Immediate Vault Immediate Access

Infographic: 16 Blockchain Disruptions

Underpinning the heart of digital currencies, blockchain has graduated from being merely a buzzword to revolutionizing how companies conduct business. Services and products that are powered by blockchain pose financial and operational risks that can challenge traditional models. With new cryptocurrencies popping up regularly and law firms creating practice groups around it, blockchain is bound to impact your industry.

If you need a quick primer on the topic ahead of the many blockchain education sessions at the RIMS 2019 annual conference, the folks at Bitfortune have created the voluminous infographic below to help you understand how the technology will improve 16 different industries, from music to government.

Explore how blockchain goes beyond Bitcoin and real-world applications that affect you and your organization. Discover ways that blockchain increases transparency and could potentially benefit your organization’s overall resilience.

Visit Bitfortune.net for more information.

Earthquake Spike in Oklahoma Linked to Fracking

ok-earthquake-shake-map
A magnitude 5.0 earthquake that rocked Cushing, Oklahoma, on Nov. 6 damaged part of the city’s downtown district, but left no major damage to bridges or highways.

Early reports indicate the damage is not insignificant. A 16-block area in the hard-hit downtown has been sectioned off because of the danger posed by unstable structures and broken glass. No serious injuries or fatalities have been reported, however. Power in Cushing was out for less than an hour following the quake, and several gas leaks were taken care of.

The city, which has a population of 7,900, is noted as the world’s largest oil storage terminal and has experienced 19 earthquakes in just the past week, raising safety concerns. As of last week, the town’s tank farms held 58.5 million barrels of crude oil, according to the U.S. Energy Information Administration. The number of earthquakes in the area has also risen exponentially. During the first half of this year, 618 temblors of M2.8 or greater have shaken Oklahoma.

eq-activity

Swiss Re noted in its September 2016 report The Link Between Hydrofracking, Wastewater Injection and Earthquakes: Key Issues for Re/insurers:

Since 2008 the number of magnitude 3.0 earthquakes per year has grown from roughly 2 per year to an average of nearly 3 per day. This now makes Oklahoma the most seismically active of the lower forty-eight states. It’s highly likely that this dramatic rise in earthquake occurrence is largely a consequence of human actions. Along with the increase in seismicity, Oklahoma has seen a growth in its oil and natural gas operations since 2008, specifically hydraulic fracturing (often referred to as “hydrofracking” or “fracking”) and the disposal of wastewater via deep well injection.

A number of states that have increased wastewater injection activity have seen increases in the number of induced earthquakes, the study said, but the reason for such a large increase in Oklahoma is still unclear. Because of the large amount of crude oil storage in the Cushing area, strong shaking is worrisome and has led some to proclaim that induced earthquakes are a national security threat.

According to AIR-Worldwide, it is not clear whether the occurrences of the small and intermediate size earthquakes being seen, and the stress changes from wastewater disposal could trigger larger and more damaging earthquakes. As a precaution, the Oklahoma Corporation Commission ordered four new Arbuckle disposal wells to be shut and 10 to reduce their volume by 25%. In Osage County, 32 wells will have reduced volume.

Experts believe limiting injection volumes is helpful because of the link between high-volume injection and earthquakes, but Swiss Re’s report concluded that while, most companies participate in the suggested reductions following a detected earthquake, economic pressure to continue wastewater injection often prevails. “Changing regulations, and how the oil and gas industry respond, remain the biggest contributor to uncertainty of how the risk will change in the future,” Swiss Re said.

New Rail Tank Car Usage Promises Safer Crude Oil Transport

Added capacity of pipelines used to transport crude oil and declining prices are contributing to decreasing transport of crude oil—and an almost 97% drop in the use of older, less safe transport cars between 2014 and the end of March, Gannett reported this week.

Rail tank car shipments of crude oil from the Bakken oil fields in North Dakota have declined from a peak of 498,271 in 2014 to 424,996 in 2015, according to the Association of American Railroads. An AAR official made the announcement at a rail tanker car safety forum sponsored by the National Transportation Safety Board, according to Gannett.

In the December 2013 report “Moving Crude Oil by Rail,” the AAR noted that the rail industry has been urging federal regulators “to toughen existing standards for new tank cars” and recommended that the estimated 92,000 existing tank cars used to transport flammable liquids, including crude oil, be retrofitted with advanced safety-enhancing technologies, or phased out if they cannot be upgraded.

While there are obvious issues with the transportation of oil by rail, the AAR has pointed out that railroads have an excellent safety record with crude, even surpassing pipelines in recent years. But the industry and federal regulators acknowledge there is much room for improvement.

