Coal: Metallurgical or Coking & Thermal or Steam

Coal is divided into two basic categories:

1) Metallurgical or Coking (used in steelmaking) and

2) Thermal or Steam (used for heating and electrical generation).

Metallurgical or coking (used in steelmaking) and thermal or steam (used for heating and electrical generation).

Metallurgical is the highest grade in terms of heating value, and sells for the highest price. The U.S. consumes about 15 million tons per year, and exports 30 to 40 million tons.

Metallurgical and thermal coal are basically different products with different markets. Thermal coal production is a giant in comparison. World-wide consumption is over 7 billion tons, and U.S. consumption is around a billion tons per year.

China is a large consumer and producer of thermal coal. It relies on coal for almost 70% of its electric power, and uses almost 3 billion tons per year. According to the World Coal Institute, China gets its coal from 18,557 mines, 95% of which are underground rather than surface. The U.S., for comparison, has 1,458 coal mines, of which 60% are opencast. (Seeking Alpha, 9/15/2012)

EPA Region 6 Administrator Fired

'Resigns' Vover ‘Crucify’ Comment

Environmental Protection Agency (EPA) Region 6 Administrator Al Armendariz has resigned due to his comments about crucifying the oil and gas industry.  According to EPA Administrator Lisa Jackson:

“Over the weekend Dr. Armendariz offered his resignation, which I accepted. I respect the difficult decision he made and his wish to avoid distracting from the important work of the agency. We are all grateful for Dr. Armendariz's service to EPA and to our nation.”

The decision comes days after Armendariz – who oversaw oil-and-gas producing states including Texas and Louisiana – drew GOP attacks over 2010 comments that surfaced in which he compared his enforcement strategy to the way ancient Roman conquerors would use terror to keep order. A number of GOP lawmakers, shortly after the 2010 comments surfaced last week, called for his ouster despite his apology for the remarks.

EPA’s Region 6 covers Arkansas, Louisiana, New Mexico, Oklahoma and Texas. Last Wednesday, Sen. Jim Inhofe (R-Okla.) unveiled a 2010 video of the regional administrator making controversial comments about EPA enforcement against oil and gas companies.  (The Hill, 4/30/3012, Politico, 4/30/2012)

EPA Publishes National U.S. Greenhouse Gas Inventory

The U.S. Environmental Protection Agency (EPA) has released the 17th annual U.S. greenhouse gas inventory. The final report shows overall emissions in 2010 increased by 3.2 percent from the previous year. The trend is attributed to an increase in energy consumption across all economic sectors, due to increasing energy demand associated with an expanding economy, and increased demand for electricity for air conditioning due to warmer summer weather during 2010.

Total emissions of the six main greenhouse gases in 2010 were equivalent to 6,822 million metric tons of carbon dioxide. These gases include carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride. The report indicates that overall emissions have grown by over 10 percent from 1990 to 2010.

The Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2010 is the latest annual report that the United States has submitted to the Secretariat of the United Nations Framework Convention on Climate Change, which sets an overall framework for intergovernmental efforts to tackle the challenge posed by climate change. EPA prepares the annual report in collaboration with experts from multiple federal agencies and after gathering comments from stakeholders across the country.

The inventory tracks annual greenhouse gas emissions at the national level and presents historical emissions from 1990 to 2010. The inventory also calculates carbon dioxide emissions that are removed from the atmosphere by “sinks,” e.g., through the uptake of carbon by forests, vegetation and soils. (EPA)
More on the greenhouse gas inventory report

Natural Gas Fracking Air Rules Due This Week

Hydraulic fracturing, or “fracking” is making the country’s vast natural gas reserves accessible at low cost. Natural gas produces about half the carbon emissions as coal and is an attractive and  affordable alternative. But extracting and transporting all that natural gas, which is mostly methane, also results in fuel leaks.When methane leaks, it has a shorter-lived but much stronger global warming effect as the carbon dioxide released when the same amount of methane is burned. Particularly on relatively short time frames of 10 or 20 years, too much methane leakage can make the fuel less attractive than even dirty old coal.  Methane is 20 times more potent as a greenhouse gas than carbon dioxide.

