The cost of oil from Alberta’s tar sands is trading near the cheapest relative to the New York benchmark in 17 months as refineries in the Midwest shut for maintenance and pipeline costs escalate.
Western Canada Select traded at a discount of $14.65 to West Texas Intermediate on April 30, near the $18 gap on April 15 that was the widest since November 2008.
Enbridge Inc. has won approval for a 33 percent tariff increase to move oil via its pipeline to the Midwest, where the U.S. Energy Department said more than twice as much refinery capacity than usual is offline for maintenance.
The higher tolls will hurt Suncor Energy Inc. and Alberta’s oil sands producers, which will be forced to offer discounts to the refiners to remain competitive with oil available from the U.S. Gulf Coast.
Friday, May 7, 2010
Thursday, May 6, 2010
BP has fought safety measures for deepwater oil rigs since Clinton days
WASHINGTON - BP, the company that chartered the Deepwater Horizon oil rig that caught fire and sank in the Gulf of Mexico in April, spent years battling federal regulators over how many layers of safeguards were needed to prevent a rig accident of the type that destroyed the Deepwater Horizon.
One area of immediate concern, industry experts said, was the lack of a remote system that would have allowed workers to clamp shut Deepwater Horizon's wellhead so it would not continue to gush oil.
The well drilled by the rig was still spilling 210,000 gallons of oil a day into the Gulf of Mexico on May 4.
In a letter sent as late as 2009 to the U.S. Department of the Interior, BP objected to what it called "extensive, prescriptive regulations" proposed in new rules to toughen safety standards. "We believe industry's current safety and environmental statistics demonstrate that the voluntary programs continue to be very successful."
While BP's arguments against safeguards date to the Clinton administration, BP won the greatest concessions during the Bush administration.
The agency said operators were expected to have multiple layers of protection to prevent a spill.
But according to aides to Sen. Bill Nelson, a Florida Democrat who has followed offshore drilling issues for years, the industry aggressively lobbied against an additional layer of protection known as an "acoustic system," saying it was too costly. In a March 2003 report, the agency reversed course, and said that layer of protection was no longer needed.
One area of immediate concern, industry experts said, was the lack of a remote system that would have allowed workers to clamp shut Deepwater Horizon's wellhead so it would not continue to gush oil.
The well drilled by the rig was still spilling 210,000 gallons of oil a day into the Gulf of Mexico on May 4.
In a letter sent as late as 2009 to the U.S. Department of the Interior, BP objected to what it called "extensive, prescriptive regulations" proposed in new rules to toughen safety standards. "We believe industry's current safety and environmental statistics demonstrate that the voluntary programs continue to be very successful."
While BP's arguments against safeguards date to the Clinton administration, BP won the greatest concessions during the Bush administration.
The agency said operators were expected to have multiple layers of protection to prevent a spill.
But according to aides to Sen. Bill Nelson, a Florida Democrat who has followed offshore drilling issues for years, the industry aggressively lobbied against an additional layer of protection known as an "acoustic system," saying it was too costly. In a March 2003 report, the agency reversed course, and said that layer of protection was no longer needed.
Wednesday, May 5, 2010
Mid-America in 1,970-bbl. Kansas gasoline leak
SOLOMON, Kansas – A farmer here noticed a distinct odor of gasoline as he stepped out of his house on the afternoon of April 23.
Prochaska drove onto Buffalo Road about five miles northwest of Solomon and noticed gasoline coming out of the ground about 400 yards east of his farm home.
Fuel from a ruptured eight-inch Mid-America mainline was gushing into the waterway, headed for the Solomon River.
Rory Tillett, director of Ottawa County Emergency Management, estimated
1,970 barrels - 82,740 gallons - spilled from the line. "It ran open for an hour and a half before it was shut down," Tillett said.
Prochaska called 911 to report the leak. Dispatchers took the call at 5:07 p.m., Tillett said.
The Prochaskas - Tom and Patty - were among 10 people evacuated from their homes that night.
Officials with Mid-America Pipeline, owned by Enterprise Products of Houston, rushed to the scene, along with emergency workers from
Bennington and Salina.
The leak was stopped on the evening of April 23, said Alan Siemer, Enterprise Products' central region operations manager.
While the flow of fuel was stopped, fixing the leak has been
troublesome, Tillett said, because of muddy conditions. Another pipeline
carrying anhydrous ammonia - owned by Magellan Pipeline - runs
parallel to the ruptured line.
