although foreign countries lag behind us, there has been considerable interest in oil-and-gas shale deposits in Europe, Latin America and Asia. China's shale gas resources alone are said to exceed those in the United States. This means that the U.S. will be an exporter of energy and drilling technologies well into the future.

The impact of the extraordinary production growth of U.S. oil and gas is becoming increasingly apparent. Even if the current growth subsides in the years ahead, the transformative impacts of this energy revolution on economic expansion will have dramatic effects. A study by Merrill Lynch pegged that contribution at 2.2 percent of America's GDP -- equivalent to an economic stimulus of $1 billion every day. The big takeaway is the unfolding scale of America's amazing oil and gas revolution -- and the huge economic impact it's having on jobs, manufacturing, the environment and competitiveness.

This blog site contains more information about Dr. Ali Ghalambor, his expertise, and remarkable contributions in the oil and gas industry.

Removing government barriers in natural gas exports

It is widely known that the US has a huge amount of natural gas supply that can last for decades, maybe even centuries. And for many people, exporting this resource is a very good idea, especially now that the US is neck deep in debt. In addition, exporting natural gas to many countries can also create hundreds—maybe even thousands—of jobs, which can very well revitalize the ailing US job market. However, regulatory barriers in the government prevent this from happening.

Image source: geology.com

Currently, the US can only export natural gas to countries which it has a free-trade agreement with, and exporting to other countries requires the approval of the US Department of Energy which involves a rigorous and exhausting process and can result in delays.

Image source: asiapacific.ca

While the US is still indecisive about their natural gas export plans, other countries are capitalizing on it, with Canada spending billions of dollars to build a terminal that would allow it to export natural gas to countries like Japan. The longer the US delays its plans to export natural gas, the more time its competitors will have to entrench themselves in the potentially lucrative natural gas exportation industry.

Image source: news.softpedia.com
Removing governmental barriers to the exportation of natural gas can prevent that from happening.

More natural gas news and links to related articles can be found at this Facebook page for Dr. Ali Ghalambor.

Monday, July 1, 2013

REPOST: Shale Gas Powering US Petrochemical Revival

More investment projects are coming to the US petrochemical industry, thanks to shale gas. This Industry Week article has the details.

HOUSTON—The U.S. petrochemical industry, in trouble just a few years ago, is making a spectacular comeback thanks to the boom in shale gas, shaking up the industry worldwide and spreading some discomfort through Asia and Europe.

"It's pretty simple: There's just so much feedstock that needs to find a home," said Chuck Carr, a petrochemical analyst at IHS, in Texas, the capital of the U.S. industry. "So everybody's saying, 'Hurry up to build something,' because at that natural gas price, it's just pure value."

The surge in gas production has pushed gas prices in the United States down since 2009, while oil prices have doubled since then.

The low price for gas as a fuel is already helping a comeback in U.S. industry. Natural gas sells for one third the price in Europe and one fifth that in Asia.

But that makes it even more a boon for the petrochemical industry, where gas is a core raw material for producing plastics and other basic industrial products.

In 2008, none of the members of the American Chemistry Council foresaw investing any more in the country.

Now, in the wake of the shale gas boom, the ACC lists 110 new investment projects for the U.S., worth some $77 billion.

Just in the past two months, 13 projects have been announced.

If all of those projects come to fruition, the ACC sees 46,000 new direct jobs, plus another 200,000 for subcontractors, in a sector that employs 800,000, compared with 1.1 million in 1981.

"I've been working for the chemical industry for almost 20 years now, and it's always been a story of moderating production," said Martha Moore, an ACC economist. "Now we're in a renaissance. Chemicals are at the forefront, but there's a rebirth of manufacturing in the United States. It's a very exciting time to be in the industry."

From Methane to 'Wet'

At the start of the boom, drillers mainly produced essentially methane gas. But faced with lower profitability, they began to focus on producing oil from shale and "wet gas," natural gas containing the feedstocks that petrochemical plants value more: butane, propane and especially ethane.

Those are extremely useful as substitutes for naptha, a component of oil often used as feedstock in chemicals plants—but now much more expensive.

Ethane costs today some one third the price of naptha.

The natural gas feedstock is transformed into polyethylene, polypropylene, butadiene, the base products for the global plastics and chemicals industry.

And, after a decade of offshoring the industry, companies now are stepping up their production of those products inside the United States.

Existing plants are working at full capacity; plants that were shut down are being started back up again; and others are boosting capacity, industry officials say.

And it is delivering profits. In a remarkable example, Lyondell Basell (IW 1000/84), the U.S. giant, has gone from bankruptcy in 2009 to record profits a year ago.

"If you look at the line 'United States' in the profits of the large petrochemical groups, you will see that it comprises often 80% of the total profits," said Patrick Pouyanne, president of the refining and chemicals division at Total (IW 1000/9), the French oil and gas giant.

Backlash Brewing?

But will the petrochemicals boom explode like a bubble, once the price of gas goes back up, especially if the United States allows producers to export gas and new gas-fired power plants lock up the supplies? Or could it be hurt by an environmental backlash to fracking, the key technique for exploiting shale gas?

"This is not our forecast, but the industry does have a record for overcapacity," said Walter Hart, another analyst at IHS.

In any event, production should keep up with a rise in demand. There is enough shale gas in the ground that can be produced profitably at the current price—around $4 per million BTU—to supply the country for 30 years, according to IHS.

"As soon as the price goes up a bit, someone opens a tap somewhere in the country" and adds more gas supply, Carr said.

Those under threat from the U.S. petrochemical renaissance include plants in Europe and Asia where feedstocks are more expensive.

In Asia, especially China, Carr said, "We already see the capacity [utilization] rates go down, to around 85%, when they used to be at 100% or 110%."

In Europe, where reaching 70% utilization is already a challenge, he sees plants shutting down capacity.

Competition from the Americans will only get tougher as the new plants come on stream, mostly over the 2017-2020 period.

That leaves a few years still to plan, "but there will not be any miracles," Total's Pouyanne said.

Dr. Ali Ghalambor was an American Petroleum Institute endowed professor and is the co-author of the book “Petroleum Production Engineering: A Computer-Assisted Approach.” This Facebook page provides more updates on the oil sector.