The Energy Information Administration has recently published a report looking at trends in the U.S.-international natural gas trade through 2007. A summary graph shows for 2007:
.jpg)
A copy of the full report can be found here.
The CA State Lands Commission is expected to vote on a proposal that could lead to the first new oil drilling project off the California coast in 40 years, according to this article in the Mercury News. The proposal was announced last year and involved an alliance between anti-oil environmentalists and the oil company, supported by billions in revenue for the state and a commitment to end local drilling by 2022.
Of course, the Commission could vote against the proposal . . .
[Update: The Commission rejected the proposal. From the LA Times: "Lt. Gov. John Garamendi, one of three members of the lands panel, said allowing any new drilling in state waters would suggest the state welcomes offshore drilling and send a come-hither message to other oil companies."]
Annual oil company profits soared due to triple-digit commodity prices through most of 2008, but the price crash in the last three months is likely to cut quarterly profits by more than half according to this article from the Houston Chronicle.
From the NYT - geography may impact climate legislation: "'There’s a bias in our Congress and government against manufacturing, or at least indifference to us, especially on the coasts,' said Senator Sherrod Brown, Democrat of Ohio. 'It’s up to those of us in the Midwest to show how important manufacturing is. If we pass a climate bill the wrong way, it will hurt American jobs and the American economy, as more and more production jobs go to places like China, where it’s cheaper.'"
Not surprising that the new Administration might reconsider the issue. According to this article from the AP, Interior Department Secretary Ken Salazar has indicated that offshore oil drilling should be worked out with Congress as part of a broader energy policy and not by independent action at Interior. The 5-year drilling plan left by the Bush administration? All but dead, according to Salazar.
We noted recently the energy security issues highlighted by Russia's restrictions of natural gas supplies to the Ukraine. One possible response - greater reliance on LNG (see this article from the Guardian).
The Act proposes, among other things, to increase the percentage depletion rate for marginal wells from 15 percent to 27.5 percent; eliminate the net income limitation on percentage depletion; and define produced water tanks as water treatment facilities to the same extent as similar facilities in other industrial sectors (relieving marginal wells of certain regulatory burdens). Introduced by Senator Inhofe (R-Okla.) and Rep. Boren (D-Okla.), a copy of the legislation can be found here.
At the FERC: "President Barack Obama has named Jon Wellinghoff Acting Chairman of the Federal Energy Regulatory Commission."
The PA Department of Environmental Protection has concluded that several wells near gas-drilling operations in Susquehanna County have become contaminated with methane, but have not identified the source, according to this article in the Times Leader.
In late 2008, Ohio Governor Ted Strickland announced the establishment of the Advanced Energy Job Stimulus Program, which will provide financial incentives in the form of low-interest loans and grants to support certain clean coal and other advanced energy projects. A total of $150 million in total funding is available. The Advanced Energy Job Stimulus Program is described in greater detail here.
The leases on tens of thousands of acres of federal land in Utah have been blocked by a federal judge because the Interior Department had not done a sufficient environmental impact analysis, according to this article from the NYT.
Another obstacle overcome. According to this article from EnergyCurrent, the Minerals Management Service (MMS) has issued a final EIS for the Cape Wind Offshore Energy Project, a 130-turbine wind farm to be located 4.7 miles offshore of Cape Cod, Mass. You can find a copy of the EIS here.
Interesting, but not surprising. According to this article from the AP, a recent report from API shows that U.S. demand for petroleum fell 6 percent to 19.4 million barrels a day.
XTO Energy has settled some of its 2009 hedges in advance to reduce outstanding debt by about $900 million, according to this article in the Star Telegram. Not a bad explanation for one use of a natural gas hedge.
Yesterday, the ECHA released its draft recommended list of substances to be subject to authorization (also known as Annex XIV substances). The draft list contains seven of the fifteen substances currently contained on the Candidate List. The seven substances are:
Continue Reading...
On December 28, 2008, U.S. EPA published direct final amendments to the All Appropriate Inquiry Rule, recognizing ASTM International’s E2247-08 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process for Forestland and Rural Property as compliance with the All Appropriate Inquiries regulation and allowing its use to satisfy the statutory requirements for conducting all appropriate inquiries under the Comprehensive Environmental Response, Compensation and Liability Act. This standard may be used to investigate large tracts, greater than 120 acres, of forestland or rural property. The amendment will go into effect on January 22, 2009.
On January 7, 2009, the U.S. Court of Appeals for the Sixth Circuit vacated a final U.S. EPA rule (published on November 27, 2007) by deciding that the U.S. EPA had no authority to exempt the application of pesticides from NPDES permitting. The Court found that pesticides, even those in compliance with FIFRA, are "pollutants" under the Clean Water Act and require a permit to be discharged to a water of the United States.
Interesting. Efforts to address California's significant budget shortfall are being opposed because they involve - at least for now - a waiver of certain environmental protections for 10 big highway projects, according to this article in the LA Times.
