The Fossil Fuel Industry

[LFC]

Republicans love to preach about states' rights (until they don't support them for their own gain, of course) but a big state, oooohhhhh say like Texass, that fails in its basic functionality can have a huge impact on other states without any direct cross-border transactions. Minnesota, for example, got whacked after the Texas freeze-up debacle sent natural gas prices skyrocketing globally. They did everything right and still got hose by Texas's market driven economics.

Texas’ deep freeze didn’t just disrupt natural gas supplies throughout Lone Star country—its effects rippled across the country, extending as far north as Minnesota. There, gas utilities had to pay $800 million more than they anticipated during the event, and Minnesota regulators are furious.

“The ineptness and disregard for common-sense utility regulation in Texas makes my blood boil and keeps me up at night,” Katie Sieben, chairwoman of the Minnesota Public Utility Commission, told The Washington Post. “It is maddening and outrageous and completely inexcusable that Texas’s lack of sound utility regulation is having this impact on the rest of the country.”

The gas and electric markets in Texas are lightly regulated and highly competitive, which has pushed companies to deliver energy at the lowest possible cost. But it also means that many companies were ill-prepared when the mercury dropped. To save money, they had skimped on winterizing their equipment. As a result, gas lines across the state—which has about 23 percent of the country’s reserves—quite literally froze. The spot price of natural gas soared to 70-times what it would normally be in Minnesota, and gas utilities paid a hefty premium when they used the daily market to match demand.

In a twist, the biggest gas utility in Minnesota is CenterPoint Energy, a Houston-based company that also supplies a large swath of Southeastern Texas. The company said it spent an additional $500 million on gas that week in February, and it has asked Minnesota’s utility commission for permission to add a surcharge to customers’ bills. The surcharge not only seeks to recoup the additional money CenterPoint spent on natural gas, it also includes 8.75 percent interest. The company expects that each customer would shoulder a burden of $300 to $400.

Then this.

CenterPoint claims that beginning the surcharge in May will be beneficial to customers since the interest charges will be lower as soon as the company’s gas bill is paid off. Utilities are allowed to bill customers for legitimate expenses. The company appears to be planning similar requests in Arkansas and Oklahoma.

Welcome to the wonders of a privatized energy sector.

[LFC]

Colonial Pipeline, the company just recently shut down by a ransomware attack, isn't just negligent about cyber security. They're also responsible for one of the worst pipeline spills in American history. Remember that the "safety" of pipelines over trucks was one of their big arguments for pushing for Keystone XL, despite the fact that TransCanada has a poor track record. Look at the numbers below and realize that even large tanker trucks carry less than 12,000 gallons (actually 44,000 lbs so depends on the product they're hauling).

The Colonial Pipeline system, described by a former CEO as a “superhighway of energy,” consists of two parallel pipelines that stretch a combined 5,500 miles, running through 12 southeastern states carrying gas from Houston to New Jersey. We now know the spill started sometime in early August 2020, caused by a crack in one of the pipes, and that the flow of gas was cut off shortly after the local fire department called it in. At first, the company said only around 63,000 gallons of gasoline had spilled, according to local news reports from WSOC. Then, as August turned to September, the number grew to 273,000. In November, as the company assured Huntersville residents that it was “deeply committed to keeping them informed throughout the process,” the number increased again, this time stopping in the neighborhood of 360,000 gallons. By then, the North Carolina Department of Environmental Quality, which was overseeing the cleanup process, released a statement that found that Colonial “has significantly underestimated the volume of gasoline” spilled into the natural preserve. Less than a week later, a Colonial spokesperson admitted to WFAE that the company in fact had no clue how much gas had been pouring from its pipe and that it would, “release a number when we believe it’s accurate and verified through multiple models.”

In late January, some five months after those two teenagers happened upon the burst pipeline, the spill’s true scope was finally released in a Comprehensive Site Assessment Report filed by the company with DEQ: 1.2 million gallons. Instantaneously, it became one of the largest nontanker spills in modern American history. And even with the 1,600 pages of documentation, there was still a great deal of missing information. Last week, the DEQ sent Colonial a Notice of Continuing Violation, finding that the company had not adequately measured or reported the levels of vapor, soil, and air pollution from the site, ordering it to update its assessment by the end of April, and continue testing the private resident wells. The question that now hovers over this crisis is how Colonial managed to obscure, for this long, the scope of what happened in the backyard of North Carolina’s most populous city.

