Despite depressed demand and a surplus of supply, the price of crude oil is rising - which some analysts attribute to the view of traders and investors that the U.S. economy is at or near bottom, according to this article in the Washington Post. Let's hope their right.
U.S. Geological Survey researchers have concluded that 30% of the world's undiscovered natural gas reserves and 13% of the world's undiscovered oil reserves are located north of the Arctic Circle, according to this article in the LA Times. Interesting - global warming may make these reserves more accessible.
The Ground Water Protection Council (GWPC) has released a new study on state ground water protection regulatory programs, a copy of which can be found here. The electronic copy has hyperlinks to background materials. A nice resource.
European Chemical Agency’s (ECHA) Member State Committee adopted a consensus opinion that the following seven Substances of Very High Concern should be included in the Authorization List:
· musk xylene – a fragrance enhancer which is used for example in detergents, fabric softeners and fabric conditioners
· 4,4'-diaminodiphenylmethane (MDA) – a hardener which is used for example in epoxy resins and adhesives
· short chained chlorinated paraffins (SCCPs) – a substance mostly used as flame retardant and/or plasticizer in various applications such as high-performance rubber, sealants, paints or textile coating
· hexabromocyclododecane (HBCDD) – a flame retardant which is used for example in polystyrene, which is then further processed for the production of insulation panels/boards or packaging products, and in textile applications
· bis(2-ethylhexyl)phthalate (DEHP) – a plasticizer which is used in a wide range of PVC and other polymers applications, such as for example flooring, roofing, coated fabrics, medical devices or primary packaging of medicinal products, as well as in various preparations such as for example sealants, adhesives and inks
· benzylbutylphthalate (BBP) – a plasticizer which is used for example in polymer products, and in particular in PVC for flooring applications, in textile and leather coating, as well as in various other preparations such as sealants, coating and inks or adhesives
· dibutylphthalate (DBP) – a specialist plasticizer which is used in particular in various polymer (PVC/non-PVC) applications (such as floor covering or primary packaging of medicinal products), and as a component of various preparations such as adhesives or paints
ECHA is expected to finalize its recommendation regarding these substances and submit it to the European Commission by June 1. The final decision as to whether these substances will be subject to Authorization will be made by the European Commission.
The Environmental Design of Electrical Equipment Act (EDEE) was introduced into the United States House of Representatives on May 14, 2009. A companion version has not yet been introduced in the Senate. The bill, which would amend the Toxic Substances Control Act of 1976, seeks to prohibit the manufacture of any “electroindustry” product that contains “a concentration value greater than 0.1% by weight of lead, mercury, hexavalent chromium, polybrominated biphenyls (PBB), and polybrominated diphenyl ethers (PBDE) as measured in any homogeneous material contained in the electroindustry product, or a concentration value greater than 0.01% of cadmium as measured in any homogeneous material contained in the electroindustry product.” The stated purpose behind this act is to establish a national standard so that manufacturers are not subjected to conflicting state standards. The bill also specifies certain exemptions although there is no specific exemption that applies to aerospace. Rather, the exemptions primarily relate to the areas of interest to the group behind this bill, the Association of Electrical and Medical Imaging Equipment Manufacturers (NEMA). This bill bears watching and it may be worthwhile for the AIA work with NEMA and seek an amendment to the bill that provides for an aerospace exemption.
OSHA’s Notice of Proposed Rulemaking for Globally Harmonized System (“GHS”) was recently sent from OHSA to the Office of Management and Budget (the “OMB”). OMB has up to 90 days to review the notice and then the notice is expected to be published in the Federal Register. This is just the next step in the process to have OSHA’s Hazard Communication Standard be revised to utilize GHS and have the United States system of hazard communication be consistent with the rest of the world’s.
A new report by the Council on Foreign Relations suggests that development of Canadian oil sands will not lead to the climate disaster that activists fear or free the United States from dependence on Middle Eastern oil, according to this article in the NYT.
A copy of the report can be found here.
This article in the NYT takes a look at the renewed interest by major oil companies in ethanol production. The motivation - ambitious federal mandates for refineries regarding biofuel-gasoline blends.
The Houston Chronicle is reporting that compromises made to get approval of the Waxman-Markey climate change legislation may partly defeat the purpose of having a cap-and-trade program according to a study done by Point Carbon, a Norway-based news and analysis service covering electricity and natural gas markets. The reason - leveling the playing field between natural gas and coal reduces the financial incentive favoring lower-emitting fuels like natural gas.
