Crude Oil Storage Facilities Running Out. Prices May Turn Negative for Producers
Oil rigs around the world keep pulling crude oil out of the ground, but the global pandemic has sent shockwaves into the market. The supply is up, but demand has plummeted now that industry has ground to a halt, highways are empty, and airplanes are parked in hangars.
It means that storage space for crude is starting to run out, both onshore and offshore, according to CNBC.
As CNN reported, the supply glut has driven the price of oil to 18-year-lows. The need to get rid of it has grown so bad that some producers are paying customers to take it off their hands, according to Yahoo! Finance. In fact, in Canada, an entire barrel of crude oil is less expensive than a $5 pint of beer, according to another story from CNBC. A barrel of Western Canada Select oil was listed as $4.18 earlier this week.
That precipitous drop in the price may make it more economical for producers to shutdown operations than to see the prices dip into negative territory, according to The Guardian.
Meanwhile, Saudi Arabia and Russia are preparing to pump record levels of oil into the global market as part of a oil price war to win control of the market, despite drastically reduced demand for energy during the COVID-19 crisis, as The Guardian reported.
Today, a three-year truce between OPEC and non-OPEC countries expired, paving the way for an increase in production. Saudi Arabia has pledged to raise output to record highs, according to CNBC.
"The market is starting to signal that not only is there no demand for this crude, eventually there could be nowhere for it to go," Jeff Wyll, senior energy analyst at Neuberger Berman, said as CNN reported.
In a letter from Goldman Sachs earlier this week, the banking giant said producers, especially in landlocked pipelines like those in the U.S., Canada and Russia, will face mounting problems as there is no place to get rid of their oversupply.
"Given the cost of shutting down a well, a producer would be willing to pay someone to dispose of a barrel, implying negative pricing in landlocked areas," the bank said in an investor note on Monday, as The Guardian reported.
"The cost to store the crude oil is now higher than the price they can get for it," Bob Iaccino, Path Trading Partners Co-Founder & Chief Market Strategist, explained to Yahoo! Finance. "You can't flow away stored crude oil."
Since it is more expensive to store than to sell, that could make the price go negative.
"Refineries in many places are now losing money for every barrel they process, or they have no place to store their output of oil products," Bjarne Schieldrop, chief commodities analyst at SEB, told CNBC. "For land-based or land-locked oil producers, this means only one thing: the local oil price or well-head price they receive very quickly goes to zero or even negative, because if they have too much oil, they must pay someone to transport it away until they have managed to shut down their production."
Analysts predict that global storage limits will max out by mid-year. Already, ports around the world are starting to turn away oil tankers, according to CNBC.
The oversupply means oil companies will start to shutdown refineries with older, less productive oil wells likely to stop production first. Goldman Sachs predicts the industry will lose as much as 5 million barrels per day of oil supply capacity, according to Reuters.
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Democrats in the House and Senate have introduced legislation to ban some of the most toxic pesticides currently in use in the U.S. D-Keine / E+ / Getty Images
By Jake Johnson
Democrats in the House and Senate on Tuesday introduced sweeping legislation that would ban some of the most toxic pesticides currently in use in the U.S. and institute stronger protections for farmworkers and communities that have been exposed to damaging chemicals by the agriculture industry.
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BP, the energy giant that grew from oil and gas production, is taking its business in a new direction, announcing Tuesday that it will slash its oil and gas production by 40 percent and increase its annual investment in low-carbon technology to $5 billion, a ten-fold increase over its current level, according to CNN.
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By Alex Thornton
The Australian government has announced a A$190 million (US$130 million) investment in the nation's first Recycling Modernization Fund, with the aim of transforming the country's waste and recycling industry. The hope is that as many as 10,000 jobs can be created in what is being called a "once in a generation" opportunity to remodel the way Australia deals with its waste.