Prochaska drove onto Buffalo Road about five miles northwest of Solomon and noticed gasoline coming out of the ground about 400 yards east of his farm home.
Fuel from a ruptured eight-inch Mid-America mainline was gushing into the waterway, headed for the Solomon River.
Rory Tillett, director of Ottawa County Emergency Management, estimated
1,970 barrels - 82,740 gallons - spilled from the line. "It ran open for an hour and a half before it was shut down," Tillett said.
Prochaska called 911 to report the leak. Dispatchers took the call at 5:07 p.m., Tillett said.
The Prochaskas - Tom and Patty - were among 10 people evacuated from their homes that night.
Officials with Mid-America Pipeline, owned by Enterprise Products of Houston, rushed to the scene, along with emergency workers from
Bennington and Salina.
The leak was stopped on the evening of April 23, said Alan Siemer, Enterprise Products' central region operations manager.
While the flow of fuel was stopped, fixing the leak has been
troublesome, Tillett said, because of muddy conditions. Another pipeline
carrying anhydrous ammonia - owned by Magellan Pipeline - runs
parallel to the ruptured line.
Tuesday, May 4, 2010
Waxman asks Halliburton to explain cementing of fatal BP well in Gulf
WASHINGTON – The initial inquiries into the cause of the fatal explosion and fire that sank the Transocean Deepwater Horizon rig in April, killing 11 and injuring 17, are centering on the cementing of the well by Halliburton 20 hours before the fatal explosion that ultimately sank the rig.
Cementing must be done in such a way that gaps do not open between the outside of the well pipe and the inside of the hole drilled into the sea floor. If cement is not poured properly, oil and natural gas can escape - the cause of more than a dozen previous well blowouts in the Gulf.
House Energy and Commerce Chairman Henry Waxman on April 30 sent a letter to Halliburton, the company responsible for pouring the cement seal, asking company executives to brief committee investigators on conditions at the rig, and preserve all documents relating to their work on the sea floor.
Elmer Danenberger, an expert on offshore drilling who retired from the U.S. Department of the Interior in January, told ABC News he is worried that "lack of attention" during the pouring of the cement could be to blame.
"With these cementing operations it's just a matter of not being attentive enough," he said. "What you want is a closed system. You want the cemented pipe totally sealing the well bore. If you don't have that, you have problems."
Cementing must be done in such a way that gaps do not open between the outside of the well pipe and the inside of the hole drilled into the sea floor. If cement is not poured properly, oil and natural gas can escape - the cause of more than a dozen previous well blowouts in the Gulf.
House Energy and Commerce Chairman Henry Waxman on April 30 sent a letter to Halliburton, the company responsible for pouring the cement seal, asking company executives to brief committee investigators on conditions at the rig, and preserve all documents relating to their work on the sea floor.
Elmer Danenberger, an expert on offshore drilling who retired from the U.S. Department of the Interior in January, told ABC News he is worried that "lack of attention" during the pouring of the cement could be to blame.
"With these cementing operations it's just a matter of not being attentive enough," he said. "What you want is a closed system. You want the cemented pipe totally sealing the well bore. If you don't have that, you have problems."
BP fought backup safety measures for deepwater oil rigs
WASHINGTON - BP, the company that chartered the oil rig that caught fire and sank in the Gulf of Mexico in April, spent years battling federal regulators over how many layers of safeguards weree needed to prevent a rig accident of the type that destroyed the Deepwater Horizon.
One area of immediate concern, industry experts said, was the lack of a remote system that would have allowed workers to clamp shut Deepwater Horizon's wellhead so it would not continue to gush oil.
The well drilled by the rig was still spilling 210,000 gallons of oil a day into the Gulf of Mexico on May 4.
In a letter sent as late as 2009 to the U.S. Department of the Interior, BP objected to what it called "extensive, prescriptive regulations" proposed in new rules to toughen safety standards. "We believe industry's current safety and environmental statistics demonstrate that the voluntary programs continue to be very successful."
While BP's arguments against safeguards date to the Clinton administration, BP won the greatest concessions during the Bush administration.
One area of immediate concern, industry experts said, was the lack of a remote system that would have allowed workers to clamp shut Deepwater Horizon's wellhead so it would not continue to gush oil.
The well drilled by the rig was still spilling 210,000 gallons of oil a day into the Gulf of Mexico on May 4.
In a letter sent as late as 2009 to the U.S. Department of the Interior, BP objected to what it called "extensive, prescriptive regulations" proposed in new rules to toughen safety standards. "We believe industry's current safety and environmental statistics demonstrate that the voluntary programs continue to be very successful."
