Dominion Resources' coal-fired power plant located in central Virginia beside the James River. Edbrown05 / CC BY-SA 2.5
Corporations that flouted environmental regulations and spewed pollutants into the air and dumped them into waterways will not be required to pay the fines they agreed to during the pandemic, according to The Guardian.
<p>The forbearance of payments totals $56 million from ten corporations for a variety of violations across the country, including polluting air and water in already vulnerable communities, like East Chicago, Indiana, according to legal proceedings.</p><p>The companies agreed to settlements with the U.S. government that forced them to pay fines without admitting liability. However, the U.S. Department of Justice advised most of the companies of extensions in letters that were obtained by the government watchdog group <a href="https://www.accountable.us/" target="_blank">Accountable.US</a> via public records requests, as <a href="https://www.theguardian.com/environment/2020/may/27/epa-corporation-environmental-fines-decision" target="_blank">The Guardian</a> reported.</p><p>The Department of Justice said the move is intended to "mitigate the financial impact" of the coronavirus. However, enforcement attorneys who have spent years targeting the companies expressed shock over the blanket policy, according to <a href="https://thehill.com/homenews/administration/493216-doj-lets-companies-skip-paying-penalties-during-pandemic" target="_blank">The Hill</a>.</p><p>"It's unprecedented in how broad it is," said Francis Lyons, a partner with Schiff Hardin LLP who previously worked on environmental enforcement issues at the Justice Department, to <a href="https://thehill.com/homenews/administration/493216-doj-lets-companies-skip-paying-penalties-during-pandemic" target="_blank">The Hill</a>. "I think this policy goes beyond what is necessary under the circumstances."</p>
<p>In one example that <a href="https://www.theguardian.com/environment/2020/may/27/epa-corporation-environmental-fines-decision" target="_blank">The Guardian</a> provided, KP Kauffman, a Denver-based oil and gas company, has spent $200,000 lobbying the <a href="http://www.ecowatch.com/tag/epa">EPA</a> in 2019 and 2020. It also hosted a meeting with oil executives and Donald <a href="http://www.ecowatch.com/tag/donald-trump">Trump</a> in 2016. Now, the company has stopped paying the fines it agreed to for allegedly violating air pollution laws when the company emitted smog-forming compounds in the Denver-Julesburg Basin, an area that wasn't meeting smog standards.</p><p>"This is exactly the time to make sure support is flowing to the federal, state and local governments that need a hand with responding to the coronavirus crisis and with the environmental problems that these special interests have caused," said Chris Saeger, director of strategic initiatives at Accountable.US, as <a href="https://www.theguardian.com/environment/2020/may/27/epa-corporation-environmental-fines-decision" target="_blank">The Guardian</a> reported.</p><p>"When we're facing a public health crisis that causes respiratory problems, this is a time to be holding companies to a higher standard of air quality, not a lower one."</p>
<p>Not surprisingly, a number of companies that do not have to pay the fines they agreed to are ones with deep ties to the Trump administration. Dominion Energy in Virginia agreed to pay for a coal ash impoundment that seeped pollutants into the groundwater along the James River. That company has several ties to the administration, including a former top EPA enforcement official and Attorney General William Barr, who leads the Department of Justice.</p><p>Similarly, ArcelorMittal, one of the world's largest steel companies, agreed to pay $5 million for polluting the air in Indiana and Ohio. Its CEO dined with Trump in Davos in January and was part of the president's roundtable in India in February. And Secretary of Commerce Wilbur Ross is a former employee of ArcelorMittal, as <a href="https://www.theguardian.com/environment/2020/may/27/epa-corporation-environmental-fines-decision" target="_blank">The Guardian</a> reported.</p><p>"This policy cuts off income to the federal government at a time when there's this massive spending by the federal government to keep the economy afloat, so you'd think they'd care about other funds coming in," said Joel Mintz, a former EPA enforcement attorney who later worked as a law professor at Nova Southeastern University in Florida, to <a href="https://thehill.com/homenews/administration/493216-doj-lets-companies-skip-paying-penalties-during-pandemic" target="_blank">The Hill</a>. "It kind of sends a message to these companies that you're letting them off the hook."</p>
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Energy Secretary Dan Brouillette says that Secretary Steven Mnuchin, pictured, worked with the Federal Reserve to bail out mid-size oil companies.
Two top administration officials, at the direction of President Trump, helped the Federal Reserve alter its lending program intended to bail out small businesses specifically to aid mid-size oil companies, Energy Secretary Dan Brouillette told Bloomberg TV this week.
<p>"Secretary Mnuchin worked very closely with the Federal Reserve ... and made that program available to what we refer to as mid-cap-sized companies," Brouillette said Tuesday. The Fed, which is legally prohibited from targeting specific sectors for relief, denied that it changed the emergency lending program in order to aid the oil sector. Oil and gas companies lobbied the Fed over the first weeks of the pandemic to ease eligibility requirements and use restrictions for the program, and the Fed altered its requirements in late April, a move praised by oil-state lawmakers and the oil and gas industry.</p>
<p><strong>For a deeper dive:</strong></p><p><em>Brouillette claims: <a href="https://www.bloomberg.com/amp/news/articles/2020-05-12/energy-chief-says-fed-was-asked-to-expand-lending-for-oil-firms?utm_campaign=Hot%20News&utm_source=hs_email&utm_medium=email&utm_content=87851446&_hsenc=p2ANqtz-8NmrI66CzajonN3JQNlAne8qxX2lcRj3Jtb7PUK0Xt-8eepJvd7qHlAP-_yfBQ80kRH5i67doW75pf_Rg_i1txI8l6Ib6fpZTUqPsFu1BXW9Ihfdo&_hsmi=87851446" target="_blank">Bloomberg</a>. April Fed program changes: <a href="https://www.washingtonpost.com/business/2020/04/30/main-street-loans-coronavirus/?utm_campaign=Hot%20News&utm_source=hs_email&utm_medium=email&utm_content=87851446&_hsenc=p2ANqtz-8NmrI66CzajonN3JQNlAne8qxX2lcRj3Jtb7PUK0Xt-8eepJvd7qHlAP-_yfBQ80kRH5i67doW75pf_Rg_i1txI8l6Ib6fpZTUqPsFu1BXW9Ihfdo&_hsmi=87851446" target="_blank">Washington Post</a>, <a href="https://stateimpact.npr.org/pennsylvania/2020/05/11/oil-and-gas-companies-asked-then-received-changes-to-fed-coronavirus-stimulus-program/?utm_campaign=Hot%20News&utm_source=hs_email&utm_medium=email&utm_content=87851446&_hsenc=p2ANqtz-8NmrI66CzajonN3JQNlAne8qxX2lcRj3Jtb7PUK0Xt-8eepJvd7qHlAP-_yfBQ80kRH5i67doW75pf_Rg_i1txI8l6Ib6fpZTUqPsFu1BXW9Ihfdo&_hsmi=87851446" target="_blank">NPR State Impact</a>, <a href="https://www.rollcall.com/2020/04/30/fed-change-allows-oil-companies-to-qualify-for-recovery-loans/?utm_campaign=Hot%20News&utm_source=hs_email&utm_medium=email&utm_content=87851446&_hsenc=p2ANqtz-8NmrI66CzajonN3JQNlAne8qxX2lcRj3Jtb7PUK0Xt-8eepJvd7qHlAP-_yfBQ80kRH5i67doW75pf_Rg_i1txI8l6Ib6fpZTUqPsFu1BXW9Ihfdo&_hsmi=87851446" target="_blank">Roll