Waste Mountain<p>The need for a dramatic increase in Australia's recycling capacity pre-dates the COVID-19 pandemic. <a href="https://www.abc.net.au/news/2019-12-27/where-does-all-australias-waste-go/11755424" target="_blank">Australians create approximately 67 million tons of waste a year</a>, and like in many wealthy countries, much of that was sent overseas. That all changed when China announced it was <a href="https://www.weforum.org/agenda/2017/10/china-has-banned-foreign-waste-so-whats-the-future-of-world-recycling" target="_blank">banning the import of a huge range of foreign waste</a> and recyclables. Soon <a href="https://www.weforum.org/agenda/2019/05/malaysia-flooded-with-plastic-waste-to-send-back-some-scrap-to-source" target="_blank">other countries followed suit</a>, and Australia was forced to look for alternative solutions.</p>
Biggest exporters of plastic. Statista
Waste Export Ban<p>Australia has adopted a strategy of taking responsibility for its own waste. Starting in January 2021, it is phasing in <a href="http://www.environment.gov.au/protection/waste-resource-recovery/waste-export-ban" target="_blank">bans on the export of different forms of waste</a>. By mid 2024, Australia's home-grown recycling industry will have to deal with an extra 650,000 tons of waste plastic, paper, glass and tires.</p><p>"As we cease shipping our waste overseas, the waste and recycling transformation will reshape our domestic waste industry, driving job creation and putting valuable materials back into the economy," federal environment minister Sussan Ley said in a <a href="https://uk.reuters.com/article/us-australia-waste/australia-to-set-up-132-million-fund-to-boost-recycling-following-export-curbs-idUKKBN247060" target="_blank">statement to Reuters</a>.</p>
Timeline for Australia's waste export ban. Australian Government
Trash Into Treasure<p>The benefits to the environment of boosting recycling rates are well known – less landfill, less plastic in our ocean, reduced need for virgin materials, and lower carbon emissions. The Recycling Modernization Fund initiative aims to divert more than 10 million tons of waste from landfill, part of an <a href="http://www.environment.gov.au/protection/waste-resource-recovery/publications/national-waste-policy-action-plan" target="_blank">overall strategy to reduce the total waste generated per person by 10%</a>, and push <a href="https://www.environment.gov.au/system/files/resources/7381c1de-31d0-429b-912c-91a6dbc83af7/files/national-waste-report-2018.pdf" target="_blank">Australia's total resource recovery rate from 58% in 2017</a> to 80% by 2030.</p><p>But like many countries, Australia is focusing on the economic benefits of better waste management as well.</p><p>"This will mean Australia converts more waste into higher valued resources ready for reuse locally by manufacturers and brands in their packaging and products," Rose Read, CEO of the National Waste and Recycling Industry Council, <a href="https://uk.reuters.com/article/us-australia-waste/australia-to-set-up-132-million-fund-to-boost-recycling-following-export-curbs-idUKKBN247060" target="_blank">told Reuters</a>.</p>
Green Jobs<p>The great potential of the circular economy to create green jobs is being recognized across the world.</p><p>In the UK, the Waste and Resources Action Program has launched a <a href="https://wrap.org.uk/buildbackbetter" target="_blank">six-point plan which it claims could add $90 billion to the economy, and create 500,000 new jobs</a>. Investment in the circular economy forms a significant part of the <a href="https://www.nytimes.com/2020/07/14/us/politics/biden-climate-plan.html" target="_blank">$2 trillion climate plan that Democratic candidate Joe Biden</a> is taking into November's US presidential election. And the <a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_20_940" target="_blank">European Union has put its Green New Deal at the heart of its plans for recovery</a> from the economic shock of COVID-19.</p><p>The World Economic Forum's <a href="http://www3.weforum.org/docs/WEF_The_Future_Of_Nature_And_Business_2020.pdf" target="_blank">Future of Nature and Business</a> report identifies 15 systemic transitions with annual business opportunities worth $10 billion a year that could create 395 million jobs by 2030.</p><p>As is the case with Australia's Recycling Modernization Fund, a combination of private enterprise and government investment can offer ways to get people back to work by building a more environmentally sustainable economy.</p>
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The Great American Outdoors Act is now the law of the land.
