By: Sharyn Alden
Jan/Feb 2012

Document your Technician’s Commercial Training Qualifications to Avoid Penalties

Running a business involves keeping up with the latest safety issues. But sometimes, even the best intended company managers can overlook common sense guidelines when it comes to hiring technicians. Allowing unqualified personnel to perform work on your motor carrier equipment may impact safety as well as your business.

Rule of thumb: If you can’t show written proof that your crew is qualified or have a contract showing that only qualified technicians can inspect or repair your commercial motor carrier equipment, you may be looking at trouble ahead.

If technicians don’t have proper training under the Federal Motor Carrier Safety Administration (FMCSA) regulations; it can be a costly mistake. Ask yourself — are you on top of all safety regulations when it comes to commercial maintenance, repair and inspection?

Not only should you or a key person in your operation know the regulations, you also need to know how and how well your personnel were trained on commercial equipment.

If you don’t know the answers to how and where your workers were trained you could face a lawsuit, fines from state and local enforcement officials, and civil penalties on the driver or the carrier ranging from $1,000 up to $11, 000 from FMCSA per violation.

Depending on the severity of the violations, the carrier’s safety rating may be downgraded. Federal criminal penalties may also be imposed against the carrier who willfully allowed technicians to perform tasks on commercial safety components without documented training. The same violations can be imposed on workers who willfully violated the regulations.

The FMCSA says anyone who performs annual and periodic safety inspections on commercial equipment must be qualified under regulations 49 CFR 396.19 or if they are making repairs on critical safety components like brake service. Those qualifications must be met under regulations 49 CFR 396.25.

Your maintenance workers don’t have to be formally trained — they can be trained in-house, but they need at least a year of on-the-job experience performing safety inspections and repairs in order to meet FMCSA requirements.

Commercial equipment always needs routine maintenance, inspections and repairs. Obviously you’re not going to just let anyone start working on your rigs. If something happens and training is at the heart of the issue, you may lose revenue and have to pay replacement costs if your equipment is involved in an accident or legal fees if you end up in court.

So how do you make sure you have the right technicians on board to perform these critical safety tasks? Don’t assume — make sure you know your workers have been properly trained.

Here’s the bottom line. As the carrier you are ultimately responsible for making sure your workers are qualified.

So make sure you can prove your safety maintenance crew has been validly trained. Then have a hard copy that shows they have received valid commercial training. You’ll need that, and fast, if you have to produce proof on demand.

Blockbuster Auction for Alaska Drilling Leases

On December 7 the federal government put Alaska drilling leases on the auction block. In advance of the sale many insiders were skeptical as to how many companies would respond to the government’s well publicized plan to auction 3 million acres on 283 tracts of drilling leases in Alaska’s National Petroleum Reserve.

The auction was part of a broad-based plan to increase energy development here. The federal sale was a boon for Alaska as the state will receive 50 percent earnings on leases.

Deputy Interior Secretary David J. Hayes made it clear that the government is looking for ways to prudently develop Alaska’s energy sources.

ConocoPhillips was the highest bidder on 34 North Slope tracts while Repsol E&P USA Inc. won the right to drill on 26 leases on the North Slope and five in the Beaufort Sea.

ConocoPhillips also edged closer to getting a long sought after permit to build a bridge that will connect drilling sites to the trans-Alaska pipeline. The company has been locking horns with the government over building a bridge and pipeline over the Colville River Delta.

If a bridge isn’t built, it could be deal-breaker for other companies interested in drilling here. The American Petroleum Institute agrees. They have said a bridge would give heavy trucks more access to drilling sites since the Colville River Delta can be difficult to maneuver.

On the same December date, the State of Alaska held its own oil drilling permit sale. The sale netted $21 million for leases around the North Slope and Beaufort Sea. Many insiders are hopeful that increased drilling will benefit the trans-Alaska pipeline and domestic oil capacity.

In the North Slope Foothills the state didn’t sell any leases but on the North Slope 178, tracts sold for $14.1 million. Seventy-eight parcels situated along the Beaufort coast brought in $6.8 million.

All of this prime acreage, established as an oil reserve in 1923, has been targeted for development on Alaska’s North Slope west of Prudhoe Bay ever since the U.S. Geological Survey estimated the region holds about 900 million barrels of oil.

Since 1999, six lease sales have been held in the oil reserve. For operators with Alaska drilling on their minds, there are numerous opportunities. Some 191 drilling tracts on 1.6 million acres are located on the North Slope and along Prudhoe Bay.

But Alaska drilling isn’t for everyone. Several companies have given up and walked away due to numerous barriers to drilling for petroleum here. In 2010, 64 leases were surrendered and another 60 returned in 2011.

