Office of Conservation: Crude Oil at Sinkhole is not Diesel

Office of Conservation: Crude Oil Source May Link Sinkhole and Failed Texas Brine Cavern

Analysis indicates sinkhole “diesel slick” and liquid hydrocarbon found in cavern samples are likely raw crude oil from same source

BATON ROUGE – Louisiana Commissioner of Conservation James Welsh said today that detailed, comparative analysis has revealed that the liquid hydrocarbon from the failed Texas Brine cavern and samples from the nearby sinkhole/slurry area strongly indicate that both are naturally occurring crude oil and not diesel – likely from the same underground source.

Experts theorized that early analysis of the substance coating the surface of the sinkhole/slurry area showed it could be a “diesel-range” hydrocarbon – meaning it contains some of the same hydrocarbons as refined diesel fuel; however, that classification has now been ruled out.

Welsh said that early analysis was primarily aimed at establishing potential toxic effects, and used the term “diesel-range” as a rough classification, with further analysis needed to determine the nature of the substance more precisely.

“Distinguishing between ‘diesel fuel’ and ‘diesel-range crude oil’ is critical to the effort to ensure public safety by determining the cause of the cavern failure and the sinkhole, and their possible link to each other and to the natural gas that has been found in the aquifer in the Bayou Corne area,” Welsh said. “While our ongoing review of operational records on the Napoleonville Salt Dome has not shown one single underground source known to contain enough diesel fuel to cover the sinkhole/slurry area, an underground oil-and-gas formation could easily account for the amounts found on the sinkhole/slurry area surface and in the cavern.”

Welsh said that better understanding of the source of the crude oil could also help better identify the source of the natural gas in the aquifer because oil and natural gas are often found together in productive formations.

Additionally, he noted that ongoing “fingerprint” analysis of natural gas samples from Bayou Corne-area bubbling sites has now ruled out the nearby Crosstex butane storage caverns and Acadian natural gas storage caverns as potential sources of the natural gas bubbling.

Welsh also said that as analysis of the failed cavern and sinkhole is ongoing, work has progressed on construction of the vent wells – with initial flaring of natural gas expected to begin by Friday.

“We discovered natural gas in both wells sites near the sinkhole and are now working as quickly as possible to remove it through these vent wells,” Welsh said. “However, the initial analysis of the third well, sited on the west side of Bayou Corne, reveals that it does not have an accumulation of natural gas, though analysis will continue at that well as the work continues throughout the area to resolve the situation for the community.”

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LPSC Residential Rate Comparison Gas Distribution Systems

Attached you will find the September 2012 Residential Rate Comparison for Gas Distribution Systems regulated by the Louisiana Public Service Commission. The total rate paid by customers consists of the Purchase Gas Adjustment (“PGA”), Customer and Commodity Charge.

For the month of September 2012 from a cost of gas perspective, the high is St. Amant Gas Company at $10.6290/MCF, while the low is  Livingston Gas and Utility Company at $3.997/MCF. From a total rate perspective, the highest base combined rate is Livingston Gas and Utility Company at $14.94/MCF, and the lowest is Entergy Gulf States Utilities at $8.08/MCF.     LPSC Copy of September 2012 Gas Bill Comparison

LPSC Residential Electric Rate Comparison for October 2012

Attached you will find the Louisiana Public Service Commission’s Residential Electric Rate Comparison for October 2012. Louisiana electric customers are enjoying the low price of natural gas which is reflected in low electric rates. By way of comparison, for a typical customer usage of 1000 Kwh/month, the highest and lowest cost providers of electricity in Louisiana are as follows: Cleco continues it’s trend of having the highest electric rates in Louisiana at $113.81 for 1000 Kwh/month. Claiborne Electric Cooperative is the lowest cost provider at $74.11 for 1000 Kwh/month. The cost basis for providing electric service is somewhat different for investor owned utilities like Cleco, versus electric cooperatives like Claiborne. A more accurate comparision of investor owned electric utilities shows Cleco at the highest as mentioned at $113.81 for 1000 Kwh/month, with Entergy Gulf States the lowest at $84.85. The electric cooperative with the highest rate is Jefferson Davis Electric Co-Op at $95.76 for 1000 Kwh/month, and the lowest, as mentioned, is Claiborne Electric Cooperative at $74.11 for 1000 Kwh/month. The attached spreadsheet gives more detailed information on each electric utility providing service in Louisiana. LPSC Copy of Residential Bill Comparisons By Month for October 2012

Texas Brine Likely to Enter Abandoned Brine Cavern Thursday

Office of Conservation: Texas Brine Likely to Enter Abandoned Brine Cavern Thursday

Company estimates entry into cavern by late afternoon Thursday

BATON ROUGE –Louisiana Commissioner of Conservation James Welsh announced today that Texas Brine LLC has reported that its investigatory well into the company’s abandoned salt brine cavern in the Napoleonville Salt Dome in Assumption Parish is expected to reach and enter the top of the cavern late Thursday afternoon.

Texas Brine sent the report Wednesday morning, in compliance with instruction from the Office of Conservation to give a minimum of 24 hours’ notice prior to the well entering the cavern. The Office also requires Texas Brine to give at least 24 hours prior notice before sampling any salt cavern material or contents for testing, to allow state agencies to take samples of their own.

Welsh initially issued the order requiring the drilling of the investigatory well on August 9th as part of the Office of Conservation’s effort to protect public safety by acting to evaluate likely causes of ongoing natural gas bubbling and the formation of a sinkhole/slurry area near the Bayou Corne community.

Thursday will mark the 33rd  day since drilling operations began, and the 39th since the permit was issued. Barring any unexpected downhole conditions, tomorrow’s cavern entry would be ahead of schedule for the 40-day drill that was originally estimated in mid-August – an estimate that did not include having to shut down operations for four days due to Hurricane Isaac.

“The Office of Conservation committed from the start that we would maintain close oversight over this project to ensure it continued to move forward as swiftly as possible, without sacrificing the safety of the public and the workers on site,” Welsh said. “The focus will now be on completing the well and assessing the status of the cavern and its contents to establish what role it may play in the nearby sinkhole and the natural gas that has been detected in the area.”

Welsh noted that the Science Work Group created to provide guidance for the responses to the ongoing situation in Assumption Parish will be meeting again today to discuss the appropriate testing, sampling and processes used to evaluate the cavern, its contents and its potential role in the ongoing situation. The Science Work Group was originally called together to make use of the best science and expertise to support the effort to assess potential causes and recommended responses to the sinkhole/slurry area and natural gas flowing through the Mississippi River Alluvial Aquifer.

At the same time that Texas Brine is nearing the top of its cavern, the Office of Conservation is also working with all companies operating on the Napoleonville Salt Dome to provide them with guidance on his order that they all assess the presence of natural gas in both the ground water aquifer and the salt dome cap rock beneath their operations; capture, vent or flare any natural gas that is encountered; and analyze any potential impacts to ground water.