The explosion of oil drilling in the Bakken Shale is causing a construction boom in East Coast rail yards.   Oil terminal work is particular hot in the Philadelphia area.  According to ENR:

In Eddystone, Pa., Enbridge is turning the site of a shuttered coal plant into a rail terminal able to take delivery of about 80,000 barrels of oil per day by this fall; it will take about 100 construction workers to complete the job. Instead of closing a South Philadelphia refinery as planned, Sunoco is building a high-speed-rail loading facility. PBF Energy, Parsippany, N.J., recently completed a rail terminal that will take delivery of about 80,000 barrels of oil per day (bpd) of Bakken and Canadian crude

What is your firm doing to cash in on domestic oil drilling?

My friend BJ Kraemer at  MCFA passed along this article from blog post from Walter Mead’s blog at the American Interest discussing the prospects that:

“So dramatic are America’s [oil and natural gas] finds, analysts talk of the US turning into the world’s new Saudi Arabia by 2020”

Mead’s post concludes that the recent shale oil and gas finds in North America and the abundance of energy contained in those finds will reshape geopolitics in the 21st Century returning America to its mid-twentieth century zenith of power.  Obviously, Mead’s conclusions are some of the most bullish by far as to the potential for shale oil and gas plays.  However, the statistics in the post are what bolsters my belief – and the beliefs of others – that the future in this country is not green – but brown.

Still skeptical?  Then, consider, according to the post, the  following:

  • “A GAO report released last May (pdf link can be found here) estimates that up to the equivalent of 3 trillion barrels of shale oil may lie in just one of the major potential US energy production sites. If half of this oil is recoverable, US reserves in this one deposit are roughly equal to the known reserves of the rest of the world combined.”
  • “our natural gas reserves are so large that the US is likely to become a major exporter, and US domestic supplies for hydrocarbon fuels of all types appear to be safe and secure for the foreseeable future. North America as a whole has the potential to be a major exporter of fossil fuels for decades and even generations to come.”
  • Since 2008, fracking alone has created nearly 600,000 new jobs in the United States.

Naturally, there continue to be brown energy haters, who believe American will not or should not maximize the potential of its oil and natural gas reserves.  Indeed, a recent article on the investment web page Seeking Alpha that is making its rounds concludes that America only has a few years of proven natural gas left and calls for a short on basically every E&P company’s stock.  Never mind that it was written, not by a geologist, but by a self described “IT professional” who apparently lacks any qualifications (which I define as those sufficient to survive a Daubert motion in federal court)  to make the conclusion reached in the article (although he apparently found of cowboy hats).

The reality is that a preponderance of all reliable evidence shows that there exists a strong probability that the conclusions in Mead’s article are correct.  American oil and natural gas has the potential to reshape the economy like no other industry.  Even the most optimistic studies on the potential for green jobs do not even come close to the job creation estimates in oil and natural gas.  Moreover, even after the largest investment in green jobs in our nation’s history, job growth in “brown” jobs has outpaced green job growth in the last four years almost exponentially.

The impact of oil and natural gas to the construction industry specifically are obviously profound and contractors not already positioning themselves in this niche should figure out how they can operate in this industry fast.  So, I say let’s go all in with oil and natural gas.  I have no problem with America becoming the new Saudi Arabia by 2020, so long as, unlike Saudi Arabia, we still permit woman to drive.

 

Interesting piece about Nationwide Mutual’s decision not to issue policies designed to cover fracking.  All reliable non-left wing/ energy from algae proponents unbiased  studies on fracking show that when its done properly – just like when any other construction technique is done properly – there is little risk of harm to the environment, water supplies, or surrounding geography in general.  So, Nationwide’s decision not to cover companies engaged in this growing area of work would appear to be Nationwide’s loss alone.  While the loss of competition is probably bad news for anyone involved with drilling for oil and natural gas, I would imagine there will be no shortage of carriers eager to fill whatever void Nationwide created.

Oil and Gas Lawyer Steven Saunders in Scranton tipped me off to a new OSHA Bulletin entitled “Worker Exposure to Silica during Hydraulic Fracturing.”  A copy of the Bulletin is available HERE.  With this Bulletin, contractors working in the oil and gas industry can be assured that OSHA is going to be paying close attention to working conditions at sites where fracking is occurring.

Under federal law, contractors are responsible for providing safe and healthy working conditions for their workers.  According to the Bulletin, OSHA has jurisdiction over regulating work place conditions that expose workers to silica, including Air Contaminants (29 CFR 1910.1000); Hazard Communication (29 CFR 1910.1200); and Respiratory Protection (29 CFR 1910.134).  In addition to providing workers with proper respiratory protection, OSHA recommends contractors institute engineering controls, such as applying fresh water to roads around the well site to reduce dust, reducing the drop height on the sand transfer belt, enclosing points where dust is released, using enclosed cabs or booths for workers unloading silica, and replacing belt transfers with a screw auger transfer system. Moreover, OSHA recommends that contractors medically monitor workers for unhealthy exposure to silica dust.

OSHA also recommends educating workers on how to safely handle silica and to reduce the hazards related to silica exposure.  This recommendation is particularly important because if a contractor cited for an OSHA violation can show that it had an employee safety policy in effect; adequately informed employees of the safety policy; diligently tried to discover violations; and effectively enforced violations of safety rules, it may avoid liability under the “employee misconduct” defense.

Apparently, even low or moderate levels of exposure to crystalline silica can cause serious damage to a worker’s lungs, including chronic cough, shortness of breath, and in some cases respiratory failure.  The dangers associated with silica sound eerily similar to those of asbestos.  If the health hazards involving silica are founded, like with asbestos, you can be sure that plaintiffs attorneys are waiting to lay siege to an industry with deep pockets.  Therefore, if OSHA fines were not incentive enough to begin taking silica exposure seriously, the threat of lawsuits from the Plaintiffs’ Bar should add more than enough additional incentive.

So, contractors in the oil and gas industry who have workers exposed to silica dust should be proactive or they will likely find themselves facing an expensive OSHA fine or on the wrong end of a company threatening personal injury lawsuit.