Conditions on the North Slope require more than an adventurous spirit. The extreme environment is costly and often dangerous for companies to operate rigs. Then there’s the approval process. Some energy companies have complained that even though the government is eager to sell drilling leases, getting government approval to move forward can be difficult.

Since natural gas is in the neighborhood of $4 per thousand cubic feet, companies need to have vision, patience and enough time and money to fulfill dreams of an Arctic windfall.

Bakken Boom Fuels the Need for Diesel Refinery

The Bakken Shale oil play in North Dakota has been making news ever since the site has become one of the country’s top energy producing fields.

Shale oil continues to make news as it reshapes the energy industry. This time the news is linked to a rise in diesel demand — more than 10 percent in the last few months alone. Now there’s a proposal on the table to build the first green field refinery in the U.S. in 35 years.

The refinery will be built to provide diesel fuel to the local community as well as the oil industry. Developed by Dakota Oil Processing, a private development company, the refinery is expected to produce about 20,000 barrels of fuel per day or about 10 percent of North Dakota’s diesel needs.

In the past three years alone the Bakken’s output has tripled to over 464,000 barrels of crude per day. That enormous growth is due in part to technological advances. North Dakota now has the distinction of being the fastest growing state economy in the country.

At the end of November the proposed refinery gained county approval. Next up, it needs to obtain a state air quality permit and go through a regulatory and environmental review process.

This is being played out in upper Midwest oilfields because of an unprecedented amount of drilling activity that requires around 600,000 gallons of diesel fuel a day.

Getting diesel fuel in this remote area is a big issue especially when a refinery in another state shuts down for maintenance. That’s what happened not long ago leaving some Bakken trucks looking for diesel hundreds of miles away.

Not unexpectedly, diesel’s high demand has come from a frenetic activity of trucks and trains racing to and from the heartland with Bakken crude. Of the 200 rigs operating in the state, the typical Bakken drilling rig is said to use about 1,500 gallons of diesel fuel a day.

With such a surge of drilling here, hundreds of trucks are needed to keep up with the boom and there’s no end in sight. Diesel-fueled trucks not only haul crude to pipelines or rail heads they move sand and water for hydraulic fracturing to extract oil and gas.

Besides the steady flow of trucks, transportation by rail is a necessity in order to keep up with output and there are only so many pipelines in North Dakota. Over 100,000 barrels of crude a day are loaded onto rail cars headed south. The new Bakken Oil Express train with 103 tank cars is one of the major transportation elements up here that require diesel fuel.

Unlike more populated areas of the country, the proposed diesel refinery is drawing few complaints. While some people have expressed concern about diesel emissions and a higher volume of traffic, residents are not expected to deter the refinery from being built.

Hand-Held Cell Phone Usage

If you’re driving a commercial truck down the highway with one hand on the wheel and the other hand holding a cell phone, you are officially a distracted driver.

Now there is a final ban in place to penalize distracted drivers and the trucks’ operators by federal law. Fines are steep — up to $2,750 for the driver and up to $11,000 for an operator that allows such unsafe behavior. Moreover, multiple fines can lead to losing a commercial drivers’ license.

The new cell phone ban was announced in November 2011 by the U.S. Transportation Secretary Ray LaHood and took effect 30 days after the Federal Register published the ruling.

Authored by the Federal Motor Carrier Safety Administration (FMCSA) and Pipeline and Hazardous Materials Safety Administration, the ban formally prohibits the use of hand-held cell phones by commercial truck and bus drivers.

It’s the first ban targeting commercial vehicle drivers since a 2010 ruling prohibited texting while driving. The new ruling focuses on operators working in interstate commerce and intrastate haulers of hazardous materials.

While the ban has received widespread approval by commercial vehicle operators, some say the cell phone regulation doesn’t go far enough to improve safety.

After the ban was announced, the Commercial Vehicle Safety Alliance (CVSA) said banning hand-held phones while driving is important, but they’d like to see the topic of distracted driving broadened to include the general population of non-commercial drivers.

The American Trucking Associations, Inc. agreed that more safety regulations are needed to curtail dangerous driving practices. Bill Grave, president/CEO of the organization pointed out a ban is needed for all drivers using cell phones for calls and texting while driving any vehicle.

How are companies going to oversee their drivers’ cell phone behavior when they are on the road?
There’s no doubt about it — the ban puts more responsibility on the shoulders of drivers but company managers now have to be more diligent in instilling a culture of safe driving techniques.

Stephen Keppler, executive director CVSA summed up that position by saying, “Management must reinforce this view by explaining to them that, no, we don’t want you responding to a cell phone call or text message until you’ve pulled over to a safe place. We need you to first and foremost focus on the road in front of you; that is your primary duty.”

The new ruling has raised several issues that are liable to take time to iron out. Truck cabs have a lot of electronic devices within reach of the driver, but some say these can be distractions nonetheless. Will more regulation be forthcoming to further define the scope of what is safe to use within the cab?

