highlights from last week's oil patch news...
the major oil story this week was the 105,000 gallon spill from a ruptured 24 inch crude oil pipeline on the Refugio State Beach coastline just west of Santa Barbara on Tuesday...not detected until beach-goers noticed the smell, the buried pipeline a few hundred yards inland apparently spewed oil into a culvert and then into a storm drain that empties into the ocean for 3 hours before the Coast Guard was able to shut it off....first erroneously reported as a 21,000 barrel spill, it was then corrected to 21,000 gallons in later reports that same day, and then revised to the final 105,000 gallon total now being carried in all recent reports, with an estimated 21,000 gallons of that total reaching the Ocean...initial reports were of a 4 mile long oil slick offshore drifting towards Santa Barbara; by Wednesday that had spread out into a 9 mile wide oil slick, which resulted in the closure of two state beaches and area fisheries, and as oil-covered birds and other ocean wildlife began washing ashore, Governor Jerry Brown declared a state of emergency to free up state resources to deal with the spill and its consequences...for those interested in seeing what it looks like, the Boston Globe offers 31 full size full color photos in their "Big Picture" gallery this week...the cleanup is expected to take months, so once again the oil industry is delivering on the increased job opportunities that they've been promising us...
to give you an idea of the area affected, we'll include a map below that was sourced from the LA Times...on that map, the little squares in the ocean indicate the location of offshore oil platforms, the dark black lines show the location of pipelines, the orange blocks in the ocean represent the boundaries of oil company lease holdings, and other orange figures represent the locations of oil storage depots (circles), treatment plants diamonds), and refineries (i shape) respectively...the pipeline that failed originates from ExxonMobil's Las Flores Canyon Processing Facility near Refugio, and runs west along the coast about 15 miles to the Plains-owned Gaviota pumping station, where the oil is then pumped to refineries in Kern County; Refugio Beach is roughly 20 miles west of Santa Barbara, so we're talking about the pipeline that runs west along the coast from there..(the spill is often described as having occurred at Refugio State Beach, just "north" of Goleta, which is about 10 miles west of Santa Barbara; "north" on this portion of coast apparently means to the west, as reporters seem to assume the entire California coast runs due north/south)...the map below also shows the nearby Channel Islands National Marine Sanctuary and another ocean preserve in dark blue, but does not show the Gaviota Coast Conservancy, which extends along the coast from west of Goleta to Point Sol, which is about 20 miles north of Point Conception, the Cape to the west of the spill area...also shown as black spots are select recent historical oil spills, indicated by a date and number of gallons spilled, most of which were smaller than the current spill, but all of which are dwarfed by the 3 million gallon 1969 Santa Barbara oil spill, which at the time was the largest spill in US history...in the upper left hand corner of the map, we also see the Guadalupe Oil Field, where an estimated 12 million gallons of oil have oozed out underground from at least 80 leaks in pipelines in an oil field operated by Unocal since the 1950s...
although the Center for Biological Diversity had filed a lawsuit to stop dangerous offshore fracking in the Santa Barbara Channel earlier this year, we have seen no indication that the oil that was spilled came from a fracked oil well...the operator of the pipeline that failed here, Houston based Plains All American Pipeline, has a long history of federal safety violations, and had already been cited for 10 crude oil spills between June 2004 and September 2007, in Texas, Louisiana, Oklahoma and Kansas, for which they were fined a total of $3.25 million and told to carry on...Plains, with environmentalist and Microsoft co-founder Paul Allen as a key original investor, also has a long history of fighting environmental regulations, and successfully won themselves an exemption from Santa Barbara county oversight more than 20 years ago; as a result, none of the welds on the pipeline that failed had ever been inspected by county officials, and the Plains pipeline was the only pipeline in the county not to have an automatic shut-off valve, which could have shut down the flow quickly when the initial pressure drop was detected...
elsewhere, in Karnes county Texas, in a largely rural area over the Eagle Ford shale, an oil well exploded on Tuesday, spewing toxic hydrogen sulfide gas that forced the evacuation of several homes nearby...the blowout then continued to spew the poisonous gas, along with methane and oil, for two days, while the area roads were closed to travelers and residents, while operators struggled to regain control....furthermore, even after the well was brought under control on Thursday, residents were still not allowed to return home...reports were that much of the area, including roadways, fields, homes, fence lines, and grass had been covered in oil that had fallen as a mist during the two days that the blowout was underway...as a result, Encana, the well operator, is providing motel rooms and incidental expenses to the evacuated residents while it works to establish a timeline for them to safely return to their homes…
meanwhile, both oil production and oil inventories fell this week, in what some are interpreting as a sign that drilling and fracking cutbacks are starting to have an impact...domestic oil production fell by almost 1.2% to 9,262,000 barrels per day in the week ending May 15th, from 9,374.000 barrels per day in the prior week, while our output still remained 8.9% higher than the 8,434,000 barrels per day production during the 3rd week in May a year ago...our stocks of crude oil in storage fell by a bit more than half a percent, from 484,839 million barrels last week to 482,165 million barrels this week, but that's still 23.2% more than a year ago, and except for the higher levels of the past two weeks, still the most oil we've had stored in the 80 years we have records for... despite what seems to be excessive inventories, our crude oil imports still averaged 7.199 million barrels per day last week, up by 318,000 barrels per day from the previous week. according to the weekly Petroleum Status Report (62 pp pdf) from the Energy Information Administration, our crude oil imports have averaged over 7.0 million barrels per day over the last 4 weeks, 0.4% more than the same 4 weeks last year...
the weekly change in the rig count has become so inconsequential that it hardly seems worth reporting it, as the rig count fell by just 3 in the week ending May 22nd, with oil rigs down 1 to 659, gas rigs down 1 to 222, and miscellaneous rigs down 1 to 4...from a year earlier, the number of drilling rigs operating in the US is now down 972, with oil rigs down 869, gas rigs down 103, and miscellaneous rigs unchanged...560 horizontal rigs have been shut down over that span, leaving 685; another 292 vertical rigs were stacked, leaving 117 operating, and the count of directional rigs fell by 120 to 85...Texas drillers shut down 516 of the rigs they were operating a year ago, leaving them with 373 as of Friday; North Dakota, California, Wyoming and Utah have also shut down more than half their rigs, with the rig count in California falling from 48 to 13, the rig count in North Dakota falling from 174 to 78, the rig count in Wyoming being cut from 45 to 22, and the rig count in Utah falling from 27 to 7..in contrast, the Woodford shale in Oklahoma has seen an increase in active rigs over the past year, with rigs operating in the Cana-Woodford increasing from 24 to 34 and rigs in the Ardmore Woodford increasing from 5 to 6...the rigs operating in the Marcellus shale, which were cut considerably after natural gas prices collapsed in late 2011, have only slowly been idled through this downturn, as the count of active rigs in West Virginia has fallen to 18, from 25 a year ago, while the count in Pennsylvania has just dropped by 11, from 60 last year to 49 last week...in Ohio, meanwhile, the rig count has dropped by 16, from 39 a year ago to 23 last week, with the total Utica shale count falling from 41 to 24 over the same span...