Call</a>, </em><a href="https://www.politico.com/news/2020/04/30/feds-expansion-of-lending-program-sparks-oil-bailout-worries-227545?utm_campaign=Hot%20News&utm_source=hs_email&utm_medium=email&utm_content=87851446&_hsenc=p2ANqtz-8NmrI66CzajonN3JQNlAne8qxX2lcRj3Jtb7PUK0Xt-8eepJvd7qHlAP-_yfBQ80kRH5i67doW75pf_Rg_i1txI8l6Ib6fpZTUqPsFu1BXW9Ihfdo&_hsmi=87851446" target="_blank"><em>Politico</em></a><a href="https://www.bloomberg.com/news/articles/2020-05-11/buffett-backed-solar-project-near-vegas-wins-trump-blessing?utm_campaign=Hot%20News&utm_source=hs_email&utm_medium=email&utm_content=87782018&_hsenc=p2ANqtz--TNVauhW3bvDHKpcc7GzS09_vXwDgTZ1ok8ohBT7dEKo4yo_-GOJeQxLtP5ZVk4pJVt4Y4QHQZWtAUpYbnAyjiPb-xVUTAkSMs9abNMrNgYCbQ_UM&_hsmi=87782018" target="_blank"></a></p><p class=""><em>For more </em><a href="http://ecowatch.com/climate-change-news/" target="_blank"><em>climate change</em></a><em> and </em><a href="http://ecowatch.com/business/renewables/" target="_blank"><em>clean energy</em></a><em> news, you can follow Climate Nexus on </em><a href="https://twitter.com/ClimateNexus" target="_blank"><em>Twitter</em></a><em> and </em><a href="https://www.facebook.com/ClimateNexus/" target="_blank"><em>Facebook</em></a><em>, and sign up for daily </em><a href="http://climatenexus.us4.list-manage1.com/subscribe?u=d1f5797e59060083034310930&id=7c84c08aaa" target="_blank"><em>Hot News</em></a><em>.</em></p>From Your Site Articles
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EcoWatch Daily Newsletter
By Jeremy Deaton, video by Bart Vandever
The 2010 BP oil spill dumped more than 200 million gallons of crude oil into the Gulf of Mexico, where it killed billions of fish. Had things gone as planned, that oil would have fueled cars and trucks, worsening climate change, which is going to kill billions of fish — and that was the best-case scenario. In short, oil is bad for sea life.
<p>Except sometimes it's not.</p><p>That's because the legs and bracings holding up oil platforms are the ideal setting for ocean reefs. Fish like to gather around the pylons, which are covered in mussels, barnacles and corals. Emily Hazelwood, who worked as a field technician after the BP oil spill, recalled learning about the reefs firsthand.</p>
<p>"BP had hired all the fishermen who lost their jobs to drive our boats," she said. "Every time we would go out with them, and we would pass one of the many oil platforms, they would say they couldn't wait to go out there fishing."</p><p>Experts say offshore oil will <a href="https://www.bloomberg.com/news/articles/2019-11-12/offshore-oil-to-peak-in-2020-then-join-shale-in-market-slowdown" target="_blank">peak this year</a> as prices fall, a trend <a href="https://fortune.com/2020/03/20/oil-slide-price-shock-demand-hit-opec-coronavirus/" target="_blank">exacerbated</a> by the coronavirus and the ongoing price war between Saudi Arabia and Russia. The slump is expected to send a growing number of rigs offline.</p>
<p>There is a real question as to what to do with the shuttered rigs, which can provide a safe home to ocean life. Oil platforms typically lie far from shore, so they are protected from the water pollution that empties into the ocean, Hazelwood said. They are safe from commercial fishing trawlers that gather up schools of fish out at sea.</p><p>"Stretching from sea floor to sea surface, these platforms can be as large as the Empire State Building, which provides a lot of real estate for marine life," Hazelwood said. "That richness of life on an oil platform is just so cool. I have never seen a group of fish like that before."</p>
<img lazy-loadable="true" src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzE2NzQ0OS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYwNzI5ODU4OX0.Fevmxtg8wssystdKM0porKSik-aLfx2xUjLHPUxuZQQ/img.png?width=980" id="edf6a" class="rm-shortcode" data-rm-shortcode-id="4bf306b9d793fcd992629b7f1234a94b" data-rm-shortcode-name="rebelmouse-image" />
A diver explores sea life on the Eureka oil rig off the coast of Long Beach, California. Blue Latitudes
<p>Hazelwood and her business partner Amber Sparks, co-founded consulting firm <a href="http://www.rig2reefexploration.org/team" target="_blank">Blue Latitudes</a>. Together, they work with oil companies to preserve the reefs that form on decommissioned oil platforms, lopping off the top while letting the rest of the structure stay in place. This process can save oil firms millions by sparing them the cost of tearing down an old rig.</p><p>Naturally, not everyone is wild about leaving the skeletons of oil platforms to rust in the ocean. In 2010, California <a href="https://www.ioes.ucla.edu/wp-content/uploads/RC-Rigs-to-Reef-Law-Fall2010.pdf" target="_blank">passed a controversial law</a> that would allow oil firms to convert old rigs into artificial reefs. Critics say it lets companies off the hook for cleanup by making the state liable for the remains of decommissioned oil platforms.</p><p>"The oil companies walk away. The state has to deal with this structure in the ocean forever, dealing with any safety issues, any pollution issues, any maintenance issues," said Linda Krop, chief counsel with the Environmental Defense Center in Santa Barbara, California.</p><img lazy-loadable="true" src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzE2NzQ1MC9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYwMTg4OTI4OX0.HR7BkA8MXTe3TnuvNDgeWH54iQ1BtST3shnMPlswIPk/img.png?width=980" id="8e6af" class="rm-shortcode" data-rm-shortcode-id="2ac4982120d288e03ade22aa5f50d8d0" data-rm-shortcode-name="rebelmouse-image" />
<p class=""><em>Reposted with permission from <a href="https://nexusmedianews.com/the-dazzling-ocean-reefs-hidden-beneath-oil-rigs-video-67cbd80a54cc" target="_blank">Nexus Media</a>.</em><em></em></p>Divers explore sea life on the Eureka oil rig off the coast of Long Beach, California. Blue Latitudes
<p>She said it's also unclear if the rigs-to-reef program has much value for sea creatures. If old oil platforms become hot spots for recreational fishing, that could leave reefs mostly barren of marine life.</p><p>"We don't know what benefit will arise from leaving a platform at sea. We want that studied. That's what the current law requires. But the proponents are trying to weaken that part of the law," she said.</p><p>Hazelwood and Sparks, for instance, have called for streamlining the rigs-to-reef program to make it easier for oil companies to convert old platforms into ocean habitats. They say that tearing down viable reefs just doesn't make sense.</p><p>"Most environmental groups, they want to go back to the way the world was 10,000 years ago. And who wouldn't? I mean, that would just be an unbelievable planet to live on," Hazelwood said. "But that's not necessarily the reality of our situation right now, so we advocate for finding that silver lining."</p>From Your Site Articles
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The dramatic price drop in oil was caused because more oil is being produced than can be stored. Here, a field operator inspects the pipelines at the Federal Strategic Petroleum Reserve near Beaumont, Texas on Sept. 21, 2000. Joe Raedle / Newsmakers
Oil prices turned negative for the first time in history Monday as energy demand plummets in the wake of the coronavirus pandemic.