<div id="e0008" class="rm-shortcode" data-rm-shortcode-id="ffc07febbf5d2d585ad06d3f43e2be56"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1290667833999929344" data-partner="rebelmouse"><div style="margin:1em 0">🚨Breaking News: The President has just signed the bipartisan #GreatAmericanOutdoorsAct. It will help: 🏗️ Restore… https://t.co/RPefKPMn7S</div> — Fix Our Parks (@Fix Our Parks)<a href="https://twitter.com/FixOurParksUS/statuses/1290667833999929344">1596554165.0</a></blockquote></div>
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By Andrew J. Whelton and Caitlin R. Proctor
In recent years wildfires have entered urban areas, causing breathtaking destruction.
Survivors left everything to flee the Camp Fire's path. Andrew Whelton / Purdue University
Wildfires and Water<p>Both the Tubbs and Camp fires destroyed fire hydrants, water pipes and meter boxes. Water leaks and ruptured hydrants were common. The Camp Fire inferno spread at a speed of one football field per second, chasing everyone – including water system operators – out of town.</p><p>After the fires passed, testing ultimately revealed widespread hazardous drinking water contamination. Evidence suggests that the toxic chemicals originated from a combination of <a href="https://doi.org/10.1002/aws2.1183" target="_blank">burning vegetation, structures and plastic materials</a>.</p>
Pipes, water meters and meter covers after wildfires destroyed them. Caitlin Proctor, Amisha Shah, David Yu, and Andrew Whelton/Purdue University
Dangerous Contamination Levels<p>Benzene was found at concentrations of 40,000 parts per billion (ppb) in drinking water after the Tubbs Fire and at more than 2,217 ppb after the Camp Fire. According to the California Office of Environmental Health Hazard Assessment, children exposed to benzene for a single day can suffer <a href="https://engineering.purdue.edu/PlumbingSafety/resources/Benzene-Levels-in-Water.pdf" target="_blank">harm at levels as low as 26 ppb</a>.</p><p>The U.S. Environmental Protection Agency recommends limiting children's short-term acute exposure to <a href="https://www.epa.gov/sites/production/files/2018-03/documents/dwtable2018.pdf" target="_blank">200 ppb</a>, and long-term exposure to less than <a href="https://www.epa.gov/ground-water-and-drinking-water/national-primary-drinking-water-regulations" target="_blank">5 ppb</a>. The EPA regulatory level for what constitutes a hazardous waste is <a href="https://19january2017snapshot.epa.gov/sites/production/files/2015-06/documents/tclp.pdf" target="_blank">500 ppb</a>.</p><p>In early 2019, California conducted contaminated water testing on humans by taking contaminated water from the Paradise Irrigation District and asking persons to smell it. The state found that even when people smelled contaminated water that had less than 200 ppb benzene, <a href="https://engineering.purdue.edu/PlumbingSafety/resources/Dissipatiion-of-Burn-Related-VOC-From-Water.pdf" target="_blank">at least one person reported nausea and throat irritation</a>. The test also showed that water contained a variety of other benzene-like compounds that first responders had not sampled for.</p><p>The officials who carried out this small-scale test did not appear to realize the significance of what they had done, until we asked whether they had had their action approved in advance by an institutional review board. In response, they asserted that such a review was not needed.</p><p>In our view, this episode is telling for two reasons. First, one subject reported an adverse health effect after being exposed to water that contained benzene at a level below the EPA's recommended one-day limit for children. Second, doing this kind of test without proper oversight suggests that officials greatly underestimated the potential for serious contamination of local water supplies and public harm. After the Camp Fire, together with the EPA, we estimated that some plastic pipes needed <a href="https://engineering.purdue.edu/PlumbingSafety/opinions/Final-HDPE-Service-Line-Decontamination-2019-03-18.pdf" target="_blank">more than 280 days</a> of flushing to make them safe again.</p>
Plastic pipes can be damaged by heat and fire contact. Andrew Whelton / Purdue University
