it was an explosive week for the oil industry; in addition to three fiery train derailments in the news, an Exxon refinery in Torrance California blew up and left the city covered in a ghostly white ash...and of a less explosive nature, five spills were reported by the frackers in North Dakota, including one "double spill" which the company responsible believes was sabotage, something we might see more of as the roughnecks and rig hands think they're getting shafted by the unannounced layoffs...
a West Virginia oil train derailment & explosion on the Kanawha River in Fayette County got the most national attention, maybe because of the explosive nature of the fireball, maybe because the Governor of West Virginia declared a state of emergency in two riverside counties within hours of learning that burning oil tankcars had entered the river, the water source for much of the state….we'll include a news clip here so you can get a sense of what that looked like...
one house burned and roughly 1000 residents were evacuated from the area, and another 2000 lost water as water intakes were shut down....the derailment of 26 tankcars was of a CSX train carrying 109 cars of explosive Bakken crude to a refinery in Yorkton, Virginia, and 19 of those tank-cars became involved in the subsequent fires, which were still burning 3 days after the derailment, as neither CSX nor West Virginia had capabilities to put the fires out...the cars that exploded were the newer CPC 1232 models that are supposedly safer than the old DOT-111s, and this train was just one of dozens carrying Bakken crude that passes through Ohio cities and other Midwest communities on the way to East Coast refineries each week...luckily, no one was killed or seriously injured this time...
another 100 car train carrying crude oil derailed and caught fire in a remote area of northern Ontario inaccessible by road early this week...29 tank-cars went off the tracks and nine were still on fire a day later when the derailment hit the news services...with below zero temperatures and no way to access the site, Canadian transportation authorities decided shut the corridor and to allow the fire to burn outbefore inspecting the scene, where it was reported that some of the rail cars were broken into pieces and scattered along the tracks in chest deep snow...the train had been visually inspected and went through a checkpoint that was supposed to automatically detect problems 20 miles before the trouble occurred, and the track had been visually inspected and cleared by a rail flaw detector in the week before the derailment...
earlier, a Canadian Pacific train carrying ethanol derailed on a river bank near Dubuque Iowa, and fifteen tankcars left the track, three of which erupted into flames and three of which rolled downhill, plunging into the Mississippi River...again, since local officials were unequipped to deal with a tankcar fire on an inaccessible hillside, they let the fire burn itself out before the Iowa DNR moved in to test the water for contamination...later assessment revealed that 8 of the old outdated DOT-111 single hulled tankers had split open and leaked their ethanol, noteworthy because 70% of the US oil tanker rolling stock is still of this design, including tens of thousands hauling Bakken crude, the same kind of oil and tankcars that exploded in Lac-Megantic, Quebec in July 2013, killing 47 people...
the number of train incidents over such a short span, including an 11 car derailment of a CSX crude oil train in South Philadelphia the prior weekend, has reignited the arguments that pipelines would be a safer way to transport oil than by rail....with fracking ongoing in several states, the volume of oil that is being shipped by rail has doubled since 2012 to 16,000 rail car loads a week...but pipelines aren't immune from their own disasters; recall that as recently as the last week in January, we were discussing two major pipeline ruptures within miles of each other on upper Missouri river tributaries....one of those pipelines leaked 3 million gallons of contaminated fracking wastewater on the North Dakota tundra over a period of more than 17 days before being noticed and shut off...this debate led to an examination of the comparative data by thinkprogress, who found that while oil trains spill more often, pipelines spill more...over the eight years examined, a period that included an 800,000 gallon tar sands oil leak into the Kalamazoo River, U.S. pipelines spilled three times as much crude oil as trains....so moving oil is dirty and dangerous any way we do it; pick your poison....
on Wednesday morning, an explosion and fire destroyed the gasoline processing unit at an ExxonMobil oil refinery in Torrance, California, injuring 4 workers and damaging surrounding buildings...although not directly related to the environmental issues surrounding fracking, the incident is noteworthy because we've been following the USW strikes at 11 US refineries for the past couple weeks, including a half dozen stories on them last week, where worker safety has been a major issue...the point is that lax safety standards at US refineries is an ongoing problem;27 workers died in such refinery explosions over the past five years...after this accident, gasoline prices rose in the Los Angeles region and 4 more refineries joined those on strike...