The dramatic price drop, from $50 to around negative $30 for the lead U.S. oil benchmark, was caused because more oil is being produced than can be stored, so buyers had to pay traders to take their May supply, <a href="https://www.nytimes.com/2020/04/20/business/stock-market-live-trading-coronavirus.html?action=click&campaign_id=51&emc=edit_MBE_p_20200421&index=0&instance_id=17815&label=markets&module=Spotlight&nl=morning-briefing&pgtype=Homepage&regi_id=88631294&section=topNews&segment_id=25620&te=1&type=styln-live-updates&user_id=d8eb7cee9d3c5ab39515239b6ec54d19#link-401d9649" target="_blank">The New York Times explained</a>. This isn't entirely unexpected. The gap between demand and supply has been such that news outlets <a href="https://www.ecowatch.com/crude-oil-storage-facilities-2645609285.html?rebelltitem=1#rebelltitem1" target="_self">including EcoWatch</a> reported this could happen in early April. But for <a href="https://www.ecowatch.com/climate-change/" target="_self">climate</a> activists, the incident highlights the instability of <a href="https://www.ecowatch.com/tag/fossil-fuels" target="_self">fossil fuels</a> as an energy source.
<p>"We are experiencing an unparalleled upending in our economies," <a href="https://350.org/" target="_blank">350.org</a>'s associate director of Fossil Finance Campaigns Brett Fleishman said in <a href="https://350.org/press-release/350-org-responds-to-oil-prices-falling-below-zero-for-the-first-time-in-the-us/" target="_blank">a statement</a>. "And it is time for the fossil fuel industry to recognize that, from now on, the cheapest and best place to store oil is in the ground."</p>
<div id="6010f" class="rm-shortcode" data-rm-shortcode-id="8c1e2e05c6d94a43ac0062e9e0a3d42d"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1252331558863699974" data-partner="rebelmouse"><div style="margin:1em 0">"We are experiencing an unparalleled upending in our economies. And it is time for the fossil fuel industry to reco… https://t.co/2QnjELi9tM</div> — 350 dot org (@350 dot org)<a href="https://twitter.com/350/statuses/1252331558863699974">1587414085.0</a></blockquote></div>
<p>But it is uncertain what this dip in prices will mean both for fossil fuels and <a href="https://www.ecowatch.com/renewable-energy/" target="_self">renewable energy</a> going forward. The New York Times explained that Monday's price fall was partly because of how oil is traded. Future contracts for May expired Tuesday, which means buyers would have had to take possession of any oil purchased for the month despite a lack of storage space.</p><p>"The May crude oil contract is going out not with a whimper, but a primal scream," Pulitzer Prize-winning oil historian and vice chairman of IHS Markit Ltd Daniel Yergin told <a href="https://www.latimes.com/business/story/2020-04-20/oil-prices-plunge-below-zero-wti-may-contract" target="_blank">the Los Angeles Times</a>.</p><p>But contracts for June closed at a relatively normal price of $20.43 per barrel, and it is hard to know what the coronavirus-induced oil crisis will mean for the renewable energy transition once lockdown orders are lifted. Oil demand has fallen by almost a third compared to April of last year, according to <a href="https://www.iea.org/" target="_blank">International Energy Agency</a> figures reported by <a href="https://time.com/5824263/coronavirus-negative-oil-prices-consolidation/" target="_blank">TIME</a>, and coal-fired electricity generation in the U.S. is at an all-time low, the Los Angeles Times reported. Carbon dioxide emissions are also down, but could ramp up again when the economy reopens.</p>
<p>Whether the recovery is based on fossil fuels or clean energy will depend on political decisions, energy researcher Alex Gilbert, a fellow at the Payne Institute at the Colorado School of Mines, told the Los Angeles Times.</p><p>"The big question with clean energy is probably what happens on the policy side," he said. "How much do China, the U.S. and the European Union pursue clean energy technologies as a stimulus method?"</p><p>Jason Bordoff, founding director of Columbia University's Center on Global Energy Policy, cautioned that oil demand could bounce back if people are afraid of taking public transportation following the pandemic.</p>
<p>"I live in New York City," Bordoff told the Los Angeles Times. "I think a lot more people will want to take personal cars if they have them, or even Ubers, before they get back in the subway again. When economies are struggling and people are struggling, environmental ambition in government policy wanes."</p><p>But some analysts think the oil industry will never be the same and that the world will never use as much oil as it did last year, as TIME reported. Many smaller companies will likely go out of business, and the larger companies will have less political power and feel more pressure to respond to the climate crisis.</p><p>In this view, the coronavirus has only accelerated a reckoning for an industry whose product is a key source of global warming. Even last year, energy performed the worst of any sector on the S&P 500 stock index.</p><p>"The basic model is in pieces, it's fallen apart," director of finance at the Institute for Energy Economics and Financial Analysis (IEEFA) Tom Sanzillo told TIME. "This is an industry in last place."</p>
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The Baytown Exxon gas refinery, Baytown, Texas is one of the largest oil-producing facilities in the U.S. Benjamin Lowy / Reportage by Getty Images
Oil-producing nations led by Russia, the U.S. and Saudi Arabia reached an unprecedented agreement on Sunday to cut oil production by 9.7 million barrels per day, or nearly 10 percent of what is currently produced, as The New York Times reported.
<p>Since the COVID-19 pandemic has triggered lockdowns around the world, the demand for oil has plummeted nearly 35 percent, causing huge surpluses in oil supply and deep drops in the price of crude oil, which fell to 18-year lows. The new agreement to slash oil production starting in May is twice the size of the cuts agreed to during the global financial crisis 12 years ago and signals a truce in a growing price war between Russia and OPEC's de facto leader, Saudi Arabia, according to <a href="https://www.theguardian.com/business/2020/apr/12/major-oil-producing-nations-agree-historic-10-cut-in-output" target="_blank">The Guardian</a>.</p>
<p>The alliance, called OPEC+, includes OPEC members as well as non-members like Russia and Mexico, but not the U.S. The deal was struck after marathon negotiations and concessions made to Mexico, which held up the deal. Mexico opposed the amount it was being asked to cut, but finally agreed to cut 100,000 barrels per day, instead of its initial allocation of 400,000 barrels per day, according to <a href="https://www.nbcnews.com/business/energy/opec-allies-agree-historic-oil-production-cut-n1182381" target="_blank">NBC News</a>.</p>
<p>The deal means oil producers will drop their production in May and June and then steadily increase it again until the deal expires in two years. That also means that most Americans will actually see the price of gasoline go up, leaving some to wonder why a U.S. president would broker a deal that will make Americans pay more at the pump, according to <a href="https://www.politico.com/news/2020/04/13/trump-crude-problem-america-oil-jobs-184374" target="_blank">POLITICO</a>. It seems Trump was spurred by the U.S. shale oil industry, which asked for help after oil prices dropped to an 18-year low. The industry has been amongst his most loyal supporters.</p><p>"Does it save shale? Not necessarily," said Randolph Bell, director of the Atlantic Council's Global Energy Center, as <a href="https://www.politico.com/news/2020/04/13/trump-crude-problem-america-oil-jobs-184374" target="_blank">POLITICO</a> reported. "But it's a really good thing for his politics domestically."</p>
<p>"Unprecedented measures for unprecedented times," Ed Morse, Citi's global head of commodities, wrote in a note to clients on Sunday, as <a href="https://www.nbcnews.com/business/energy/opec-allies-agree-historic-oil-production-cut-n1182381" target="_blank">NBC News</a> reported. Morse added in his note that the cut will have a significant impact in the second half of the year and influence prices up to the mid-$40s by year-end.</p><p>The price hike seems counterintuitive for Trump who <a href="https://twitter.com/realdonaldtrump/status/1237024549046288385" target="_blank">tweeted that</a> on March 9 it was good for consumers that gasoline prices were going down. Three days later, he told reporters, "Frankly that's like a big tax cut, not a little tax cut for the consumer. So there's something about that that I like," as <a href="https://www.bloomberg.com/news/articles/2020-03-12/trump-likens-cheap-gasoline-brought-on-by-oil-crash-to-a-tax-cut?sref=yLCixKPR" target="_blank">Bloomberg</a> reported. On March 30, he reversed course, telling Fox news, "I never thought I would be saying this: Maybe we have to have an oil increase," as <a href="https://www.axios.com/coronavirus-trump-cheap-oil-77e97c16-b1e9-44e0-8ce7-5bb2e723c904.html" target="_blank">Axios</a> reported.</p>
