Bad News, for Coal & Crude

Coal miner by Jan Truter used under CC BY-NC-ND 2.0

Federal Coal Sales Moratorium Shakes Industry Stronghold

• By MEAD GRUVER AND MATTHEW BROWN, ASSOCIATED PRESS via ABC News

GILLETTE, Wyo. — Feb 1, 2016, 9:43 AM ET  

Signs of economic troubles first appeared a few years ago, when drilling for natural gas trapped in water-saturated coal seams went bust. Thousands of wells were idled as companies shifted focus to fracking for gas in Texas and the Northeast.Then last year, mining company Alpha Natural Resources filed for Chapter 11 bankruptcy. Industry giant Arch Coal Inc. followed in early January. Each company has two major mines in Wyoming. Arch's Black Thunder mine ranks among the largest in the world.
Less than a week after the Arch bankruptcy came the Obama administration moratorium on new coal lease sales.

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"All these rules and regulations just make it harder to conduct business," said Susan Doop, owner of a local alternative therapy business. "Everything he (Obama) does to make it more costly to do business makes it harder. People are losing their jobs."
Doop and her husband, Marlin, who owns an auto body shop, already are seeing the changes. He just spent three weeks focused exclusively on repairing a Ford Super Duty pickup truck from a coal mine that had a crushed cab and bent frame.
A $15,000 check he got from Arch the same week the company filed for bankruptcy bounced. He said he can't afford health insurance and was going to use the money to pay for another round of treatments for advanced liver and colon cancer.

FIVE STORIES TO WATCH IN THE ARCH COAL BANKRUPTCY

Big executive bonuses; shafting workers and the environment; and more. Via Sightline

In case you somehow missed the news, Arch Coal, North America’s second largest coal company, filed for bankruptcy a few weeks back. Arch’s management hopes to use bankruptcy protection to shed $4.5 billion in debt—money that Arch borrowed from investors near the peak of the coal market, but that the company can’t pay back now that coal prices have tumbled.
To anyone paying attention, Arch’s insolvency came as no surprise. The company hadmissed a bond interest payment in mid-December after unsuccessful negotiations with creditors. Besides, coal industry bankruptcies are a dime a dozen at this point: Alpha Natural Resources, the #4 coal company in the US, declared bankruptcy in August; Walter Energy declared itself insolvent back in July; and Patriot Coal filed for Chapter 11 protection in October, its second filing since 2012. All told, nearly 50 US coal mining companies have filed for bankruptcy protection since the beginning of 2012.
Arch’s bankruptcy obviously highlights the dire state of the industry’s finances. But it also raises important questions about public policy, fiscal responsibility, and the fate of the coal industry itself. 

Here are the top five stories that I’m going to keep my eye on as the Arch Coal bankruptcy unfolds. Read the article here 

As Coal topples, Crude also falters

Photo by Mark Ralston/AFP/Getty Images

The Syncrude oil sands extraction facility near the town of Fort McMurray in northern Alberta.

Once Unstoppable, Tar Sands
Now Battered from All Sides

Canada’s tar sands industry is in crisis as oil prices plummet, pipeline projects are killed, and new governments in Alberta and Ottawa vow less reliance on this highly polluting energy source. Is this the beginning of the end for the tar sands juggernaut?
by Ed Struzik via Environment360

In the summer of 2014, when oil was selling for $114 per barrel, Alberta’s tar sands industry was still confidently standing by earlier predictions that it would nearly triple production by 2035. Companies such as Suncor, Statoil, Syncrude, Royal Dutch Shell, and Imperial Oil Ltd. were investing hundreds of billions of dollars in new projects to mine the thick, highly polluting bitumen.
Eyeing this oil boom, Canadian Prime Minister Stephen Harper said he was certain that the Keystone XL pipeline — “a no-brainer” in his words — would be built, with or without President Barack Obama’s approval. Keystone, which would carry tar sands crude from Alberta to refineries along the Gulf of Mexico, was critical if bitumen from new tar sands projects was going to find a way to market.
What a difference 18 months makes. The price of oil today has plummeted to around $30 a barrel, well below the break-even point for tar sands producers, and the value of the Canadian dollar has fallen sharply. President Obama killed the Keystone XL project in November, and staunch opposition has so far halted efforts to build pipelines that would carry tar sands crude to Canada’s Pacific and Atlantic coasts.
The industry is suddenly weathering a perfect storm that analysts say has significantly altered its prospects.