Assuming the Environmental Protection Agency’s estimate of the industry’smethane leakage rate — 2.4 percent — is accurate, choosing to build a new gas power plant instead of a new coal plant produces immediate greenhouse emissions benefits. Replacing old, inefficient coal plants with new natural gas facilities would presumably produce larger benefits. But using natural gas to run cars wouldn’t reduce net climate impacts for 80 years. Fueling heavy-duty trucks with natural gas wouldn’t result in greenhouse emissions benefits for 300 years.

These results undercut the environmental rationale for the proposed NaturalGas Act, which would provide federal support for converting America’s heavy-truck fleet to run on natural gas. But they underscore the appeal of rules about to be finalized at the EPA, which would require natural gas producers to prevent leaks from wells, pipelines, storage tanks and other infrastructure. The rules are designed to reduce the release of volatile organic compounds that formdangerous smog, but the EPA estimates that they would also result in the collection of 3.4 million tons of methane annually, a quarter of current methane emissions from the sector.

On top of environmental benefits, gas producers would have more product to sell. Reducing leaks might not be a money-making proposition at every well — and the industry naturally claims the government is off in its figures — but the EPA

reckons that, overall, new standards will save the industry about $30 million a year.

The Obama administration must issue the final regulations by Tuesday. As long as regulators have a reasonable confidence that drillers will have enough time to deploy the necessary equipment, the rules will help ensure that natural gas contributes to the fight against climate change inexpensively, and perhaps mightily. (Wash Post, 4/16/2012)

China Crude Oil Imports Increasing

China's crude-oil imports reached 5.55 million barrels a day in March. d Iran supplied 11% of China's total imports in 2011, giving it an incentive to ensure it has enough oil in reserve if any global embargo against Iranian oil goes into effect. A European Union embargo on Iranian crude exports is set to take full effect this summer.

China and other emerging markets have less oil on tap to provide for domestic demand than Western counterparts. China's total oil stocks, both strategic and commercial, are enough to cover only about 40 days of domestic usage, analysts estimate. By comparison, the U.S.'s strategic and commercial stockpile can cover the country's needs for 94 days. (WSJ, 4/11/2012)

Department of the Interior Proposed Fracking Rules

The American Petroleum Institute, America’s Natural Gas Alliance, the American Exploration and Production Council, the Independent Petroleum Association of America, and the U.S. Oil and Gas Association, Exxon, and Anadarko Petroleum are part of a wider industry push that has taken concerns about looming Interior Department "fracking" regulations they consider burdensome to the White House. Interior is proposing rules to govern fracking that occurs on public lands. The rules are expected to require disclosure of chemical ingredients used in the fracking process, and also address well integrity and water management.

Industry fears the rules could lead to hundreds of millions of dollars' worth of annual delays for industry projects on public lands, and warns of “onerous” reporting requirements. The presentation also cites concerns that Interior could deny fracking from occurring at wells that have already been drilled.
Fracking involves high-pressure injections of water, chemicals and sand into rock formations to open up seams that enable trapped gas to flow. The method, along with advances in horizontal drilling technology, is enabling a U.S. gas production boom but bringing pollution fears along with it.
Environmental groups are pushing for stronger federal oversight on several fronts, including the repeal of the Energy Policy Act of 2005 that exempted fracking from EPA Clean Water Act rules.

Iidustry recommendations for the looming Interior rules include adoption of the format used by FracFocus — a voluntary disclosure database run by the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission — for the required federal disclosures. The industry groups support current state-level requirements and recommend that Interior should use the FracFocus system “instead of attempting to create a different, costly and unnecessary new reporting process.” They also say there is no need for a “national well construction model.”

Federal officials have signaled that they could let companies disclose the required data through FracFocus, which is currently a voluntary registry.

The Environmental Protection Agency is preparing separate air emissions rules for wells developed with hydraulic fracturing, and studying fracking’s effect on water supplies. (The Hill, 4/9/2012)

Environmental Groups Sue EPA Over Coal Fly Ash

Fly Ash Pond

Several environmental groups are suing the Environmental Protection Agency (EPA) to force completion of long-planned national regulations to govern disposal of so-called coal ash, a waste product from power plants. The lawsuit filed on Thursday by the Sierra Club, Appalachian Voices, the Chesapeake Climate Action Network, the Environmental Integrity Project and others, states:

"In the absence of national standards requiring safe disposal, coal ash has been dumped in thousands of unlined and unmonitored ponds, landfills, pits and mines. The result has been the widespread release of hazardous pollutants from coal ash to water, air and soil, endangering human health and the environment."