The new, safer tank cars have thicker steel shells, insulating materials, full-size metal shields at each end and improved outlet valves underneath the car. Increased use of the new cars is good news for densely populated areas on the east and west coasts that have numerous trains—often of at least 100 tank cars—moving through daily.
DOT 117 train car
A transportation law, the FAST Act, signed by President Obama in December 2015, includes new mandates for freight trains transporting crude oil through the U.S. The law requires that older tank cars be replaced by the newer, safer car for shipping flammable liquids by March 1, 2018, phasing out the older model used, according to the U.S. Department of Transportation.

A rail disaster in Lac-Mégantic, Canada, on July 26, 2013, that killed 42 people brought a heightened focus on the dangers of transporting highly flammable Bakken crude oil by train.

According to the DOT, the rule also:

  • Requires an enhanced tank car standard and an aggressive, risk-based retrofitting schedule for older tank cars carrying crude oil and ethanol.
  • Requires a new braking standard for certain trains that will offer a higher level of safety by potentially reducing the severity of an accident.
  • Designates new operational protocols for trains transporting large volumes of flammable liquids, such as routing requirements, speed restrictions, and information for local government agencies.
  • Provides new sampling and testing requirements to improve classification of energy products placed into transport.

Shale Shakes Up Energy Sector

shale oil industry

HOUSTON—In the words of the well-known rock group REM, “It’s the end of the world as we know it,” at least for the energy sector in the last decade, said Ross Payne, managing director of Wells Fargo Securities and keynote speaker at the IRMI Energy Risk and Insurance Conference here. Since 2009, production in the United States is up 72%, he said. “That’s a phenomenal increase, driven by shale production.”

The huge boon in shale production was the result of technology. “Just sticking one straw into shale was not going to be economic, butwhen you were able to take that drill bit and turn it horizontal, and go out one to two miles horizontally and pop a hole into the ground every hundred yards along that one or two miles, you got enough flow to make that economically an option,” he said. “That’s why, when we broke the technology on that, it did change the world as we know it.”

Looking at energy from 30,000 feet, he explained that, since the early ’90s, the energy sector has enjoyed “one way pricing,” which was brought about by constricted supplies. The only new technology before developments to extract shale came along was in the deep water offshore arena, “a brand new territory for drilling in the 1980s and ’90s.”

Adding to that was dramatic global growth and demand, primarily from the BRIC countries–Brazil, Russia, India and China–and geopolitical issues such as the Arab Spring and the Iraq war, Payne said.

With high prices, however, “you get substitutions and you get disrupters. Clearly shale has become a disrupter.” What kind of impact has shale had on the industry? “Just since 2011 to 2013, the Energy Information Administration (EIA) doubled their crude basin estimates to 95. There are now 41 countries out there with significant shale assets. Shale reserves increased 980% in that two year time frame. Currently in the United States, 42% of production is through shale, with crude production around 50%,” he said.

As technology continues to evolve, Payne said, “we are continuing to do a better job of pulling this gas and crude out at a lower price. We are going to get more prolific and drive down costs even further.” Meanwhile, other countries, including China and Russia, are doing the same.

“Shale is the future, it’s the future on a global basis as well,” he said. The country with the largest shale reserves, he noted, is Russia, with the United States in second place. “We’re obviously the largest producer of shale crude, and China is number three. On the natural gas side, China is number one and the U.S. is number four.”

But how long will crude prices stay low? “We think it’s going to be awhile,” Payne said. “Because of shale, prices will be capped. As prices start to come up, we will see a situation where rigs come back on line very quickly. We think that, as we get into the $65 to $70 per barrel range, a lot of rigs will come back on line,” he said. “At peak, we were at 1,610 crude rigs in the U.S., and if you have 1,610 rigs working in the fields primarily on shale, you will get 1 million barrels of growth year-over-year.” He also does not see prices going much above $80 because of the ability to turn these rigs so quickly, primarily in the U.S.

A poll among energy experts in the audience as to where prices will be by the end of 2015 reached a consensus of $55 to $60 per barrel. Asked whether he believes the Nixon-era ban on exporting oil will be lifted, Payne pointed out that a number of CEOs have been pushing for U.S. exports of crude. “I’m surprised that Obama let LNG [liquefied natural gas] exports materialize as quickly as he did,” he said, adding that the president has allowed for other similar exports as well. However, he warned, “Once we start to export, there could be a knee-jerk reaction from OPEC. We are going to be viewed as a competitor rather than a customer, and they may want to squelch that competitor a bit longer than people’s expectations. So I think there is a danger to doing that, but it could very well move forward.”