The Energy Information Administration's weekly storage report is out, showing a net increase of 71 Bcf for the week and total supplies above the 5-year range:
Working Gas in Underground Storage Compared with 5-Year Range
More information (and a better quality graph) can be found here.
Despite low prices and substantial supplies, Chesapeake Energy Corp. is continuing to increase natural gas production according to this article in the WSJ. (Note: Subscription required.)
The NYT has an interesting article on the money spent by various industry and environmental groups lobbying for and against climate legislation before the House last month.
The U.S. Court of Appeals for the D.C. Circuit has ruled on the Department of Interior's request for clarification regarding an earlier decision to vacate the 2007-2012 Outer Continental Shelf oil and natural gas leasing program, finding that it does not apply to the Gulf of Mexico. A copy of the DOI's press release on the matter can be found here.
The WSJ has an interesting article on pipeline infrastructure projects (note: subscription required). The focus is on moving gas out of the shale production regions.
Britain's Financial Services Authority is poised to find that recent oil market volatility has more to do with uncertainty over economic growth than speculation in the market, according to this article in the WSJ (Note: Subscription required.). That finding is interesting in light of recent statements made by the CFTC regarding potential greater regulation of energy commodity markets.
[Update: In a timely article, the WSJ is reporting that the CFTC is likely to come out with a report next month blaming oil price volatility on speculators. (Subscription required.) And the Houston Chronicle is reporting that the CFTC has imposed new rules on natural gas swaps on ICE (the IntercontinentalExchange) to close the "Enron loop."]
The Dallas Morning News has an interesting article on Exxon Mobil Corp.'s view of the potential for natural gas and the use of hydraulic fracturing to develop unconventional resources.
The WSJ has an interesting article on earnings and share prices of oil services companies. It notes, for example, that prices for resource extraction are down 58% in June from a year ago. (Note: Subscription required.)
[Update: In a related article, the NYT is reporting that the oil field services company Halliburton said that its 2nd quarter profit declined by 48%, to $0.29 per share. Its chairman and CEO stated that he believes it is unlikely that there will be a meaningful recovery by year end due to a continued weakness in natural gas demand.]
[Update: In yet another article, the Houston Chronicle is reporting that Schlumberger Ltd.'s second-quarter earnings are down 57%. (Moved up.)]
Senators Casey (D-PA) and Enzi (R-WY) have introduced legislation to address long-term liability issues presented by carbon capture and storage projects according to this press release from Senator Casey's office. Among other things, the "Carbon Storage Stewardship Trust Fund Act of 2009" would require private insurance for construction, transportation, injection and monitoring activities, and establish a federal trust fund from fees paid by facility operators to address claims for damages after a facility is transferred to the federal government.
On July 20, 2009, Representative Xavier Becerra (D-CA) introduced legislation to amend the Internal Revenue Code to make permanent a tax incentive for environmental remediation costs. If passed, it would affect expenditures paid or incurred after December 31, 2009. See the proposed legislation HERE.
Occidental Petroleum Corp. may have made the largest oil and gas discovery in California in 35 years, according to this article in the LAT. The find may be equivalent to 150 million to 250 million barrels of oil, two-thirds of which is believed to be from natural gas.
The NYT is reporting on steps being taken by the Department of Energy and the Colorado State Oil and Gas Conservation Commission to address concerns over drilling in the Piceance Basin near Project Rulison. That project involved the detonation of a nuclear device 8,400 feet underground to develop natural gas reserves, but produced gas too radioactive to sell. And of course - hydraulic fracturing is mentioned in the article as a cause for concern.
On July 23, 2009, the House Subcommittee on Energy and the Environment will hold a hearing on the proposed Chemical Facility Anti-Terrorism Act of 2009 (HR 2868). The proposed legislation would make permanent the prior temporary grant of authority to the Department of Homeland Security to regulate security practices at chemical facilities. Included in the proposed legislation are provisions that would require certain covered chemical facilities to implement inherently safer technology to reduce the consequences of a terrorist attack.
A copy of the legislation can be viewed HERE.
It's no secret that California is facing a real budget crisis. The LAT is reporting that an earlier proposal to allow Plains Exploration & Production Co. to drill off the Santa Barbara County coast has been revived as one mechanism to address the state's financial problems.