While BP's arguments against safeguards date to the Clinton administration, BP won the greatest concessions during the Bush administration.
Three U.S. refineries latest to sue to get out of Keystone contracts
CALGARY, Alta. - Three small U.S. oil refineries are suing TransCanada to get out of their contracts to ship oil on the Keystone pipeline. They say that cost overruns on the Keystone pipeline have gone over budget by 145 percent in Canada and 92 percent in the U.S.
Canadian crude producers have already sought to be released from such contracts.
The U.S. refineries are suing TransCanada Corp. in hopes of breaking contracts to ship oil on Keystone, a new pipeline they say has been beset with cost overruns.
The refineries, owned by Sinclair Oil Corp., National Cooperative Refinery Association and Coffeyville Resources Refining & Marketing LLC, together committed to ship 95,000 b/d on the $5-billion line, which would deliver Canadian crude near their locations in the central United States.
Now the refineries want out. In three separate but nearly identical statements of claim, which a TransCanada spokesman has called “without merit,” the refiners argue that Keystone was so expensive to build, it will no longer be a cheaper option than shipping on pipelines run by competitor Enbridge Inc.
The refiners accuse TransCanada of misleading them when they signed shipping contracts in the summer of 2007. TransCanada nearly doubled its construction estimates in October, 2007, from US$2.8-billion to $5.2-billion.
As a result, the three refiners are demanding to be released from their shipping contracts, which together would account for about 12.5 percent of Keystone’s capacity.
If they fail in court, the refiners want US$950-million in damages, plus interest and expenses.
Canadian crude producers have already sought to be released from such contracts.
The U.S. refineries are suing TransCanada Corp. in hopes of breaking contracts to ship oil on Keystone, a new pipeline they say has been beset with cost overruns.
The refineries, owned by Sinclair Oil Corp., National Cooperative Refinery Association and Coffeyville Resources Refining & Marketing LLC, together committed to ship 95,000 b/d on the $5-billion line, which would deliver Canadian crude near their locations in the central United States.
Now the refineries want out. In three separate but nearly identical statements of claim, which a TransCanada spokesman has called “without merit,” the refiners argue that Keystone was so expensive to build, it will no longer be a cheaper option than shipping on pipelines run by competitor Enbridge Inc.
The refiners accuse TransCanada of misleading them when they signed shipping contracts in the summer of 2007. TransCanada nearly doubled its construction estimates in October, 2007, from US$2.8-billion to $5.2-billion.
As a result, the three refiners are demanding to be released from their shipping contracts, which together would account for about 12.5 percent of Keystone’s capacity.
If they fail in court, the refiners want US$950-million in damages, plus interest and expenses.
Monday, May 3, 2010
TransCanada launches open season for proposed Alaska gas pipeline
TransCanada on April 30 began taking bids for space on its proposed natural gas pipeline from the North Slope.
The open season is the 90-day period in which a pipeline owner takes bids on space in the proposed line. Depending on the bids and the conditions placed upon them, the project might or might not proceed.
The Alaska Pipeline Project, as TransCanada has dubbed its proposal, was developed in accordance with the process outlined in the state’s Alaska Gasline Inducement Act (AGIA). That means the proposal complies with a variety of state-imposed requirements, in exchange for state assistance with the preconstruction planning and design costs and certain incentives.
The bids, if they come, will come from gas owners, and that primarily means the three major North Slope petroleum producers.
Exxon Mobil, the primary leaseholder at the North Slope’s largest undeveloped gas field, Point Thomson, is working with TransCanada. The two firms together have proposed two alternatives - a 1,700-mile line to Alberta, Canada, or an 800-mile bullet line to Valdez.
The open season is the 90-day period in which a pipeline owner takes bids on space in the proposed line. Depending on the bids and the conditions placed upon them, the project might or might not proceed.
The Alaska Pipeline Project, as TransCanada has dubbed its proposal, was developed in accordance with the process outlined in the state’s Alaska Gasline Inducement Act (AGIA). That means the proposal complies with a variety of state-imposed requirements, in exchange for state assistance with the preconstruction planning and design costs and certain incentives.
The bids, if they come, will come from gas owners, and that primarily means the three major North Slope petroleum producers.
Exxon Mobil, the primary leaseholder at the North Slope’s largest undeveloped gas field, Point Thomson, is working with TransCanada. The two firms together have proposed two alternatives - a 1,700-mile line to Alberta, Canada, or an 800-mile bullet line to Valdez.
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