The Short-Term Energy Outlook for January projects a 36% drop in natural gas prices for 2009: "The U.S. economic downturn is also contributing to lower natural gas prices. The Henry Hub natural gas spot price is projected to decline from an average of $9.13 per Mcf in 2008 to $5.78 per Mcf in 2009, but then increase in 2010 to an average of $6.63 per Mcf."
Graphically:
The U.S. Court of Appeals for the Fifth Circuit recently upheld a lower court decision finding that the federal government could not collect royalties on certain deepwater leases held by Anadarko in the Gulf of Mexico. The issue involved whether the Department of Interior had the authority to suspend royalty relief established by Congress under the Outer Continental Shelf Deep Water Royalty Relief Act for production volumes that were less than the volume thresholds established in the Act itself. The court held that it did not.
A copy of the court's decision can be found here.
Increased wastewater volumes from Marcellus Shale drilling activities have led to an interesting partnership. According to this press release, "The Department of Environmental Protection and the natural gas drilling industry have launched a partnership to explore innovative methods to treat wastewater generated from oil and gas well drilling operations in the commonwealth. Working with the partnership, the department will develop a technology-based standard for total dissolved solids in oil and gas wastewater."
U.S. EPA has recognized several landfill methane capture projects for reducing greenhouse gas emissions: "The 2008 LFG award winning energy projects employed unique project structures and took creative approaches to use LFG from municipal solid waste landfills, creating a new source of renewable energy to benefit the local community." Congratulations to all, including the Green Energy Center, High Btu Landfill Gas Energy Project, located in Grove City, Ohio.
Were speculators driving oil market prices last year? Many believe so. From CBS News (60 Minutes): "So what happened? It's a complicated question, and there are lots of theories. But as correspondent Steve Kroft reports, many people believe it was a speculative bubble, not unlike the one that caused the housing crisis, and that it had more to do with traders and speculators on Wall Street than with oil company executives or sheiks in Saudi Arabia." The report ends by noting that the Obama administration has promised to address the issue.
At a recent auction for the rights to drill on 149,000 acres of federal land at the Bureau of Land Management office in Salt Lake City, an anti-development activist won leases on 22,000 acres for $1.8 million that he did not have, according to this article in the Washington Post.
Chesapeake Energy has agreed to a five-year contract with its CEO, Aubrey McClendon, that includes a one-time $75 million 'incentive award. Annual salary was capped at $975,000 with annual bonuses limited to $1.95 million. Not too bad.
Unwanted by some. This article from the NYT observes that many activists single out production from oil sands when it comes to environmental impact, noting that a recent RAND Corporation study estimated that oil from the oil sands generates about 10 to 30 percent more greenhouse gases than conventional crude. Still, as the article points out, however, there are energy security benefits.
[Update: There are similar issues raised in the U.S. regarding oil shale development on public land in Colorado, Utah and Wyoming, according to this article from the AP.]
Energy security. According to this article from the AP, several European countries and Turkey are facing a shutoff of natural gas out of Russia and the Ukraine.
[Update: For more, see this NYT article noting that the shutoff was hitting the European economy as Suzuki's Hungarian unit said it was halting production because of restrictions on industrial gas usage.]
According to this press release, Chesapeake has raised $412 million through a volumetric production payment transaction (VPP) with Argonaut Private Equity, financed by Goldman Sachs Group's GS Loan partners. It involves assets in the Anadarko and Arkoma basins with proved reserves of approximately 98 billion cubic feet equivalent and current net production of approximately 60 million cfe per day.
Argonaut is controlled by Oklahoma billionaire George B. Kaiser, who also recently bought $50 million of shares in another gas producer, Sand-Ridge Energy Inc. See here (WSJ, subscription needed).
This article from the Fort Worth Business Press notes the connection between higher crude oil and natural gas prices during the first half of 2008 and record drilling activity resulting in an increase in worldwide crude oil and natural gas reserves.
This article from the Plain Dealer speculates on how the global recession and global warming is likely to affect energy prices in 2009 and into the future. It also comments on how Ohio-specific issues could spike power prices and make the state even less competitive.
We've had several recent posts on the Haynesville Shale. For more, see this article from the Shreveport Times discussing the impact the economy is having on leasing.
And for a similar article on the Barnett Shale, see here.
In Devon Energy Corp. v. Kempthorne, Devon challenged an order of the Department of the Interior requiring it to retroactively recalculate royalties owed to the United States under a coalbed methane lease in Wyoming's Powder River Basin. At issue were certain deductions taken by Devon for compression and dehydration-related costs when calculating royalties under the agency's marketable condition rule, which requires a federal lessee to put production into a marketable condition at no cost to the United States. Interior had found that the marketable condition rule precluded those deductions where compression and dehydration were necessary to meet the transporting pipeline's gas quality specifications (and thus make the gas deliverable to the purchaser).
Continue Reading...Enter keywords:
Add this blog to your feeds or put your e-mail in the box below and hit GO to subscribe by e-mail.