<p>On <a href="https://twitter.com/paulkrugman/status/1249694542413975557" target="_blank">Twitter</a>, Nobel Prize-winning economist Paul Krugman questioned why Trump would help the oil industry but not postal workers. Krugman speculates that it is because the oil and gas industry gave 88 percent of its contributions to Republicans while the postal service only gave 12 percent to Republicans. Furthermore, Krugman noted that Trump has shown affinity for the autocrats who run Russia and Saudi Arabia.</p>
<p>On Friday, the world's 20 largest economies held a separate G-20 virtual meeting to discuss the world's oil markets, raising speculation that even more cuts to production may be on the horizon. That meeting, which included countries like Canada, which produce oil but are not in OPEC+, ended without any new commitments, as <a href="https://www.npr.org/2020/04/12/831261657/as-demand-for-oil-dries-up-opec-and-allies-agree-to-historic-cuts-in-output" target="_blank">NPR</a> reported.</p><p>OPEC+ has asked non-member nations like Brazil, Canada, Norway and the U.S. to join the deal. If that happens, it could mean a cut in 20 million barrels of oil per day, according to <a href="https://www.theguardian.com/business/2020/apr/12/major-oil-producing-nations-agree-historic-10-cut-in-output" target="_blank">The Guardian</a>.</p><p>One caveat to the deal is there is not actually an international enforcement agency that regulates oil production. Even though a deal has been reached, cheating on oil production limits is common, according to <a href="https://www.nytimes.com/2020/04/12/business/energy-environment/opec-russia-saudi-arabia-oil-coronavirus.html" target="_blank">The New York Times</a>.</p><p>Many analysts were underwhelmed by the deal.</p><p>"The OPEC+ deal, although well-meaning in intent, wholeheartedly fail[s] to address the supply/demand basis confronting the world," said Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, as <a href="https://www.cnn.com/2020/04/12/energy/opec-deal-production-cut/index.html" target="_blank">CNN</a> reported. "It can at best only put a floor under oil prices at their March lows."</p>
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Crews battle the blazing remnants of the offshore oil rig Deepwater Horizon in the Gulf of Mexico on April 21, 2010 near New Orleans, Louisiana. U.S. Coast Guard / Getty Images
By Donald Boesch
Ten years ago, on April 20, 2010, the BP Deepwater Horizon oil rig exploded, killing 11 crew members and starting the largest ocean oil spill in history. Over the next three months, between 4 million and 5 million barrels of oil spewed into the Gulf of Mexico.
<p>I was a member of the <a href="https://www.govinfo.gov/content/pkg/GPO-OILCOMMISSION/pdf/GPO-OILCOMMISSION.pdf" target="_blank">oil spill commission</a> appointed by President Obama to investigate the causes of the disaster. Later, I served as a courtroom witness for the government on the effects of the spill. While scientists now know more about these effects, risks of deepwater blowouts remain, and the energy industry and government responders still have only very limited ability to control where the oil goes once it's released from the well.</p><p>The spill commission found that <a href="https://www.govinfo.gov/app/details/GPO-OILCOMMISSION" target="_blank">multiple identifiable mistakes caused the blowout</a>. Our report cast doubt over how safety was addressed across the offshore oil industry and the government's ability to regulate it.</p><p>As the oil spill commission's report showed, drilling ever deeper into the Gulf involved risks for which neither industry nor government was adequately prepared. The industry had felt so sure that a blowout would not happen that it lacked the capacity to contain it. Neither BP nor the government could do much to control or clean up the spill.</p>
Safety improvements are threatened
<p>The presidential commission recommended numerous reforms to reduce the risks and environmental damages from offshore oil and gas development. The industry developed <a href="https://www.noia.org/offshore-energy/safety/response-containment-systems/" target="_blank">systems to contain blowouts</a> in deep water and has deployed them worldwide. Improvements in operational safety were made within companies and <a href="https://www.centerforoffshoresafety.org/" target="_blank">across the industry</a>.</p><p>The Department of the Interior acted quickly to reorganize its units. It created a <a href="https://www.bsee.gov/who-we-are/about-us" target="_blank">Bureau of Safety and Environmental Enforcement</a> to avoid conflicts of interests with its leasing, development and revenue collection responsibilities. After four years in development, the bureau issued <a href="https://www.federalregister.gov/documents/2016/04/29/2016-08921/oil-and-gas-and-sulfur-operations-in-the-outer-continental-shelf-blowout-preventer-systems-and-well" target="_blank">new well control rules</a> in 2016 governing drilling safety.</p><p>But despite progress on a number of fronts, Congress has not enacted legislation to improve safety or even raise energy companies' ridiculously low liability limits for oil spills – currently just <a href="https://www.boem.gov/newsroom/press-releases/boem-adjusts-limit-liability-oil-spills-offshore-facilities" target="_blank">US$134 million</a> for offshore facilities like the Deepwater Horizon. The Trump administration has <a href="https://www.doi.gov/pressreleases/bsee-finalizes-improved-blowout-preventer-and-well-control-regulations" target="_blank">reversed or relaxed safety reforms</a>. It has loosened the safe pressure margins allowed in a well, dispensed with independent inspections of blowout protectors and removed requirements for continuous onshore monitoring of offshore drilling.</p><span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="6213b6d12749022223a9d737e4f84404"><iframe lazy-loadable="true" src="https://www.youtube.com/embed/esliY9Miej0?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span>
<p>Some of these changes were <a href="https://thehill.com/policy/energy-environment/484837-political-appointees-urged-rollback-of-deepwater-horizon-inspired" target="_blank">ordered by political appointees</a> over the recommendations of the safety bureau's technical experts. While the bureau is charged with focusing singularly on <a href="https://www.bsee.gov/who-we-are/about-us" target="_blank">safety and the environment</a>, its director, <a href="https://www.bsee.gov/who-we-are/our-organization/leadership/director" target="_blank">Scott Angelle</a>, has been a <a href="https://money.cnn.com/2018/01/05/investing/offshore-oil-drilling-safety-trump-bsee/index.html" target="_blank">prominent proponent</a> of the administration's aggressive <a href="https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-unleashing-american-energy-dominance/" target="_blank">"energy dominance"</a> strategy, ordering expanded oil production and elimination of costly regulations. Imagine the message this sends about priorities to people in government and industry who are responsible for ensuring safety.</p>
Where contamination lingers
<p>Before the Deepwater Horizon disaster, the deep Gulf of Mexico ecosystem was egregiously understudied in all respects, while a <a href="https://www.boem.gov/sites/default/files/oil-and-gas-energy-program/Leasing/Five-Year-Program/2019-2024/DPP/NP-Economic-Benefits.pdf" target="_blank">multi-billion-dollar industry</a> intruded into it. Now scientists know much more about what happens when large quantities of oil and gas are released in a seafloor blowout.</p><p>Scientists learned much about the effects of the spill through monitoring the blowout, assessing damages to natural resources and investigating the fate and effects of escaping oil. More has been spent on these studies and more results published than for any previous oil spill.</p><p>A substantial portion of oil released from the mile-deep well was entrained in a plume of droplets spreading out 3,000 feet below the Gulf's surface. Footprints of contamination and effects extended <a href="http://dx.doi.org/10.1126/sciadv.aaw8863" target="_blank">far beyond the area where oil slicks were observed</a>.</p>NASA | Satellites View Growing Gulf Oil Spill