This article from the NYT looks at how energy plans proposed by prior Administrations and mandated by Congress have fared over the years. As you might expect, the results are poor.
The International Energy Agency (IEA) is warning that cuts in new production investments may lead to significantly higher oil prices, according to this report in the LA Times. Cuts to planned investments amount to a decline in 2 million barrels of oil per day.
The NYT is reporting that the Waxman-Markey climate legislation has been approved by the House Energy and Commerce Committee, largely along party lines. Representative Rogers of Michigan said, “This is the biggest energy tax in the history of the United States." Stay tuned.
A new report from the consulting firm Wood Mackenzie suggests that this may not be a good time for state and federal mandates on renewable resources due to declining demand for electric power and new power plants scheduled to come online in the next few years, according to this article in the Houston Chronicle. No surprise there.
At the recent Fourth Meeting of the Conference of the Parties to the Stockholm Convention on Persistent Organic Pollutants, the delegates adopted an amendment to the Annexes to add nine additional chemicals to the list of Persistent Organic Pollutants. For the list of nine chemicals see here. Responsibilities under the Convention with respect to these newly added chemicals will be effective May 9, 2010 in those countries that have ratified the Convention (“Party States”), unless such Party State (a) made a declaration in its ratification of the Convention that amendments to Annexes A, B and C of the Convention would not be effective without a ratification of such amendments; or (b) submits a written notification that it is unable to accept the amendment. Chemicals listed in Annexes A, B and C to the Convention are subject to varying degrees of regulations by the Parties to the Convention.
The Buffalo News is reporting that the early results from a new well drilled by a joint venture between National Fuel Gas Co. and EOG Resources in the Marcellus Shale are encouraging. Its initial rate of production appears to be more than 3 MMcf per day, more than 9 times the initial rate of production of the joint venture's first well. Nice.
Oil refiners are predicting higher gasoline prices as a result of the Waxman-Markey proposed climate legislation, according to this article in the WSJ. That's because the legislation allocates only 2% of the emissions allowances to the industry, requiring refiners to buy the rest of their needed allotment at auction or in the open market.
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According to this article in the WSJ, material, labor and drilling costs have declined since the first quarter of this year - due in part to the lower price of steel, cheaper diesel fuel, and most importantly, a drop in demand for drilling equipment.
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The Delaware River Basin Commission has announced that natural gas production from shale formations located within the drainage area of the Basin's Special Protection Waters may not commence without first applying for and obtaining Commission approval. This, according to the Commission, will impact most of the shale formations in the Basin in which new horizontal drilling and hydraulic fracturing techniques are being used. More information can be found here.
This article in the NYT reports on how cap-and-trade became the mechanism of choice in Congress for addressing greenhouse gas emissions. Clinton-era politics played a significant role.
The Secretary of Energy, Steven Chu, has announced an additional $2.4 billion in federal funding for the expansion of commercial deployment of carbon capture and storage (CCS) technology. This is part of the Administration's ongoing efforts to develop technologies to reduce carbon dioxide emissions. More information can be found here.
U.S. EPA has scheduled the first of two public hearing on its proposed greenhouse gas endangerment finding for next Monday, May 18, 2009, from 9:00 a.m. to 8:00 p.m. in Arlington, Virginia. More information - including an audio link to the hearing - can be found here.
Governor Schwarzenegger is proposing to raise $1.8 billion for California by reviving the first new oil drilling project off the state's coast in 40 years, a proposal that was rejected in January by the State Lands Commission according to this article in the Houston Chronicle. That . . . and selling San Quentin . . .
The Salt Lake Tribune is reporting that several exploration companies and Utah counties are suing the Department of Interior in federal court over the Bureau of Land Management's refusal to lease certain properties to winning bidders at a December 19, 2008 auction. Reading the article, you get a sense of the machinations involved to obstruct development.
The Maryland Public Service Commission has initiated proceedings to review the hedging policies of state gas and electric utilities for the 2009-2010 winter heating season. A copy of the notice can be found here.