Could Low Oil Prices Help Usher in a New Era?
Mark Trahant 1/27/16 Via Indian Country Today

Here is the problem: If the pipeline is built and the train system is upgraded there will be too much transportation capacity at current oil prices. So the railroad companies will have to seek out new customers. Or, as Sightline said, while “the projects are largely designed to transport and handle light shale oil from the Bakken oil formation in North Dakota … the infrastructure could also be used to export heavy Canadian oil.”
The idea of how much capacity — especially given the price of oil — is the wild card in any transportation scheme. Many projects were designed when oil prices were higher than $75 a barrel instead of around $30. Oil is a commodity and traded on international markets. That means it’s subject to the up and down of supply and demand. Currently there is far more oil supply than demand. A report by the International Energy Agency says last year “saw one of the highest volume increases in global oil demand this century, we have long believed that this could not be repeated in 2016. But, with crude oil prices plunging below $30/bbl, must we expect some boost to the rate of growth in 2016? Unfortunately, the New Year has been awash with pessimism about economic growth.”
And that means less economic growth — and less oil consumption. The IEA says that when Iran is fully online selling oil, and if other oil exporting countries maintain current production levels, the demand could exceed 1.5 million barrels a day and “unless something changes, the oil market could drown in over-supply.” So yes prices could go lower.

U.S. Not Prepared for Tar Sands Oil Spills, National Study Finds

U.S. Not Prepared for Tar Sands Oil Spills, National Study Finds

By Codi Kozacek, Circle of Blue, 10 December, 2015 

 

Report urges new regulations, research, and technology to respond to spills of diluted bitumen.

Oil gathers in a sheen near the banks of the Kalamazoo River more than a week after a spill 

of crude oil, including tar sands oil, from Enbridge Inc.’s Line 6B pipeline in 2010. It was the 

largest inland oil spill in U.S. history. Photo courtesy Sam LaSusa

Spills of heavy crude oil from western Canada’s tar sands are more difficult to clean up than other types of conventional oil, particularly if the spill occurs in water, a new study by a high-level committee of experts found. Moreover, current regulations governing emergency response plans for oil spills in the United States are inadequate to address spills of tar sands oil.

The study by the U.S. National Academies of Sciences, Engineering, and Medicine confirmed what scientists, emergency responders, and conservationists knew anecdotally from a major oil spill that contaminated Michigan’s Kalamazoo River in 2010 and another spill in Mayflower, Arkansas in 2013. Tar sands crude, called diluted bitumen, becomes denser and stickier than other types of oil after it spills from a pipeline, sinking to the bottom of rivers, lakes, and estuaries and coating vegetation instead of floating on top of the water.

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“[Diluted bitumen] weathers to a denser material, and it’s stickier, and that’s a problem. It’s a distinct problem that makes it different from other crude.”

–Diane McKnight, Chair 
Committee on the Effects of Diluted Bitumen on the Environment

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“The long-term risk associated with the weathered bitumen is the potential for that [oil] becoming submerged and sinking into water bodies where it gets into the sediments,” Diane McKnight, chair of the committee that produced the study and a professor of engineering at the University of Colorado Boulder, told Circle of Blue. “And then those sediments can become resuspended and move further downstream and have consequences not only at the ecosystem level but also in terms of water supply.”

“It weathers to a denser material, and it’s stickier, and that’s a problem. It’s a distinct problem that makes it different from other crude.” McKnight added. Weathering is what happens after oil is spilled and exposed to sunlight, water, and other elements. In order to flow through pipelines, tar sands crude oil is mixed with lighter oils, which evaporate during the weathering process. In a matter of days, what is left of the diluted bitumen can sink.

The study’s findings come amid an expansion in unconventional fuels development and transport in North America. Over the past decade, Canada became the world’s fifth largest crude oil producer by developing the Alberta tar sands. U.S. imports of Canadian crude, much of it from tar sands, increased 58 percent over the past decade, according to the U.S. Energy Information Administration.

Though oil prices are at a seven-year low, and market turbulence is expected to persist for several more years, tar sands developers are working to double the current tar sands oil production — around 2.2 million barrels per day — by 2030. Pipelines to transport all of the new oil are expanding too, producing a greater risk of spills.