<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="e0ae67b051718ba3863e543b577e9716"><iframe lazy-loadable="true" src="https://www.youtube.com/embed/mCWW5xt3Hc8?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p>Nearly all of the oil released has since degraded. Populations of most affected organisms have recovered. But contamination lingers in sediments in the deep Gulf, and in some marshes and beaches where oil came ashore. Populations of <a href="https://www.gulfspillrestoration.noaa.gov/sites/default/files/wp-content/uploads/Chapter-4_Injury_to_Natural_Resources_508.pdf" target="_blank">long-lived animals the oil killed </a> might not recover for decades. These include sea turtles, bottlenose dolphins, seabirds and <a href="https://theconversation.com/deepwater-corals-thrive-at-the-bottom-of-the-ocean-but-cant-escape-human-impacts-104211" target="_blank">deepwater corals</a>.</p><p>And yet, as scientists synthesize results from this <a href="https://gulfresearchinitiative.org/" target="_blank">10-year research initiative</a>, very little practical advice is emerging about what can be done to respond more effectively to future blowouts from ever-deeper drilling in the Gulf.</p><p>Surely, we can more rapidly contain blowouts. The effectiveness of injecting chemical dispersants into the plume gushing from the well <a href="https://link.springer.com/chapter/10.1007/978-3-030-12963-7_29" target="_blank">remains in debate</a>. How much oil do dispersants keep from reaching the surface, where it threatens those working to stanch the blowout, as well as birds, sea turtles and coastal ecosystems? But the research has not revealed more effective approaches in controlling released oil.</p>Safety first is the big lesson
<p>As I see it, the essential lesson from Deepwater Horizon is that industry and government should be putting their greatest energies into preventing operational accidents, blowouts and releases. Yet the Trump administration emphasizes <a href="https://theconversation.com/trumps-offshore-oil-drilling-plans-ignore-the-lessons-of-bp-deepwater-horizon-89570" target="_blank">increasing production and reducing regulations</a>. This undermines safety improvements made over the past 10 years.</p><p>Furthermore, the price of crude oil – already low because of high fracked oil production in the U.S. – has <a href="https://theconversation.com/the-oil-shock-of-2020-appears-to-be-here-and-the-pain-could-be-wide-and-deep-133293" target="_blank">declined drastically</a> since the beginning of 2020. Saudi and Russian oil had already glutted the market when the coronavirus pandemic reduced oil consumption.</p><p>
The federal government's March 2020 oil and gas lease sale for the Gulf of Mexico yielded the lowest response in four years –
<a href="https://www.oedigital.com/news/476766-u-s-offshore-oil-lease-sale-weakest-since-2016" target="_blank">$93 million in high bids</a>, compared to $159 million in the previous round. To prop up the industry and maintain production, the Trump administration is seeking to <a href="https://www.spglobal.com/platts/en/market-insights/latest-news/oil/032020-interior-considers-lowering-us-federal-royalty-rates-for-next-gulf-lease-sale-sources" target="_blank">lower royalty rates</a> and store excess production in the <a href="https://thehill.com/policy/energy-environment/491111-oil-giants-meet-at-white-house-amid-talk-of-buying-strategic" target="_blank">Strategic Petroleum Reserve</a>.
</p><p>
But as industry acts to cut its expenditures and downsize staff, will safety costs be a priority?
</p><p>
National energy policy was beyond the charge of the 2010 commission, but 10 years later, it is impossible to consider the future of offshore oil and gas without factoring in the need to
<a href="https://www.agu.org/Share-and-Advocate/Share/Policymakers/Position-Statements/Position_Climate" target="_blank">eliminate net greenhouse gas emission within 30 years</a> to limit climate change. Why would the United States consider expanding offshore exploration and drilling that might yield fossil fuels only 20 years from now?
</p><p>
Even in the historically developed Gulf of Mexico, rather than just "drill, baby, drill," I believe the U.S. should be developing a realistic transition plan for phasing out offshore fossil fuel production. Such a strategy should encompass not only ensuring high standards for safety and industry responsibility for abandoned infrastructure during the drawdown, but also an economic evolution for the region, including opportunities for carbon sequestration and renewable energy production. We need to ensure that there will be a vibrant and productive Gulf long after we cease removing its oil.
</p>
<p class=""><em>Donald Boesch is a Professor of Marine Science, University of Maryland Center for Environmental Science.<br/></em></p><p><em>Disclosure Statement: </em><em>Donald Boesch served on the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, a bipartisan presidential commission that operated in 2010-2011. He also served as an expert witness for the U.S. government in its lawsuit against BP for natural resource damages as a result of the spill.</em></p><p><em>Reposted with permission from <a href="https://theconversation.com/a-decade-after-the-deepwater-horizon-explosion-offshore-drilling-is-still-unsafe-132846" target="_blank">The Conversation</a>.</em></p><p>
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An aerial view of a crude oil storage facility of Caspian Pipeline Consortium (CPC) in the Krasnodar Territory. Vitaly Timkiv / TASS / Getty Images
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.
<p>It means that storage space for crude is starting to run out, both onshore and offshore, <a href="https://www.cnbc.com/2020/04/01/coronavirus-oil-prices-could-turn-negative-as-storage-nears-capacity.html" target="_blank">according to CNBC</a>.</p>
<p>As <a href="https://www.cnn.com/2020/04/01/business/oil-prices-crash-storage-space/index.html" target="_blank">CNN reported</a>, 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, <a href="https://finance.yahoo.com/news/why-crude-oil-prices-go-negative-185323993.html" target="_blank">according to Yahoo! Finance</a>. In fact, in Canada, an entire barrel of crude oil is less expensive than a $5 pint of beer, <a href="https://www.cnbc.com/2020/03/30/a-barrel-of-oil-is-now-cheaper-than-a-pint-of-beer-in-canada.html" target="_blank">according to another story from CNBC</a>. A barrel of Western Canada Select oil was listed as $4.18 earlier this week.</p><p>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, <a href="https://www.theguardian.com/business/2020/mar/30/oil-rig-closures-rising-as-prices-hit-18-year-lows-due-to-coronavirus" target="_blank">according to The Guardian</a>.</p><p>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.</p><p>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.</p>
<p>"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.</p><p>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.</p><p>"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.</p><p>"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, <a href="https://finance.yahoo.com/news/why-crude-oil-prices-go-negative-185323993.html" target="_blank">explained to Yahoo! Finance</a>. "You can't flow away stored crude oil."</p><p>Since it is more expensive to store than to sell, that could make the price go negative.</p>
<p>"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 <a href="https://www.cnbc.com/2020/04/01/coronavirus-oil-prices-could-turn-negative-as-storage-nears-capacity.html" target="_blank">CNBC</a>. "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."</p><p>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.</p><p>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, <a href="https://www.reuters.com/article/us-global-oil-research-goldman/coronavirus-crisis-a-game-changer-for-oil-sector-goldman-sachs-idUSKBN21H197" target="_blank">according to Reuters</a>.</p>
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A sign marks the ground covering TransCanada's Keystone I pipeline outside of Steele City, Nebraska on April 21, 2012. Lucas Oleniuk / Toronto Star via Getty Images
The company behind the controversial and long-delayed Keystone XL pipeline announced it would proceed with the project Tuesday, despite concerns about the climate impacts of the pipeline and the dangers of transporting construction crews during a pandemic.