There’s also the issue that some drivers use cellphones instead of GPS navigation devices. Time will tell how these and other potential distractions will play out in the ever evolving world of high-tech navigation and communications and commercial safety.

U.S. Makes a Dent in Global Oil Export Market

For the first time in 62 years, the U.S. has become a net exporter of refined oil products.

That new role is due to the U.S. having so much oil the export business is flourishing — more than it has in many years. In December, the U.S. Energy Information Administration reported U.S. oil is being exported at record rates to several countries including Brazil, Mexico and Chile.

At year’s end the EIA reported that about twice the amount of fuel was currently exported compared to the fuel exports at the beginning of 2011.

Today’s rise in oil exports is due to many factors and not the least is the change of the American infrastructure. For one thing, in the last few years demand for fuel-efficient cars has grown. Americans are not only more fuel conscious, their buying habits have changed ever since the advent of the 2008 recession. In general, they tend to be more strident about making big purchases, taking trips, or buying cars and boats with big gas tanks.

Consequently, the demand for gas has declined 10 percent over the past few years. Products made from crude oil like diesel and jet fuel have also declined. Still, while the demand for oil shrinks at home, in many foreign markets the demand is high.

How far has the U.S. oil export business grown? Look at it this way. For several decades between 1960 and 2008, when the U.S. began exporting gas, the demand on the home front seemed endless. So much so the U.S. was using as much gas as it could produce and at the same time it was also importing fuel.

Make no mistake — we’re still dependent on foreign oil for over half the crude used domestically, but the export business is now playing on the global stage where for a long time it was nearly dormant.

The EIA has gone out on a limb and predicted the export trend will be around indefinitely. Mark Williams, global head of refining, trading and marketing for Royal Dutch Shell (RDSA), is involved with exporting diesel and other refined U.S. products. He says gas exports are definitely growing but he doubts that the U.S. will become a huge export player.

Other companies like Shell and ExxonMobil see the export trend as being a good opportunity for their U.S. refineries to make gas for the world market.

On the other side of the export business many people in the U.S. aren’t pleased. Tom Kloza, chief of oil analysis at the Oil Information Service says he understands when truck drivers are furious when they have to pay high prices at the pump and at the same time the country is exporting gas to foreign countries. Kloza says he understands these frustrations, but he is nonetheless against putting restrictions on oil and diesel exports anytime soon.

Still, with 2012 being an election year you can expect the topic of oil exports to be one of considerable interest with numerous politicians and their constituents.

ExxonMobil’s Forecast

At the beginning of each year, companies typically look at predictions about a variety of topics from future earnings to expenditures. It’s also the time of year when energy giant, ExxonMobil puts out its annual energy forecast. This year the company’s energy forecast extends out nearly three decades for some key areas of interest.

So it’s no surprise that when the largest publicly traded oil and gas company releases its annual forecast about where they foresee energy demands in the coming years, investors and industry insiders listen.

While the long-term outlook shows steady demand for oil in some areas of the world, ExxonMobil expects that demand to level off in other regions. They point to huge untapped gas reserves all over the world that may eventually help meet some of the demands of an oil-dependent earth.
One of the company’s predictions includes shale gas drilling on the world stage. We all know the boom in shale gas drilling is unprecedented at some U.S. sites like North Dakota, but ExxonMobil projects shale gas production will spread to other countries and have an impact on every continent in the world.

If that happens, ExxonMobil says there is enough untapped gas underground to fuel current demand for 250 years.

The company points out they foresee the demand for hybrid vehicles to continue. That may be somewhat of a surprise considering a lot of Americans still like their gas-loving SUVs, trucks and vans, but ExxonMobil expects the demand for hybrid vehicles that run on both gas and electricity, to keep growing. They predict hybrid vehicles to increase not only on American roads but also to become the more popular vehicle of choice on world highways as countries become increasingly more energy conscious and efficient.

The company doesn’t expect the demand for oil in developing countries to move significantly up or down anytime soon. In fact they don’t expect any big rise or drop in demand in the developing world through 2040.

But China, and other developing countries, where demand for fuel is on the rise, is a different matter. Here, ExxonMobil predicts the country won’t saturate their high demand for oil any time soon. In fact, the energy outlook for developing countries is extremely strong. Here they expect demand for oil and petroleum-based fuels to rise about 60 percent between 2010 and 2040.

The long-term energy analysis also looks at the world GDP. ExxonMobil’s forecast puts the GDP at growing an average of 2.9 percent a year between now and 2040. By contrast, the energy giant puts the world energy demand at just 0.9 percent.

The company says coal use will be flat for some time before making a steady downward spiral both in use and demand. On the other hand, they foresee power plants becoming ever more dependent on nuclear energy, natural gas and renewable energy.