The Energy Information Administration has released its May 2009 Short-Term Energy Outlook. It summarizes: "The Henry Hub natural gas spot price is projected to average $4.06 per thousand cubic feet (Mcf) in 2009, down from an average of $9.13 per Mcf in 2008. Then, buoyed by modest economic growth next year, the price is expected to increase to an average of about $5.21 per Mcf in 2010. The projected steep decline in industrial output this year is expected to reduce industrial natural gas consumption by 8 percent, resulting in a 1.9-percent decrease in total annual consumption of natural gas. Natural gas consumption in the electric power sector, however, is projected to increase by 2.1 percent since lower natural gas prices are expected to back out some coal consumption in this sector."
A copy can be found here.
The Electric Reliability Council of Texas (ERCOT) - which manages 85% of the state's electric load - has released a report on the near-term impacts of proposed federal climate change legislation. Among other things, the report finds that if natural gas prices are $7 per MMBtu, the carbon allowance costs must be between $40 and $60 per ton to reduce carbon emissions in ERCOT generation to 2005 levels, resulting in an annual increase in wholesale power costs of approximately $10 billion.
A copy of the report can be found here, posted by the Texas Public Utility Commission.
According to reports in both the Washington Post and the Chicago Tribune, rising oil prices may be the result of market investors and a moderating global economy (e.g., increased imports to China). Some analysts caution, however, that these price increases may be premature because of a continued weakness in the economy. Stay tuned.
This is interesting (politics). Today, the Senate Committee on Environment and Public Works is holding a hearing on U.S. EPA's 2010 budget proposal. While questioning EPA Administrator Jackson, Senator John Barrasso (R-Wyo.) produced a memorandum reportedly from White House Counsel to EPA that he characterized as a "smoking gun" because it suggests a lack of scientific support for EPA's proposed finding that greenhouse gases are a danger to public health. An OMB spokesperson has apparently confirmed that it was prepared by the President's administrative staff.
Video of the questioning, as well as a copy of the memorandum, can be found here.
The Colorado Oil and Gas Conservation Commission (COGCC) has amended its rules to eliminate the right of the Department of Public Health and Environment and the Division of Wildlife to appeal permitting decisions made by the COGCC director. The amendments take effect July 1, 2009. More information can be found here.
The Energy Information Administration (EIA) has released an update of its Natural Gas Market Centers special report, which examines the role and importance of these market centers to shippers, pipelines and other transporters of natural gas in North America. Offers a good overview of the issue. A copy can be found here.
This NYT article is reporting that venture capital appears to be moving away from investments in alternative energies - such as algae and solar - and returning to information technology used to increase energy consumption efficiencies. Very interesting.
The Pennsylvania Department of Conservation and Natural Resources (DCNR) has released a report discussing the viability of using the state's subsurface geologic formations for development of a carbon sequestration network. For more information, see here.
The Houston Chronicle has an interesting article on the need for greater communication by the American energy industry to defend itself publicly and dispel the myths about meeting the country's energy needs through the use of renewable resources.
The Philadelphia Inquirer is reporting that the PA Governor's plan to impose a new severance tax on energy production in Pennsylvania is meeting resistance, with the Senate passing a budget last week that did not contain the Governor's proposal. At least one lawmaker stated that the proposal is "off the table" at least until the industry can firmly establish itself in the Marcellus Shale.
U.S. EPA is reviewing whether to grant an ethanol industry request to raise the maximum amount of ethanol that can be added to gasoline to create a 15-percent blend from 10 percent allowed today, a move that could affect more than 500 million gasoline engines used in large pickups to lawn mowers, according to this NYT article.
The NYT is reporting that the Obama administration will retain a wildlife rule preventing the government from invoking the Endangered Species Act to restrict GHG emissions allegedly threatening the polar bear and its habitat.
The Department of Energy has decided to eliminate funding for research on automotive hydrogen fuel cells, finding that it won't be practical over the next 10 to 20 years, according to this NYT article.
The DEO is also likely to restore funding for FutureGen according to the article. Interesting.
The NYT is reporting that the President's budget proposal will include a repeal of intangible drilling cost expensing and of the percentage depletion for oil and natural gas. That doesn't sound like change the industry should believe in.
[Update: CBS News is reporting that the proposed budget - just released - will cost the industry $52.4 billion over the next 10 years as a result of these repeals. (Moved up).]
[Update: For more, see this press release from IPAA; or this article from the Salt Lake Tribune. (Moved up).]