<p>Pipeline owner TC Energy Corp. also announced that Alberta's government had invested around $1.1 billion to cover most construction costs through the end of 2020, <a href="https://www.cbc.ca/news/canada/calgary/tc-energy-keystone-xl-pipeline-1.5515850" target="_blank">CBC News reported</a>. The completed 1,210 mile pipeline will have the capacity to transport 830,000 barrels of oil a day from Hardisty, Alberta to Steele City, Nebraska, where it will connect to pipelines traveling to Gulf Coast refineries, <a href="https://www.tcenergy.com/announcements/2020-03-31tc-energy-to-build-keystone-xl-pipeline/?utm_source=email&utm_medium=marketingcloud&utm_campaign=&utm_content=&utm_term=" target="_blank">TC Energy said</a>. Construction along the pipeline route in Alberta, at the U.S. and Canadian border and in the states of Montana, South Dakota and Nebraska will begin immediately, CBC News reported.</p>
<p>"This is a shameful new low," <a href="https://www.sierraclub.org/dirty-fuels" target="_blank">Sierra Club's Beyond Dirty Fuels</a> campaign associate director Catherine Collentine said in a statement reported by <a href="https://thehill.com/policy/energy-environment/490419-controversial-keystone-xl-pipeline-construction-to-proceed" target="_blank">The Hill</a>. "By barreling forward with construction during a global pandemic, TC Energy is putting already vulnerable communities at even greater risk."</p><p>The pipeline has long faced opposition from environmentalists who say it promotes the use of especially dirty <a href="https://www.ecowatch.com/tag/tar-sands" target="_self">tar sands</a> oil in a time of climate crisis, and <a href="https://www.ecowatch.com/tag/indigenous" target="_self">indigenous</a> and local communities who oppose its construction on their land.</p>
<p>Following nationwide protests, President Barack Obama <a href="https://www.ecowatch.com/breaking-president-obama-rejects-keystone-xl-pipeline-1882117930.html" target="_self">blocked construction in 2015</a>, but President <a href="https://www.ecowatch.com/tag/donald-trump" target="_self">Donald Trump</a> <a href="https://www.ecowatch.com/trump-keystone-xl-2633379906.html" target="_self">reversed that decision</a> when he took office. The Nebraska Supreme Court smoothed one regulatory hurdle when it <a href="https://www.ecowatch.com/keystone-xl-pipeline-approved-2640036828.html" target="_self">approved an alternative route</a> for the pipeline in 2019 despite the opposition of landowners and Native American tribes, but, according to CBC News, a hearing in another case against the pipeline will take place in Montana April 16.</p>
<p>The timing of TC Energy's announcement has spawned a new line of opposition, however — communities along the pipeline route who are concerned that construction crews could spread the new <a href="https://www.ecowatch.com/tag/coronavirus" target="_self">coronavirus</a>.<br></p><p>Even before TC Energy's announcement, the group <a href="http://boldnebraska.org/" target="_blank">Bold Nebraska</a> <a href="https://actionnetwork.org/petitions/cancel-kxl-halt-all-keystone-xl-construction-due-to-public-health-emergency/" target="_blank">launched an online petition</a> calling on the company to cancel all construction in Montana, South Dakota and Nebraska while the outbreak lasts.</p><p>"Our rural communities are strained as it is for medical supplies and hospital beds amid a global pandemic. TC energy must put an end to any construction in our small towns as the pandemic grows across our country," the group's founder Jane Kleeb told <a href="https://www.npr.org/2020/03/31/824445928/builder-of-controversial-keystone-xl-pipeline-says-its-moving-forward?t=1585728249044" target="_blank">NPR</a>.</p><p>TC Energy, meanwhile, argued that it could keep workers and communities safe and keep building.</p><p>"During construction, we will continue to take guidance from all levels of government and health authorities to determine the most proactive and responsible actions in order to ensure the safety of our crews and community members during the current COVID-19 situation. Construction will advance only after every consideration for the health and safety of our people, their families and of those in the surrounding communities has been taken into account," TC Energy President and CEO Russ Girling said in a statement.</p>
<p>The Alberta government, which is backing the project both with an initial investment and a $4.2 billion loan, said the project would generate more than 1,400 direct and 5,400 indirect jobs and would bring in $30 billion to the governments of Alberta and Canada, according to CBC.</p><p>"We cannot wait for the end of the pandemic and the global recession to act. There are steps we must make now to build our future focused on jobs, the economy and pipelines," Alberta Premier Jason Kenney said, according to NPR.</p><p>But Kleeb argued to NPR that the project was not such a sure bet, noting that if a Democrat wins the 2020 U.S. presidential election, the pipeline may well be vetoed again.</p><p>Keith Stewart, a senior energy strategist with <a href="https://www.greenpeace.org/canada/en/" target="_blank">Greenpeace Canada</a>, also questioned the wisdom of Kenney's investment.</p><p>"He may want voters to believe that boom times are just around the corner, but even before COVID-19, global investors and central bankers were warning that the smart money is moving out of <a href="https://www.ecowatch.com/tag/fossil-fuels" target="_self">fossil fuels</a>," he told CBC News.</p>
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Looking across the Houston Ship Canal at the ExxonMobil Refinery, Baytown, Texas. Roy Luck, CC BY 2.0
By Nick Cunningham
A growing number of refineries around the world are either curtailing operations or shutting down entirely as the oil market collapses.