According to the 30-day accident report the company was required to file with the U.S. Department of Transportation following the spill, the pressure at the time of the spill was 183 pounds per square inch, not even at the halfway mark of its maximum capacity. As the accident report noted, the leak went undetected because of the pipeline’s age. Thanks to federal law, Sorg reported, pipelines built prior to 2019 don’t have to have computational pipeline monitoring systems. So although a remote supervisory control and data acquisition system, or SCADA, was connected to the pipeline and working, there was no pressure drop registered by its overseers stationed in Georgia.

Colonial has been here before. The company also holds the record for largest gas spill in the neighboring state of South Carolina, having dumped 950,000 gallons of diesel fuel into the Reedy River in 1996. The spill devastated local wildlife and vegetation, blanketing the shores of the river with 35,000 dead fish. Colonial pleaded guilty to criminal negligence and coughed up over $50 million in landowner settlements and federal fines. Reflecting on the spill 20 years later, in 2016, Colonial Pipeline spokesman Steve Baker told Greenville News that the company shaped up after that disaster: “Even today we still kind of point back to that as the day that things changed.”

But did things really change? As the News noted in its anniversary package, since then, another 470,000 gallons of petroleum, gas, or hazardous material were leaked by faulty infrastructure across the state, with Colonial responsible for 19 of those incidents. Its Reedy River record was nearly eclipsed in 2014 by competitor company Plantation Pipeline (a massive middle finger to whoever is naming these companies so aptly, by the way). Plantation’s Belton spill looked a lot like the Huntersville spill: A line installed in 1968 had a dent repaired in 1991 and then was … left alone for 23 years until it leaked 369,600 gallons of toxic gas in 2014.

[goldenvalley]

The bottom line is that underground pipes can leak and/or rupture. What is the solution? Transport this stuff above ground via rail or truck...fireballs on wheels. Having centralized refining and then transporting the gasoline over many, many miles is the problem. But no one wants a refinery on the outskirts of their town.

[LFC]

May 18, 2021 16:15:53 GMT goldenvalley said:

The bottom line is that underground pipes can leak and/or rupture. What is the solution? Transport this stuff above ground via rail or truck...fireballs on wheels. Having centralized refining and then transporting the gasoline over many, many miles is the problem. But no one wants a refinery on the outskirts of their town.

If only there was an alternative that could be developed to greatly reduce the need for massive petroleum product refinement and its massive widespread distribution requirements. Oh, wait. There is.

[LFC]

Another major pipeline failure, this one an exploding gas line under the Gulf of Mexico.

Mexico’s state-owned oil company, Pemex, is being slammed by critics after a gas leak at an underwater pipeline caused an oceanic fireball that looked like something out of a Michael Bay film. Video of the ocean on fire in the Gulf of Mexico immediately went viral.

The pipeline, located off the coast of Campeche on the western Yucatán Peninsula, ruptured at 5:15 a.m. on July 2 near the 90,000-gallon oil spill that occurred in 2016. Bright orange flames leapt from the surface of the sea for over five hours before crews were able to extinguish them.

According to reports, the fire began in an underwater pipeline that was connected to a platform on Pemex’s flagship Ku Maloob Zaap oil development. No injuries were reported, and Pemex said it would investigate the cause, although it did release a relatively vague statement.

“The turbomachinery of Ku Maloob Zaap’s active production facilities were affected by an electrical storm and heavy rains,” the Pemex incident report read. The report also note that crews used nitrogen to get the blaze under control.

Angel Carrizales, the head of Mexico’s oil safety regulator, wrote on Twitter that the fire “did not generate any spill,” but didn’t explain what, exactly was burning on the surface.

An "electrical storm and heavy rains"? Wow. Who could have predicted that might happen.