of the five spills that occurred in North Dakota early this week, the first pair involved over 40,000 gallons of fracking wastewater that was released from two well sites in Williams county owned by Hess Energy; both impacted a wetlands area, and the company reported it as vandalism because valves were opened on storage tanks in both cases...in the second incident, 1,260 gallons of oil overflowed from a truck and spilled into an oxbow of Charbonneau Creek, which is a a tributary of the Yellowstone River, which was hit bya 50,000 gallon pipeline rupture just 4 weeks ago; it appears the operator just kept filling the truck after it was already loaded....the third reported spill occurred after a valve was left open as a truck was offloading diesel fuel at a tank farm, and resulted in 400 gallons of said diesel fuel flowing into a tributary of Lonesome Creek...finally, Murex Petroleum reported a pump leak caused 21,000 gallons of brine to spill in Divide County, but they manged to contain it on site....
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both oil production and crude oil inventories increased from last week's records again in this week's report, as the industry continues to drown itself in oil...the EIA reported US oil production reacheda record 9,280,000 barrels per day in the week ending February 13th...that's up 13.9% from the 8,148,000 barrels of oil per day we were producing in the 2nd week of February last year...they also reported that U.S. crude oil inventories rose by 7.7 million to a record 425.64 million barrels in the week ended Feb. 13, a figure that excludes oil in the Strategic Petroleum Reserve, and that gasoline inventories increased by 0.5 million barrels last week, and are above the upper limit of the 5 year average range for this time of year...
meanwhile, the pace of the pullback in the oil patch slowed somewhat this week, as only 48 drilling rigs were taken out of service, in contrast to the 98 rigs that were idled last week...Baker Hughes reported the count of active drilling rigs on February 20th was at 1310, down from 1258 rigs on February 13th, with oil rigs down 37 to 1019, gas rigs down 11 to 289, and rigs classified as miscellaneous unchanged at 2...this was the least rigs idled in one week since 43 were shut down on January 23rd....the count of land-based rigs fell by 48 to 1250, two were removed from drilling operations on inland waters, leaving 6, while an additional two drilling platforms were added in US waters offshore, bringing the offshore rig count to 54...the count of active horizontal well drilling rigs was down by 46 to 979, the count of vertical well rigs fell by 7 to 203, while the number of directional well rigs rose by 5 to 128...this left the US rig count 461 rigs lower than the count from last February 21st when 1771 rigs were in use, with oil rigs down 406, gas rigs down 53, and miscellaneous rigs down 2 from a year ago...
also in contrast to last week, when half of the rigs idled had been operating in the Permian Basin, a smaller numbers of rigs were shut down in several US shale fields this week, with the decrease of 6 rigs in both the Permian and the Mississippian the greatest rig decrease from any one shale area...however, with rigs being shut in several Texas plays, that state again saw the greatest decrease at 22, leaving 576 still running, followed by Oklahoma,where the idling of 16 rigs left 155... North Dakota and Wyoming each saw 4 rigs shut down, leaving 119 and 35 operating respectively, while 3 rigs were stacked in Alaska, leaving 7...other states with less rigs working this week included Colorado, down 2 to 41, California down 1 to 15, and Utah, which was down 1 to 11...meanwhile, 6 rigs were restarted in New Mexico, where 12 were shut down last week, giving us a sense at how temporary and tenuous this weekly data can be...in addition, the rig counts of 11 in Arkansas, 18 in Kansas, 37 in Ohio, 54 in Pennsylvania and 17 in West Virginia were unchanged from a week ago...
in Canada, Baker Hughes reported 360 drilling rigs were still running during the week ending February 20th, which was 22 less than they reported a week earlier, as 184 Canadian oil rigs were running, 14 less than last week, and the count of Canadian gas rigs operating fell by 8 to 176....that leaves the Canadian rig count 272 rigs lower than last year, with oil rigs down 238, and gas rigs 34 lower than a year earlier...however, the Canadian Association of Oilwell Drilling reports somewhat different totals; they show 317 rigs drilling on February 17th, with 461 shut down, for an capacity utilization rate of 41%, down from 576 working and an operating rate of 71% last year...