The last barrel

Last month, this column described how the national media have refused to report two significant achievements made by the U.S. upstream industry in reducing emissions, as relates to natural gas. As I pointed out, most U.S. citizens haven’t heard about these numbers, because the national media can’t stand the fact that something good was achieved by the oil and gas industry.

In an extension of that syndrome, we now find that the national media can’t even bring themselves to report the significant humanitarian assistance being provided by the industry in the wake of the Oklahoma tornadoes of late May and very early June. In fact, 10 days after the E5 tornado hit Moore, Okla., an Associated Press story, which was picked up by CBS, NBC and other national media, failed to give even a hint of this industry’s charitable contributions, or, for that matter, any corporate assistance. Instead, the story lavished praise on several country music stars for staging a benefit concert on May 29. It also mentioned, very generically, that the Red Cross raised about $15 million in the three days after that May 20 tornado. Well, where do those twits at AP think the money came from?

According to a “Corporate Aid Tracker” on the U.S. Chamber of Commerce website, more than $29 million in corporate contributions to Oklahoma City area tornado victims had been made, as of June 3. Of that, $13.51 million, or 47%, had been contributed by oil and gas firms, both upstream and downstream, with a majority of the money going to the American Red Cross. Hometown firms Continental Resources ($2.5 million), Devon Energy ($2.5 million) and Chesapeake Energy ($1.0 million) accounted for $6 million. Additional contributors include ConocoPhillips ($1.0 million); Koch Industries ($1.0 million); Oneok, Inc. ($1.0 million); Phillips 66 ($1.0 million); Apache Corp. ($500,000, plus matching up to another $500,000 in donations); BP ($300,000 directly, plus another $200,000 from its foundation); Chevron ($500,000); ExxonMobil ($500,000); Noble Energy ($500,000 directly, plus matching employee donations, up to $1,000 per employee); NuStar Energy ($100,000, plus $250,000 from a related family foundation); Valero Energy ($100,000); and Sempra Energy ($60,000).

This list is extensive, but probably not complete. It should be noted that in addition to cash, many companies have provided equipment, supplies and employee volunteers. The Apache contribution is a bit different, as it is specifically directed toward providing storm shelters and safe rooms in Oklahoma schools.

U.S. and Russian gas production appear to be neck-and-neck. Back in March, the U.S. Energy Information Administration joyfully announced that “the U.S. surpassed Russia as world’s leading producer of dry natural gas in 2009 and 2010.” That seemed like quite a milestone at the time, but now it appears that this may only have been half-true. Indeed, the U.S. did surpass Russia in 2009, when Russian dry gas output dropped to just 19.303 Tcf from 21.515 Tcf in 2008, due to an economic downturn. At the same time, U.S. dry production rose 2.3% to 20.624 Tcf. However, it appears that the EIA is having trouble keeping up with its own numbers. As of the end of May, the running series of numbers that the EIA maintains shows Russian output in 2010 reaching 21.536 Tcf, a mere 1% higher than the U.S. figure of 21.316 Tcf. As for 2011, there is no question that Russia finished first, producing 23.686 Tcf, while the U.S. output was 22.902 Tcf. However, the U.S. figure was up 3.4% in one year. For 2012, U.S. dry gas production grew an impressive 5.1%, to 24.063 Tcf. The question is whether that number is high enough to overtake Russia. There are conflicting reports as to whether Russian output was up or down last year, and the final figure has not yet firmed up.

Are railroading interests holding up Keystone? This question may partially explain why President Obama is holding up approval of the final Keystone XL pipeline segment. However, I have to give credit for this thought to a friend of mine, who works for a company that supplies heavy duty engine parts for both the railroad and oil and gas industries—a unique position. His theory is that 1) Obama and financier Warren Buffet are good friends; 2) Buffet owns the controlling interest in the Burlington Northern Santa Fe (BNSF) Railway; 3) The intended Keystone XL route would pass through eastern Montana and adjacent to southwestern North Dakota, close enough to the Bakken shale that operators would want to tie in with it; 4) BNSF is spending “a couple hundred million dollars” this year, to boost Bakken oil shipments 40%, to 700,000 bpd by the end of 2013. Therefore, said my friend, Obama is going to hold up the Keystone XL, long enough for Buffet to recoup the most recent investment. In the past five years, BNSF’s annual oil transportation volume from the Bakken has jumped nearly 7,000% from 1.3 MMbbl (3,552 bpd) in 2008 to about 89 MMbbl (243,169 bpd) in 2012.

We told you so. By the latest count, three full-blown scandals envelop the Obama administration, including the Internal Revenue Service (IRS), the Benghazi situation in Libya, and the Justice Dept. surveillance of journalists. At press time, a fourth potential scandal was brewing, whereby Health and Human Services Secretary Kathleen Sebelius was accused of improperly soliciting private funding to support an effort to increase enrollment in the Affordable Care Act (a.k.a. Obamacare). None of this should surprise regular readers of this column. As I mentioned six months ago, Obama’s re-election ensured four more years of South Side of Chicago political tactics—playing by no rules and intimidating people where necessary. Some people compare the situation to Watergate, during 1972-1974. Indeed, the situation now, just like it did then, justifies the question, “What did the President know, and when did he know it?”