[goldenvalley]

Look at this for video of the fire. www.google.com/amp/s/www.nytimes.com/2021/07/03/world/americas/eye-fire-gulf-mexico.amp.html

[LFC]

The same old cast of characters is more than happy to break the law because it costs them less and the asshats in charge of Texass government are more than happy to let them. Welcome to more externalized costs.

Even when policymakers set the easiest rules for fossil fuel producers to follow, it seems like many companies choose to flaunt them anyway. A new analysis from Earthworks suggests that oil and gas producers in the Permian Basin in Texas, one of the largest oilfields in the world, are routinely emitting carbon dioxide and methane without the correct permits, with offenders including big names like Shell and Exxon.

The Permian Basin has had all sorts of problems tied to methane, particularly leaky equipment and wellheads. But the new report delves into another major source: flaring and venting, which companies use to dump or burn unwanted gas into the atmosphere.

“The gas is not what they’re after,” report author Sharon Wilson said, noting companies are largely looking for more profitable oil. “It’s not worth their time and money because it costs more to transport the gas to market unless the price of gas is very high.”

The new analysis relies on data from a number of sources, including data collected by the Environmental Defense Fund during three flyovers of 1,000 sites in one district in the Permian Basin where the group used special monitoring equipment to observe flares. The Earthworks team cross-referenced this with data from the Texas Railroad Commission (RRC), the confusingly named state regulatory body that is responsible for the oversight of the oil and gas industry. The commission issues flaring permits, but the results of the analysis show many companies are sneaking around regulations.

The results are pretty stark: Of the 227 flares observed during the three flyovers, 84% didn’t have a permit associated with them. It’s not just smaller producers that are cutting corners. Big-name producers are breaking the rules, too. Exxon and Shell are both on the list of companies Earthworks caught flaring without a permit. Both of these companies, Earthworks noted in its report, have endorsed more regulations of flaring and venting; Shell is part of an initiative based out of the World Bank called “​​Zero Routine Flaring by 2030.”

[LFC]

The big oil companies are setting up to f*** the taxpayers again through the magic of bankruptcy. This is why I believe that anybody involved in natural resource extraction with potential cleanup costs must be forced to post and maintain a bond that protects the taxpayers from having to bear their costs. If they go bankrupt the bondholder(s) are on the hook. I suspect business practices would change quite a bit.

The price of oil produced in California this year reached its highest level in a decade. President Joe Biden is releasing millions of barrels of oil from the Strategic Petroleum Reserve to keep prices in check. And fossil fuel companies’ earnings are so high that Gov. Gavin Newsom has called for a windfall tax on their profits.

It might seem like a lucrative time to drill for oil in the Golden State. Yet, some of the world’s largest oil companies, several of which have done business in the state for more than a century, are selling assets and beginning to pull out of California.

Even with strong cash flow in the short term, producers have more to gain from offloading wells and the associated liability — chiefly expensive environmental cleanup — than from pumping more oil and gas, experts say.

“This is the kind of deal you see when an industry is in its twilight,” said Andrew Logan, senior director for oil and gas at Ceres, a nonprofit focused on sustainability in companies and markets.

Some industry experts, lawmakers and environmentalists are concerned about the recent deals, noting that the sales shift environmental liability from corporate powerhouses to less-capitalized firms, increasing the risk that aging wells will be left orphaned, unplugged and leaking oil, brine and climate-warming methane. They see a threat that the state’s oil industry could repeat a pattern seen in other extractive industries like coal mining and lead to taxpayers bearing cleanup costs.

California Assemblymember Steve Bennett, a Democrat who has long worked on oil policy, has seen oil companies in his Ventura district walk away from environmental liability. “It gets passed on to a smaller company and to a smaller company until someone declares bankruptcy and the public is stuck with the cleanup bill,” he said.

[goldenvalley]

Meanwhile oil companies are reporting record breaking profits in the 3rd quarter of 2022.

Major oil companies saw profits soar in the third quarter of 2022, continuing a trend of massive industry profits even as Russia’s invasion of Ukraine causes soaring prices for consumers.

Exxon Mobil on Friday morning reported its highest earnings ever at $19.7 billion for the quarter, while Shell reported its second highest of $9.5 billion.