Whether tar sands producers achieve that level of oil supply is not assured. Public pressure is mounting in Canada and the United States to rein in tar sands development due to considerable environmental damage and heavy carbon emissions. U.S. President Barack Obama last month scrapped the Keystone XL pipeline, an 800,000-barrel-per-day project to move crude oil from Canada’s tar sands to Gulf of Mexico refineries. An international movement to divest from fossil fuels and a legally binding global deal to cut carbon emissions –if it is signed in Paris– could curb demand for tar sands oil.                                    continued below

The Thin Green Line Is Stopping Coal and Oil in Their Tracks

The Thin Green Line Is Stopping Coal and Oil in Their Tracks

Northwest communities have won key battles. Can they win the war?

 

Eric de Place (@Eric_deP) and Deric Gruen (@DericGruen) on August 13, 2015

SightLine Institute

 

This post is part of the research project: Northwest Coal & Oil Exports

“Everybody outside the Northwest thinks that’s where energy projects go to die.”

“Everybody outside the Northwest thinks that’s where energy projects go to die.” That’s the reputation our region has earned as an increasing number of proposed coal and oil export projects have encountered ferocious opposition. It’s what the backer of a proposed oil refinery in Longview, Washington, told reporters earlier this year after his company’s stealth proposal was outed by environmental groups.

The Cascadia region has proven to be extraordinarily challenging for those who would turn it into a major carbon energy export hub—so much so that Sightline has taken to calling it the Thin Green Line.

Since 2012, a staggering number of schemes have proposed to move large volumes of carbon-intense fuels through Oregon, Washington, and British Columbia to Asian markets. A recent Sightline analysis shows that proposed and newly permitted energy projects in the region would amount to the carbon equivalent of more than five Keystone XL Pipelines.

But in big ways and small—from Coos Bay, Oregon, to Prince Rupert, British Columbia—the Thin Green Line has held fast. Big energy projects have faced delays, uncertainty, mounting costs…and then failure. A review of these projects makes clear just how successful the region has been in denying permission to dirty energy companies as it stays true to its heritage as a center of clean energy, sustainability, and forward thinking.

continued below...   

Oil Industry's devastating alternative to the Clean Power Plan

The Oil Industry's devastating alternative to the Clean Power Plan

Nick Abraham editor Oil Check Northwest 
 
August 6th - Earlier this week, President Obama announced its long awaited Clean Power Plan, and the new rules were met with plenty of fanfare from all of us that want clean air to breathe and a healthy climate to live in.

Unsurprisingly, oil and coal companies were not as pleased. They’ve organized an army of front groups, pseudo-think tanks and bought off organizations to attack and cripple the plan.

Locally, “astro-turf” groups like Oregonians for Sound Fuel Policy and the Washington Climate Collaborative are not just attacking action like the Clean Power Plan. They have a widespread agenda to prevent new environmental protections and undercut the Northwest’s progress.

They’ve laid out an alternative to a clean energy future, a Dirty Power Plan, for the Northwest. You won’t see them announcing it from podiums or siting down with Katie Couric to talk it over. But make no mistake the fossil fuel industry has a plan for our corner of the world.

1. Sinking Clean Fuels

No surprise here. With a virtual monopoly on what we can fuel up with, oil companies are fighting desperately to prevent either state from enacting a clean fuels program. Despite putting $2 million into Oregon campaigns in 2014 clean fuels prevailed in a landmark victory this past session in Oregon. The legislature mandated that 10% of fuels in the state must come from renewable sources. Not one’s to bow out gracefully,oil companies have put forth 3 different ballot measures for 2016 that would repeal or weaken clean fuels.

In Washington, legislators who received millions from oil companies, almost completely derailed compromise on a new transportation package by trying to preemptively block clean fuels. Senate leaders added a poison pill to the transportation package that said if Governor Inslee implemented clean fuels through executive order all alternative transportation funding would move to road construction. In an effort to keep our state moving (literally), the Governor begrudgingly accepted the deal. Chalk one up for the oil companies.