The United Nations’s Clean Development Mechanism Panel gave in-principle approval to the first set of emission reduction (or removal) projects in developing countries may earn certified emission reduction (CER) credits that may be traded, sold and used by industrialized countries to meet emission reduction targets under the Kyoto Protocol. This first project involves the deployment of 30 million compact fluorescent light bulbs in Mexico, which will be distributed over the next three years with a goal of generating up to 7.5 million CERs. For more, see here.
For more information on the Clean Development Mechanism, see here.
On July 10, 2009 the EPA identified hard rock mining as the first new class of facilities for which EPA will develop financial assurance regulations under CERCLA Section 108(b). Hard rock mining includes facilities that extract, beneficiate or process metals (e.g., copper, gold, iron, lead, magnesium, molybdenum, silver, uranium, and zinc)and non-metallic, non-fuel minerals (e.g., asbestos, gypsum, phosphate rock, and sulfur). Additional classes of facilities that EPA intends to examine by the end of 2009 for inclusion are: hazardous waste generators, hazardous waste recyclers, metal finishers, wood treatment facilities, and chemical manufacturers. Additional details on EPA’s reg development effort can be found HERE.
Final regulations are supposed to follow in 2 years with implementation dates not later than 2 years thereafter. Requirements are driven by a February 25, 2009 court order (see .pdf) arising from the case Sierra Club v. Johnson (ND California, Case No. C 08-01409 WHA).
The Federal Energy Regulatory Commission (FERC) published two proposed rulemakings yesterday. The first seeks supplemental comments regarding possible revisions to the posting requirements adopted in FERC Order 720 for major non-interstate pipelines (Docket No. RM08-2-000). Specifically, the Commission is looking for comments regarding various proposals to post information for virtual or pooling receipt and delivery points; the use of design capacity to determine whether a receipt or delivery point should be posted; and the use of an exemption for receipt points with de minimis gas flows even if the design capacity meets the posting threshold. Comments are due 30 days from publication in the Federal Register (which hasn't happened yet).
Continue Reading...We recently posted about energy security issues in South America. The LAT has a similar article observing that the European Union is encouraging member states to increase natural gas storage and pipeline facilities to protect against Russian manipulation.
The News-Journal is reporting on the arrest of a ring of thieves - employed by area gas companies - stealing condensate from well sites across East Texas. Speculation on the loss involved - potentially millions of dollars.
The LAT has an interesting article on competing theories over the cause of oil price volatility. The two culprits (as you might expect) - "speculators" and supply/demand imbalances.
The Bismarck-Tribune is reporting that North Dakota may have another vast crude-oil bearing formation below the Bakken. Recent production results from wells in the Three Forks-Sanish formation suggest that many are as good as or better than some Bakken wells according to the state's Department of Mineral Resources.
This article in the American Statesman reports on how Austin's GreenChoice program, which sells electricity generated entirely from renewable sources, is struggling to survive. Electricity produced from the nation's most successful green-energy program - by volumes of sales - now costs nearly three times as much as the standard service.
This is interesting: Exxon Mobil is planning on investing $600 million in producing liquid transportation fuels from algae, according to this article in the NYT. The potential energy yield is significant, especially compared to corn (2,000 gallons of fuel per acre of production each year, compared to 250 gallons per acre a year).
[Update: The WSJ has an article briefly discussing this and other algae projects. Interesting. (Note - Subscription required.).]
The NYT is reporting on the competition between natural gas and coal in climate legislation before Congress. According to the article, the natural gas industry is behind in its efforts to have an impact on the pending legislation. The take away if you are interested in lowering carbon emissions: "Natural gas emits about half the carbon dioxide, the principal greenhouse gas, that coal does for the same amount of energy produced."
Wind farms may not be the energy panacea that we are looking for, according to this article in Examiner.com (Cleveland, Ohio). The problem - Impact on wildlife such as the Oklahoma prairie chicken.
Exxon Mobil is using a variant of hydraulic fracturing to develop tight sands in the Piceance Basin, according to this article in the Houston Chronicle. Very interesting.
This article in the Houston Chronicle discusses Senate challenges to climate legislation recently passed in the House. Regional differences play a key role.