Understatement of the year in bold (by me) below:

“Not in a legal definition, but in most people’s minds, what’s happening with refined products, profits and margins probably qualifies as a windfall,” Tom Kloza, global head of energy analysis at the Oil Price Information Service, told The Hill in an interview.

“The optics are pretty bad,” Kloza added. “Record profits … aren’t exactly being cheered by a population that says, hey, we need a break from inflation.”

Moreover, he said, “if you were to have a virtual map of what’s occurred so far in the month of October, which is outside the realm of the third quarter profits, the numbers aren’t just off the charts, they’re off the wall the charts are on.”

But never mind because:

Patrick DeHaan, head of petroleum analysis at GasBuddy, argued that much of the actual consumer prices are outside oil companies’ control.

“They can decide to raise production or not, and if they raise production that lowers prices, but for now, oil company profits are a sign of the imbalances that exist in oil markets,” he said. “That is, everyone wants oil and refined products and there’s simply not enough to go around.”

Oil companies can just as easily “lose big” in a scenario that drives down demand, like at the beginning of the COVID-19 pandemic, he noted.

“When the going’s good, it’s very good, and when the going’s bad, it’s extremely bad,” he said.

So rake in the profit while you can.

I do understand that gasoline prices are not entirely set by the oil companies, there's a whole chain of middle companies that have impact too. Capitalism and all that makes it tough to pinpoint where the gratuitous profit taking is occurring ... probably it's in lots of spots along the supply line.

[jackd]

What's clear is that the prices are not due to inflation; they are due to price gouging.

[LFC]

I suspect the fossil fuel companies would greatly prefer a shift to hydrogen rather than electric / batteries since that kind of processing, pipelining, and delivery capacity is right up their alley. It doesn't matter if it's not the best solution because it's the best for them. The current increases in electric plus wind and solar, including in-home solar, doesn't benefit them at all.

A powerful coalition of industry interests paid for a peer-reviewed study on the benefits of hydrogen as an energy source, the Boston Globe reported in an article published Wednesday. The study neglected to mention the significant involvement of fossil fuel players in drafting the text. According to documents obtained by the Globe, these industry interests were so involved in the research that they were “allowed to review and suggest changes before the study was released,” including drafting large portions of the study’s recommendations to policymakers.

The Globe’s report deals with a paper published in Frontiers in Energy Research in September by a team of researchers at University of Massachusetts, Lowell. In the study, the authors review research on different types of hydrogen and make recommendations for Massachusetts to best incorporate hydrogen into its energy future.

“A hydrogen economy has the potential to provide economic benefits, a reduction in greenhouse gas emissions, and sector coupling to provide a resilient energy grid,” the authors write in the paper’s introduction.

The research was funded by the Associated Industries of Massachusetts (AIM), a business coalition representing a variety of industries; their association was disclosed in the paper. However, emails obtained through a public records request by the Globe show that some of the association’s fossil fuel and natural gas members, including natural gas giant National Grid, that would benefit from a positive study on hydrogen’s benefits had been directly asked to fund the research and review the final paper—and the study’s authors were aware of this outreach. This was not mentioned in the final paper.

Over the past few years, the popularity of hydrogen fuel as an alternative energy source has skyrocketed in the conversation around the energy transition. The oil and gas industry is particularly enthusiastic about hydrogen; in addition to types of hydrogen that can be made with natural gas and other fossil fuels, the idea that hydrogen made from renewable energy—known as green hydrogen—could simply replace fossil fuels in existing pipelines and infrastructure is alluring to an industry anxious about a coming energy transition. The study, however, neglects to mention many of the issues with this concept, including hydrogen’s questionable application for home heating. Several non-industry-funded studies have found that hydrogen would not be an economic or sensible carbon-free choice for heating homes.

The Globe reports that one of the study’s coauthors, Mary Usovicz, a former director of business development at UMass Lowell, “had spent decades working in the gas industry.” A lobbyist for AIM, Robert Rio, was friendly with Usovicz, and met with her weekly and was allowed access to the study before it was published. In one email obtained by the Globe, Rio was provided a Microsoft Word document of the study; track changes show that Rio had a hand in drafting portions of the introduction as well as recommendations at the end of the study geared toward policymakers.