<p><br/></p><p>Oil prices have fallen precipitously to their lowest levels in nearly two decades. Typically, falling oil prices are a good thing for refiners because they buy crude oil on the cheap and process it into gasoline, jet fuel, and diesel, selling those products at higher prices. The end consumer also tends to consume more when fuel is less expensive. As a result, the profit margin for refiners tends to widen when crude oil becomes oversupplied.</p>
<p>But the world is in the midst of dual supply and demand shock — too much drilling has produced a substantial surplus, and the global coronavirus pandemic has led to a historic drop in consumption. Oil demand could fall by as much as <a href="https://www.reuters.com/article/us-global-oil-iea/iea-says-global-oil-demand-could-drop-20-as-3-billion-people-in-lockdown-idUSKBN21D2V5" target="_blank">20 percent</a>, according to the International Energy Agency, by far the largest decline in consumption ever recorded.</p><p>Consumption of jet fuel around the world has <a href="https://www.bloomberg.com/news/articles/2020-03-29/the-global-oil-market-is-broken-drowning-in-crude-nobody-needs" target="_blank">plunged</a> by 75 percent. Average retail gasoline prices in the U.S. are dropping below $2 per gallon nationwide and have already fallen <a href="https://www.bloomberg.com/news/articles/2020-03-23/-1-gasoline-is-here-and-it-s-a-terrible-sign-for-the-economy?sref=qm26bHqj" target="_blank">below $1 per gallon</a> in some places. They will fall further still.</p>
<div id="2854d" class="rm-shortcode" data-rm-shortcode-id="e3aa43540e046fa3093ee27e1cf0a1c6"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1244700942026584064" data-partner="rebelmouse"><div style="margin:1em 0">"If oil continues to sell at such a low price, some of those companies are going to have severe financial issues tr… https://t.co/hHNTRFJ7uc</div> — KENS 5 (@KENS 5)<a href="https://twitter.com/KENS5/statuses/1244700942026584064">1585594804.0</a></blockquote></div>
<p>In fact, margins even fell into negative territory, meaning that the average refiner was losing money on every gallon of gasoline produced. Refiners now find themselves facing a painful financial squeeze.</p><p>"We're seeing gasoline cracks at negative margins. We're seeing jet cracks even worse," Brian Mandell, an executive with Phillips 66, said on a <a href="https://s22.q4cdn.com/128149789/files/events/2020/Phillips-66-Business-Update-Transcript_03.24.20.pdf" target="_blank">March 24 phone call</a> with investors. "Cracks" refer to the difference between the cost of buying crude oil and selling the refined product, and it stands in as a reference point for a refiner's profit margin.</p><p>One of the main strategies that refiners use when a particular product is oversupplied is to alter their processing mix. Facing a glut of gasoline, refiners could switch their operations away from gasoline to a focus on diesel, where margins have not declined by nearly as much. "With strong price signals pushing refiners towards diesel production, they would have made immediate adjustments to tweak their refined product yields," RBN Energy, a consultancy, wrote in a report.</p><p>However, some refiners already switched over to diesel following tighter international sulfur regulations on maritime fuels that took effect at the start of this year, which placed a premium on low-sulfur diesel. Having already tapped that strategy, the ability to adjust away from gasoline production is "likely limited," RBN concluded.</p>
<h3>Collapsing Demand Leads to Refinery Closures</h3><p>There are around <a href="https://www.weforum.org/agenda/2020/03/todays-coronavirus-updates/" target="_blank">3 billion</a> people on some form of a lockdown around the world. In those circumstances, refiners have seen buyers vanish overnight.</p><p>"We're seeing even our Latin American customers asking us if they can back out of cargoes now, so we see that the demand destruction is starting to move toward Latin America," Brian Mandell, the Phillips 66 executive, told investors.</p><p>With no buyers, gasoline is set to pile up in storage. Refiners are looking at no other choice but to curtail or shut down operations.</p><p>Valero Energy, for instance, recently announced that it would <a href="https://seekingalpha.com/news/3555549-valero-cuts-runs-in-least-half-of-u-s-refineries-bloomberg" target="_blank">limit output</a> at six of its 12 U.S. refineries. ExxonMobil announced significant cuts to its refineries in Texas and Louisiana, citing the lack of sufficient storage capacity. Notably, Exxon said it would shut down its gasoline unit at its Baytown, Texas, complex, the company's largest such unit in the United States.</p><p>"The refiners are struggling mightily, due to the steep drop in demand," John Kilduff, a partner at Again Capital LLC, told <a href="https://www.bloomberg.com/news/articles/2020-03-23/oil-refiners-cutting-back-with-demand-wipeout-crushing-profits" target="_blank">Bloomberg</a>. "The poor refining margins will push companies to reduce operating rates further."</p><p>The danger for some refineries is that they cannot simply throttle back and operate at really low levels. "In our experience, crude throughput in the 60 percent to 70 percent range is approaching the minimum rates that a refinery can operate without completely shutting down units," RBN said.</p><p>According to Phillips 66, even that threshold might be optimistic. "I don't think a good rule of thumb would be down in the 60 percent range for refiners. Most refineries can't turn down that far," Robert Herman, an executive with Phillips 66, said on an investor call. With refiners already lowering processing, "we're nearing kind of minimum crude rates in many of our refineries today," he added.</p><p>In other words, facing a mounting glut and no ability to lower output further, some refineries may simply need to shut down entirely.</p>
<div id="38814" class="rm-shortcode" data-rm-shortcode-id="2ae004f649ea64af5ea78d59fa319bcf"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1244594983103082498" data-partner="rebelmouse"><div style="margin:1em 0">We are now witnessing oil refiners not just cutting runs, but in some markets they are completely shutting down.… https://t.co/0ndZjNMUHE</div> — Javier Blas (@Javier Blas)<a href="https://twitter.com/JavierBlas/statuses/1244594983103082498">1585569542.0</a></blockquote></div>
<p>The problem is a global one. Italy's API became the first European refiner to <a href="https://www.reuters.com/article/us-health-coronavirus-oil-refineries/global-oil-refiners-to-deepen-output-cuts-as-coronavirus-destroys-demand-idUSKBN21D19K" target="_blank">shutter a facility</a>. On March 30, North Atlantic Refining Ltd. announced the <a href="https://www.reuters.com/article/us-refinery-operations-come-by-chance/come-by-chance-becomes-first-north-american-refinery-to-close-on-coronavirus-concerns-idUSKBN21H27F" target="_blank">first refinery</a> to shut down in North America.<br></p><p>In one particularly unusual move, India's Reliance Industries said it would simply sell the crude oil that it had in transit at sea, rather than allowing the cargo to arrive at its refineries. Reliance, which operates the world's largest refining complex, said it would instead cut processing rates. "As of now, the plan is to cut refining throughput in April because demand is not there," a source told <a href="https://www.reuters.com/article/health-coronavirus-india-reliance/rpt-exclusive-indias-reliance-seeks-to-sell-mideast-crude-cargoes-in-rare-move-idUSL4N2BN0P5" target="_blank">Reuters</a>.</p><p>In the U.S., refineries unable to switch away from gasoline are most at risk, as are those in the Midwest and the Rockies, where access to <a href="http://www.ecowatch.com/tag/pipelines">pipelines</a> and storage capacity is a fraction of that on the Gulf Coast, according to RBN.</p><p>"It is not difficult to see run cuts of 10 mmb/d (million barrels per day) soon, perhaps peaking at 15-20 mmb/d at the height of the pandemic. This is likely to force some refineries to close down, while others will reduce rates severely," research firm FGE <a href="https://www.reuters.com/article/us-refinery-operations-come-by-chance/come-by-chance-becomes-first-north-american-refinery-to-close-on-coronavirus-concerns-idUSKBN21H27F" target="_blank">said</a> in a report on March 30.</p>
<h3>Running out of Storage, Oil Prices to Crash Further</h3><p>The situation could unravel rather quickly. Consumers aren't consuming and refiners are lowering their operations. Ultimately, that means that oil drillers will have no place to sell their oil.</p><p>A number of pipeline companies have already <a href="https://www.bloomberg.com/news/articles/2020-03-28/pipelines-ask-u-s-oil-drillers-to-curb-output-as-tanks-fill-up" target="_blank">asked</a> oil drillers to cut back on their production because the pipeline system was becoming overwhelmed.</p><p>The estimated 20-million-barrel-per-day surplus will lead to storage filling up in the next two to three months. To avoid such an outcome, analysts widely see crude prices crashing even further.</p><p>"Demand for gasoline (no driving) and jet fuel (no flying) has now crashed and inventories for these products are already brimming. 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, a Swedish corporate bank, said in a statement. "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."</p>
<p><em>Reposted with permission from <a href="https://www.desmogblog.com/2020/03/30/oil-refineries-face-shutdowns-demand-collapses" target="_blank">DeSmog</a>.</em></p>From Your Site Articles
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lgbarrio / Flickr / CC BY-NC-ND 2.0
The Environmental Protection Agency (EPA) issued a policy memo yesterday that is an expansive relaxation of legally mandated regulations on polluting industries, saying that industries may have trouble adhering to the regulations while they are short-staffed during the coronavirus global pandemic, according to the AP.