The groups, who filed suit in the U.S. District Court for the District of Columbia, say EPA is violating the Resource Conservation and Recovery Act (RCRA) by failing to update its regulations. The complaint says the waste streams contain “large quantities” of arsenic, lead, mercury and other toxins linked to neurological, developmental and other health problems.

EPA floated draft rules almost two years ago laying out options for regulation of the wastes. The coal industry and many coal-state lawmakers are seeking to prevent EPA from going with the tougher of the two options: regulating the materials under the hazardous waste title of RCRA, which is Subtitle C.

The push for coal ash rules stems in part from a late 2008 spill from a breached storage pond in Tennessee. The accident dumped 5.4 million cubic yards of the liquid material into and around a nearby river, destroying and damaging several homes.

It has bee three decades since EPA last reviewed the coal ash disposal standards and over three years since the Tennessee Valley Authority Kingston spill.  In 2010, power plants used unsafe and leak-prone coal ash ponds to dispose of wastes containing 113.6 million pounds of toxic metals, a nearly ten percent increase from 2009. Yet EPA’s proposed standards for safe disposal, including a plan to close down ash ponds within five years, have gone nowhere. (The Hill, 4/5/2012)

Cushing Oklahoma Crude Oil Inventories Rising in 2012

Crude oil inventories at the Cushing, Oklahoma storage hub, the delivery point for the NYMEX light-sweet crude oil futures contract, are up by 12.0 million barrels (43%) between January 13, 2012 and March 30, 2012. This was the largest increase in inventories over an 11-week period since 2009. The inventory builds can be partly attributed to the emptying of the Seaway Pipeline, which ran from the Houston area to Cushing, in advance of its reversal. While Cushing inventories are now approaching the record levels of 2011, the amount of available storage capacity at Cushing is much greater now than it was a year ago, relieving some of the pressure on demand for incremental storage capacity.

Historically, the Seaway Pipeline delivered crude oil from the U.S. Gulf Coast to Cushing, where it then moved to the refineries connected by pipeline to the storage hub. In November 2011, Enbridge Inc. acquired a 50% share in the pipeline from ConocoPhillips; at this time, Enbridge and joint owner Enterprise Product Partners announced they would reverse the direction of the pipeline to flow from Cushing to the Gulf Coast. Currently, the pipeline is expected to deliver 150,000 barrels per day (bbl/d) from Cushing to the Gulf Coast beginning in June 2012. The companies plan to expand Seaway's capacity to 400,000 bbl/d in 2013 and to 850,000 bbl/d in 2014.

In early March, approximately 2.2 million barrels from the Seaway pipeline was emptied into Cushing storage in order to prepare for the pipeline's reversal. This accounts for about 20% of the build in inventories during this period. However, even without the emptying of Seaway, inventory builds over the past months have been particularly steep compared to the five-year average. As of January 13, Cushing inventories stood at 28.3 million barrels, slightly below their seasonal five-year average. After the 12.0-million-barrel increase, inventories were almost 11 million barrels above their average level, the largest such variation to average since June 2011. This is largely due to flows into Cushing as a result of increasing production in the mid-continent region. (DOE-EIA)

EPA Delays Fracking Air Pollution Rules For Two Weeks

Deadline for Final Oil and Gas Rule extended to April 17, 2012

FACT SHEET

Center Criteria For Evaluating Fracking Projects

EPA and litigants WildEarth Guardians and the San Juan Citizens Alliance have agreed to a two-week extension – until April 17, 2012 - on a consent decree to issue air pollution standards for natural gas wells developed with hydraulic fracturing. EPA, under the consent decree, faced an April 3 deadline to complete rules to cut smog-forming and toxic emissions from gas wells, compressors, oil storage tanks and other oil-and-gas sector equipment.  The agency requested the additional time to fully address the issues raised in the more than 156,000 public comments we received on the proposed rules.

 The rules are aimed at curbing smog-forming volatile organic compounds, emissions of benzene, which are linked to cancer, and releases of methane, which is a potent greenhouse gas.  The proposal would cut smog-forming volatile organic compound (VOC) emissions by nearly one- fourth across the oil and gas industry, including a nearly 95 percent reduction in VOCs emitted from new and modified hydraulically fractured gas wells.  

In addition to EPA plans to set air pollution standards for "fracked" wells, the Interior Department is crafting rules for fracking that occurs on public lands. The upcoming Interior Department proposal will require disclosure of chemical ingredients injected underground, and will also address well integrity and management of large volumes of wastewater.