Building Codes Could Make Areas Disaster-Ready<p>Our research underscores that community building codes are inadequate to prevent wildfire-caused pollution of drinking water and homes.</p><p>Installing one-way valves, called backflow prevention devices, at each water meter can prevent contamination rushing out of the damaged building from flowing into the larger buried pipe network.</p><p>Adopting codes that required builders to install fire-resistant meter boxes and place them farther from vegetation would help prevent infrastructure from burning so readily in wildfires. Concrete meter boxes and water meters with minimal plastic components would be less likely to ignite. Some plastics may be practically impossible to make safe again, since all types are susceptible to fire and heat.</p><p>Water main shutoff valves and water sampling taps should exist at every water meter box. Sample taps can help responders quickly determine water safety.</p>
<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="9540d7e271306ed417112042a3efc9a4"><iframe lazy-loadable="true" src="https://www.youtube.com/embed/GnlrzI1wdAI?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span>
The Smell Test Doesn’t Work<p>Under no circumstance should people be told to <a href="https://www.waterboards.ca.gov/press_room/press_releases/2018/pr122418_voc.pdf" target="_blank">smell the water</a> to determine its safety, as was recommended for months after the Camp Fire. Many chemicals have no odor when they are harmful. Only testing can determine safety.</p><p>Ordering people to boil their water will not make it safe if it contains toxic chemicals that enter the air. Boiling just transmits those substances into the air faster. "Do not use" orders can keep people safe until agencies can test the water. Before such advisories are lifted or modified, regulators should be required to carry out a full chemical screen of the water systems. Yet, <a href="https://doi.org/10.1002/aws2.1183" target="_blank">disaster</a> after <a href="https://pubs.rsc.org/en/content/articlehtml/2017/ew/c5ew00294j" target="_blank">disaster</a>, government agencies have failed to take this step.</p><p>Buildings should be tested to find contamination. <a href="https://www.purdue.edu/newsroom/releases/2020/Q1/study-your-homes-water-quality-could-vary-by-the-room-and-the-season.html" target="_blank">Home drinking water quality can differ from room to room</a>, so reliable testing should sample both cold and hot water at many locations within each building.</p><p>While infrastructure is being repaired, survivors need a safe water supply. Water treatment devices sold for home use, such as refrigerator and faucet water filters, are not approved for extremely contaminated water, although product sales representatives and government officials may <a href="https://undark.org/2019/09/19/camp-fire-california-drinking-water-carcinogens/" target="_blank">mistakenly think</a> the devices can be used for that purpose.</p><p>To avoid this kind of confusion, external technical experts should be called in assist local public health departments, which can quickly become overwhelmed after disasters.</p>
<div id="71cf9" class="rm-shortcode" data-rm-shortcode-id="e059d199e8368d282a31601e372e4dda"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1204068265980547075" data-partner="rebelmouse"><div style="margin:1em 0">The Los Angeles City Council's Planning and Land Use Committee signed off on an effort to expand the city's fire-re… https://t.co/fP8Z8mUq7R</div> — IntlCodeCouncil (@IntlCodeCouncil)<a href="https://twitter.com/IntlCodeCouncil/statuses/1204068265980547075">1575907219.0</a></blockquote></div>
Preparing for Future Fires<p>The damage that the Tubbs and Camp fires caused to local water systems was preventable. We believe that urban and rural communities, as well as state legislatures, should establish codes and lists of authorized construction materials for high-risk areas. They also should establish rapid methods to assess health, prepare for water testing and decontamination, and set aside emergency water supplies.</p><p>Wildfires are coming to urban areas. Protecting drinking water systems, buried underground or in buildings, is one thing communities can do to prepare for that reality.</p>
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By Zulfikar Abbany
"We don't have a definition of life," says Kevin Peter Hand, one early California morning when we speak via video. "We don't actually know what life is."