<p>While the announcement was made yesterday, the policy is being applied retroactively to March 13. </p>
<p>The loosening of environmental regulations allows power plants and factories, as well as other facilities to self-assess their own ability to follow the legal requirements for reporting air and water pollutions, <a href="https://www.nytimes.com/2020/03/26/climate/epa-coronavirus-pollution-rules.html" target="_blank">according to The New York Times</a>. The easing of restrictions comes as several companies have complained recently that layoffs, personnel restrictions, and other issues related to the pandemic would make compliance difficult.</p>
<p>The temporary easing of regulations has no set end date, allowing a number of industries to ignore environmental laws since the agency announced that it will not "seek penalties for noncompliance with routine monitoring and reporting obligations," <a href="https://thehill.com/policy/energy-environment/489753-epa-suspends-enforcement-of-environmental-laws-amid-coronavirus" target="_blank">according to The Hill</a>. While the <a href="https://www.ecowatch.com/tag/oil-and-gas" rel="noopener noreferrer">oil and gas</a> industries were amongst the known polluters asking for a relaxation of the rules, the announcement showed a sweeping relaxation of the rules, "forgoing fines or other civil penalties for companies that failed to monitor, report or meet some other requirements for releasing hazardous pollutants," as the AP reported.</p><p>While companies are normally required to report when they discharge pollutants into the water or air, the new policy memo states:</p><blockquote style="margin-left: 20px;"><span></span> In general, the E.P.A. does not expect to seek penalties for violations of routine compliance monitoring, integrity testing, sampling, laboratory analysis, training, and reporting or certification obligations in situations where the E.P.A. agrees that Covid-19 was the cause of the noncompliance and the entity provides supporting documentation to the E.P.A. upon request.</blockquote>
<p>Advocates for the environment were appalled by the announcement.</p>
<p>"This is an open license to pollute. Plain and simple," Gina McCarthy, EPA administrator under former President Barack Obama and now president of the Natural Resources Defense Council, said as <a href="https://www.cnn.com/2020/03/26/politics/epa-coronavirus-pandemic/index.html" target="_blank">CNN</a> reported. She added that the Trump administration is "is taking advantage of an unprecedented public health crisis to do favors for polluters that threaten public health."</p>
<p>The latest move is consistent with a pattern of rollbacks that the Trump administration sees as unfriendly to business. Since the Trump administration took office in 2017, the number of civil and criminal penalties against polluters has dropped precipitously, according to the AP. </p>
<p>Cynthia Giles, who headed EPA's Office of Enforcement during the Obama administration, wrote a statement to <a href="https://thehill.com/policy/energy-environment/489753-epa-suspends-enforcement-of-environmental-laws-amid-coronavirus" target="_blank">The Hill</a>, calling it a moratorium on enforcing the nation's environmental laws and an abdication of EPA's duty:</p>
<blockquote>This EPA statement is essentially a nationwide waiver of environmental rules for the indefinite future. It tells companies across the country that they will not face enforcement even if they emit unlawful air and water pollution in violation of environmental laws, so long as they claim that those failures are in some way 'caused' by the virus pandemic. And it allows them an out on monitoring too, so we may never know how bad the violating pollution was.</blockquote>
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A three-dimensional portrait of methane concentrations around the world is helping researchers to understand the complex gas, which constitutes the second largest contributor to greenhouse gas (GHG) warming after carbon dioxide.
<p>Methane is an important GHG that is emitted during the production and transport of coal, natural gas and oil as well from agricultural practices like rice cultivation and the raising of livestock, according to the U.S. Environmental Protection Agency (<a href="https://www.epa.gov/ghgemissions/overview-greenhouse-gases" target="_blank">EPA</a>). Once lofted into the atmosphere, high-altitude winds can transport methane far beyond its source, disproportionately impacting communities around the world.</p><p>"There's an urgency in understanding where the sources are coming from so that we can be better prepared to mitigate methane emissions where there are opportunities to do so," <a href="https://www.nasa.gov/feature/goddard/2020/new-3d-view-of-methane-tracks-sources-and-movement-around-the-globe" target="_blank">said</a> research scientist Ben Poulter at NASA's Goddard Space Flight Center in Greenbelt, Maryland.</p>
<p>During extraction processes, if methane leaks into the air before being used, a single molecule can trap the sun's heat and warm the atmosphere, according to the <a href="https://www.edf.org/climate/methane-other-important-greenhouse-gas" target="_blank">Environmental Defense Fund</a>. The largest source of man-made methane production is attributed to the oil and gas industry; about 10 percent of all GHG emissions from <a href="https://www.ecowatch.com/tag/fossil-fuels" target="_self">fossil fuels</a> in the U.S. can be attributed to methane. Though methane has a shorter lifetime with lower concentrations in the atmosphere than carbon dioxide, the gas is eighty-four times more potent and needs to be considered when evaluating the impact of global <a href="https://www.ecowatch.com/tag/climate-change">climate change</a>.</p>
<p>"It is estimated that up to 60 percent of the current methane flux from land to the atmosphere is the result of human activities," said Abhishek Chatterjee, a carbon cycle scientist with Universities Space Research Association based at Goddard.</p><p>"Similar to carbon dioxide, human activity over long time periods is increasing atmospheric methane concentrations faster than the removal from natural 'sinks' can offset it. As human populations continue to grow, changes in energy use, agriculture and rice cultivation [and] livestock raising will influence methane emissions. However, it's difficult to predict future trends due to both lack of measurements and incomplete understanding of the carbon-climate feedbacks."</p>
<p>To determine methane's role on Earth's carbon cycle and its impact on the climate system, researchers at NASA combined multiple data sets from self-reported fossil fuel producers, government overseers and satellite observations. These were put into a high-resolution computer model to simulate the global movement of methane emissions based on known processes in certain environments while accounting for weather models and natural processes that break down the gas.</p>
<p>Methane's global movements through space and landscapes are complex and can vary depending on many factors. Of note, the impacts of methane are felt disproportionately around the planet.</p><p>Europe was shown to be the only region to show a decrease in methane emissions over the last two decades, which may largely be due to measures prioritizing the use of <a href="http://www.ecowatch.com/renewable-energy/">renewable energy</a> in a <a href="https://www.ecowatch.com/25-of-europe-quits-coal-1891078241.html" target="_self">shift</a> from fossil fuels like coal.</p><p>In South America, the Amazon River Basin and its associated wetlands flood seasonally, which creates oxygen-deprived environments that contribute a significant source of methane. Researchers estimate that around 60 percent of wetland methane emissions come from the tropics.</p><p>In Asia, more than 85 percent of methane emissions comes from human activities, with rice cultivation and livestock being the driving sources. Additionally, China's economic expansion and increasing population have driven the demand for energy and resources.</p><p>"<a href="http://www.ecowatch.com/tag/agriculture">Agriculture</a> is responsible for about 20% of global methane emissions and includes enteric fermentation, which is the processing of food in the guts of cattle, mainly, but also includes how we manage the waste products that come from livestock and other agricultural activities," said Poulter.</p><p>Arctic and high-latitude regions account for about one-fifth of global methane emissions.</p><p>"What happens in the Arctic doesn't stay in the Arctic," said Ott, adding that the region is not currently a strong pulse of methane but "that could change dramatically over time."</p><p>The findings will help to inform future field and satellite missions, as well as policy decisions.</p>
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