Fracking involves high-pressure injections of water, chemicals and sand into rock formations in order to open up seams that enable trapped gas to flow.

The Clean Air Act requires EPA to set New Source Performance Standards (NSPS) for industrial categories that cause, or significantly contribute to, air pollution that may endanger public health or welfare. Oil and gas production, processing, transmission and storage are significant sources of VOCs, which contribute to the formation of ground-level ozone (smog). The law requires EPA to review new source performance standards every eight years.

The proposal would cut smog-forming volatile organic compound (VOC) emissions by nearly one-fourth across the oil and gas industry, including a nearly 95 percent reduction in VOCs emitted from new and modified hydraulically fractured gas wells. This significant reduction would be accomplished primarily through use of a proven technology to capture natural gas that currently escapes to the air.

The proposed rules would apply to the more than 25,000 wells that are fractured and refractured each year, as well as to storage tanks and other pieces of equipment. In 2009, about 1.1 million wells were producing oil and natural gas in the United States. The wells are located in many areas of the country, including both urban and rural areas.

Some of the largest air emissions in the oil and gas industry occur as natural gas wells that have been fractured are being prepared for production. During a stage of well completion known as "flowback," fracturing fluids, water, and reservoir gas come to the surface at a high velocity and volume. This mixture includes a high volume of VOCs and methane, along with air toxics such as benzene, ethylbenzene and n-hexane. The typical flowback process lasts from three to 10 days. Compression is necessary to move natural gas along a pipeline. The proposed rule would reduce VOC emissions from two types of compressors:

Centrifugal compressors would have to be equipped with dry seal systems.

Owners/operators of reciprocating compressors would have to replace rod packing systems every 26,000 hours of operation.

Pneumatic controllers: Pneumatic controllers are automated instruments used for maintaining a condition such as liquid level, pressure, and temperature at wells, gas processing plants, compressor stations, among other locations. These controllers often are powered by high-pressure natural gas. These gas-driven pneumatic controllers may release natural gas (including VOCs and methane) with every valve movement, or continuously in some cases.

EPA is proposing VOC emission limits for pneumatic controllers.

For new or replaced pneumatic controllers at gas processing plants, the proposed limits would eliminate VOC emissions. These limits could be met through using controllers that are not gas-driven.

For controllers used at other sites, such as compressor stations, the emission limits could be met by using controllers that emit no more than six cubic feet of gas per hour. (The Hill, 4/2/2012, EPA)

EPA to Allow 15 Percent Renewable Fuel in Gasoline

Approves 1st Applications For Registration of Ethanol to Make E15

The U.S. Environmental Protection Agency (EPA) approved the first applications for registration of ethanol for use in making gasoline that contains up to 15 percent ethanol – known as E15. Ethanol is a renewable fuel that can be mixed with gasoline. For over 30 years ethanol has been blended into gasoline, but the law limited it to 10 percent by volume for use in gasoline-fueled vehicles. Registration of ethanol to make E15 is a significant step toward its production, sale, and use in model year 2001 and newer gasoline-fueled cars and light trucks.

To enable widespread use of E15, the Obama Administration has set a goal to help fueling station owners install 10,000 blender pumps over the next 5 years. In addition, both through the Recovery Act and the 2008 Farm Bill, the U.S. Department of Energy (DOE) and U.S. Department of Agriculture have provided grants, loans and loan guarantees to spur American ingenuity on the next generation of biofuels.

Today’s action follows an extensive technical review required by law. Registration is a prerequisite to introducing E15 into the marketplace. Before it can be sold, manufactures must first take additional measures to help ensure retail stations and other gasoline distributors understand and implement labeling rules and other E15-related requirements. EPA is not requiring the use or sale of E15.

Ethanol is considered a renewable fuel because it is generally produced from plant products or wastes and not from fossil fuels. Ethanol is blended with gasoline for use in most areas across the country. After extensive vehicle testing by DOE and other organizations, EPA issued two partial waivers raising the allowable ethanol volume to 15 percent for use in model year 2001 and newer cars and light trucks.

E15 is not permitted for use in motor vehicles built prior to 2001 model year and in off-road vehicles and equipment such as boats and lawn and garden equipment. Gas pumps dispensing E15 will be clearly labeled so consumers can make the right choice.(EPA)

More information