Not dramatically. But this report from the Houston Chronicle notes that futures prices rose above $4 for the first time in weeks following information from the Labor Department suggesting that the recession may be easing.
This report from the Dallas Morning News discusses the difficulties faced by large producers in the Barnett Shale in slowing production because of the crash in natural gas price.
The Washington Post is reporting that President Obama and Vice President Biden are pressing House Democrats to take action on the American Clean Energy and Security Act of 2009 issued for comment last month by Henry A. Waxman (D Ca.), Chairman of the Energy and Commerce Committee, and Edward J. Markey (D. Mass.), Chairman of the Energy and Environment Subcommittee. Much of the concern appears to be that this initiative stands in the way of health care legislation that the Administration wants to move forward.
U.S. EPA has proposed a strategy for increasing the nation's supply of renewable fuels that includes a percentage-based standard that refiners and others must ensure is used in transportation fuel; and that requires renewables to achieve greenhouse gas reductions when compared to the gasoline and diesel fuels they displace.
For more information, see here.
Gulf of Mexico (GOM) oil production could peak by 2013 at more than 1.8 million barrels per day, but natural gas production in the Gulf is likely to continue to decline, according to this article from the Houston Chronicle reporting on a recent study issued by MMS. A copy of the MMS study can be found here.
The Pennsylvania Department of Environmental Protection (DEP) has concluded that Schreiner Oil and Gas Company is the entity responsible for gas migration and water supply issues in McKean County, according to this DEP press release. It reasoned: "Schreiner has been actively drilling combination oil and gas wells in the area since last fall and did not establish background water quality in the area prior to drilling. Therefore, Schreiner is presumed responsible for restoring water supplies within 1,000 feet of the drill sites."
This article from the LA Times discusses the impact gasoline prices have had on driving behavior in California. No surprise - people are driving less and looking to alternative fuels, like natural gas. Still, it is interesting.
The development of oil and natural gas resources underlying state lands gets more complicated when the mineral and surface estates have been severed, according to this article in the Pittsburgh Post-Gazette.
[Update: The article above refers to Belden & Blake Corp. v. Commonwealth of Pennsylvania, DCNR, a Pennsylvania Supreme Court decision issued just last week (April 29, 2009) and involving a producer's right to develop the minerals underlying state lands when the mineral and surface estates have been severed.
Continue Reading...This article from the Shreveport Times discusses the continued interest in and possibilities for development of the Haynseville Shale.
This column in Newsweek makes the case that the Administration is biased against the oil and natural gas industries, contrary to our national interest. Interesting.
A Vorys attorney recently had the opportunity to participate in a small group lunch with a member of the House Energy and Commerce Committee this week and shared several insights into the status of the Waxman climate change bill. First and foremost, it was clear to this Committee member that Chairman Waxman does not have the votes to move the bill as presently written out of the Energy and Commerce Committee. Blue Dog Democrats from the Midwest have said quite clearly that they will not vote for the current bill unless it is changed to, as one Blue Dog member put it, "make it less punitive to coal states."
There are a significant number of issues now being negotiated between the Blue Dogs and Chairman Waxman, including the level of energy that must be produced from renewable sources and the target date for achieving that goal; the variety of technologies that will be included in the definition of biomass energy production; and perhaps the biggest issue, whether CO2 emission allowances will be auctioned or distributed for free. The Blue Dogs are almost uniformly opposed to using the auction of allowances to pay for other unrelated government programs, like healthcare reform.
Continue Reading...Environmentalists have filed yet another lawsuit against the U.S. Forest Service and the Bureau of Land over the impacts of energy development on federal lands, according to this article from MSNBC. This time it involves claims that the agencies failed to curb air pollution in the San Juan Basin.
On Wednesday, the Pennsylvania Budget and Policy Center issued a report entitled Responsible Growth: Protecting the Public Interest with a Natural Gas Severance Tax, asserting that a well-structured severance tax will protect Pennsylvania taxpayers from the public costs associated with increased drilling in the state. More generally, it looks at the potential costs of natural gas drilling on taxpayers and the environment, how other states structure severance taxes, and the lessons that can be learned from those structures. A copy can be found here.
Pennsylvania producers - through their trade associations, primarily - have opposed new severance taxes on the industry, pointing out their adverse impacts on prices and development.
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