2. Pipelines Trains and Terminals

The Northwest stands directly between Asian markets and major fossil fuel deposits in Canada and the interior Western US. The fastest, cheapest route to getting their coal, oil and natural gas to export is through our backyard, and that’s exactly what their Dirty Power Plan would propose.
Here’s what that would look like:

- Coal terminals North of Bellingham and Longview WA with over 90 million metric tons of coal total

- Expanded Bakken crude oil refining in Ferndale, Anacortes, Tacoma, Hoquiam, and Vancouver WA as well as Clatskanie OR could move over 1 million barrels/day through our region. That’s 14 oil trains a day

- Natural gas: 140 miles of new pipeline from Sumas WA to Warrenton OR cutting through major population centers along the I-5 corridor as well as a 230 mile line from Malin to Coos Bay OR

3. Keeping Pollution Free

This year, both Oregon and Washington had bills in the legislature to put a price on pollution. In Oregon bill 3470 would have given the state the authority to regulate pollutants much the same way as California currently does, through a carbon cap and trade system. A second bill (3250), would have charged polluters a fee and given that money back to each Oregonian with a dividend check, very similar to Alaska's program that charges oil companies a royalty and gives checks to every resident. (If you've ever had a friend from Alaska they cannot shut up about their "free" check every year)

Unfortunately both bills didn’t make it out of session, as a transportation fight took out all the air in the legislature. Much in the same was as Washington; a provision was added to the transportation package that would cut clean fuels in exchange for a deal. Only this time oil companies were caught red handed writing the bill themselves. After a drawn out battle, the package was killed and clean fuels lived on to fight an other day.

In Washington Governor Inslee laid out a proposal to cut emissions from the state’s largest industrial polluters, a plan that would have given the billions raised to badly need transportation improvements and education funding that’s still in a $3.5 billion hole. This bill, similar to Oregon, was killed after a barrage of attacks from oil-backed legislators.

Not to be out maneuvered, in late July, Governor Inslee announced that the state would be regulating emissions through the Department of Ecology’s mandate. As impressive as this plan is, it still needs backup to be completely effective. To truly have a strong impact, the law will need a way to enforce the regulations. Many predict that a price on pollution will be put on the ballot in 2016 and this would give the Governor’s proposal some much needed teeth.

This week’s Clean Power Plan announcement was a powerful step forward; we couldn’t be happier to see a tough but achievable strategy to cut emissions. But lets not forget that fossil fuel companies have a plan of their own. And the Dirty Power Plan does not paint a bright future for the Northwest.

Nick Abraham editor Oil Check Northwest
nick@oilchecknw.com 

Alberta Fire Threat Grows as It Moves Near Oil Sites

 

Smoke rises from a wildfire east of Slave Lake, Alberta May 25

Alberta Fire Threat Grows as It Moves Near Oil Sites

by Robert Tuttle    Bloomberg Business   May 27, 2015

Northern Alberta firefighters are battling a wildfire that has moved within 5 kilometers of Canadian Natural Resources Ltd.’s oil sands operations.

The Cold Lake Air Weapons Range blaze is spreading in the direction of oil and natural gas operations and threatens plants run by Canadian Natural and Cenovus Energy Inc., Scott Long, an executive director at the Alberta Emergency Management Agency, said in a news conference Wednesday. Firefighters put in containment and protection guards to keep it from getting closer, he said.

Wildfires have prompted the shutdown of 230,000 barrels a day of oil-sands output, about 10 percent of Canada’s production. Heavy Western Canadian Select crude’s discount to U.S. benchmark West Texas Intermediate narrowed for a second day, shrinking 75 cents to $8.75 a barrel on Wednesday, data compiled by Bloomberg show.

Cenovus shut its 135,000-barrel-a-day Foster Creek operations, located near Cold Lake, on Saturday. Canadian Natural’s 80,000 barrel a day Primrose facility remained down Wednesday after shutting over the weekend, spokeswoman Julie Woo said in an e-mail. Production from the company’s Kirby South operations was reduced by 18,000 barrels a day.

The Cold Lake fire that started Saturday expanded to cover 17,500 hectares (43,000 acres), Alberta’s Environment and Sustainable Resource Development agency said on its website. Another fire near the town of Chard grew to 1,400 hectares and burned in an area with “numerous pipelines and well sites.”....    more here

A Song of Oil, Ice and Fire

Shell could be drilling in the Arctic in less than 5 weeks. It’s a choice between our natural world and an oil slick. Which will you choose? 

Watch and share this video to expose Shell’s risky Arctic drilling plans.