The North Dakota Supreme Court held this week that deductions for natural gas processing of sour gas made by Petro-Hunt, LLC, were properly deducted from royalty payments in Bice v. Petro-Hunt, L.L.C. (Case No. 20080265). The leases at issue paid royalties based on the market-value of the gas "at the well," and the court found that the majority rule in oil and gas producing states in the country allowed a lessee to deduct post-production costs related to improving gas-quality or transporting the gas to market under this type of lease language. Adopting that rule, the court therefore rejected claims made by royalty owners that the producer had an obligation to pay all costs incurred to turn unmarketable gas into a marketable product - i.e., rejecting the first marketable product rule.
[Note: Also interesting, the court addressed issues involving the royalty-free use of residue gas and deductions made for risk-capital and depreciation.]
The Energy Information Administration is reporting that natural gas storage inventories rose by 75 Bcf last week, leaving us 601 Bcf higher than last year at this time and well above the 5-year average.
We noted earlier this year the energy security issues between Russia, the Ukraine and Europe. Venezuela has now halted oil exports to Honduras to pressure reinstatement of ousted President Manuel Zelaya according to this article in the NYT, raising similar security issues.
The EIA has published its Short-Term Energy Outlook for July, finding: "The monthly average Henry Hub natural gas spot price is expected to remain below $4 per thousand cubic feet (Mcf) until late in the year given plentiful U.S. natural gas supplies and weak demand, particularly in the industrial sector. The Henry Hub price is projected to increase from an average of $4.22 per Mcf in 2009 to an average of $5.93 per Mcf in 2010 as expected economic growth increases industrial consumption of natural gas."
A complete copy can be found here.
The Washington Post is reporting that plans by T. Boone Pickens to construct the world's biggest wind farm in Texas - 4,000 megawatts at a projected cost of $10 billion - has been put on hold due to tight credit markets and low natural gas prices.
The NYT is reporting that the Commodity Futures Trading Commission is considering limiting the volume of energy futures contracts held by purely financial investors and publishing more detailed information about aggregate hedge fund activity and traders arbitraging between domestic and foreign energy prices.
The U.S. Senate Committee on Environment and Public Works is holding a hearing today to address the need for climate legislation, entitled, “Moving America toward a Clean Energy Economy and Reducing Global Warming Pollution: Legislative Tools.” The speakers include the Secretary of the Department of Energy, Steven Chu, the Administrator of the Environmental Protection Agency, Lisa Jackson, and the Director of Climate Programs for the Natural Resources Defense Council.
Cap-and-trade appears to be favored by many - but not all - of the participants.
Copies of the prepared testimony can be found here.
[Update: A related Washington Post article can be found here.]
Ohio EPA announced a new Environmental Insurance Program (EIP) offered through the Ohio EPA’s Site Assistance and Brownfield Revitalization (SABR) Office. The EIP makes Ohio EPA Voluntary Action Program (VAP) staff available to make an “insurance readiness” review of assessment and remediation documentation. In turn, participants are able to get quotes from three insurance providers for Pollution Legal Liability insurance at up 10% off the standard premium rates. Providers currently participating in the program include: ACE Environmental Risk, Great American Insurance Company and Navigator’s Specialty Insurance Company. For more information on the program, click here and here.
We previously mentioned the enforcement concerns raised by federal agents in Australia over the prosecution of new carbon crimes here. It appears that our cousins in the United Kingdom are creating a similar criminal enforcement unit to police excessive CO2 emissions, according to this article in the Sunday Times. Is this something that will cross the Atlantic? Only time will tell.
The NY Department of Environmental Conservation (DEC) is reporting that natural gas production in 2008 fell slightly to 50.32 Bcf, an 8% decline from the previous year. Still, oil and gas production in the state earned landowners nearly $61 million in royalties, with local governments receiving an estimated $14.6 million in taxes.
"The Trenton-Black River formation remains New York's dominant gas production zone, accounting for 69 percent of total production in 2008." A new on-line database can give you individual well production information if you are interested (including well owners and operators, locations, and depths). Not bad.
This interesting NYT article suggests the incandescent light bulb is “not dead yet” despite the congressional mandate on energy efficiency due to take effect in 2012. We’ll see. But what is clear is that necessity remains the mother of invention.
The WSJ has an interesting article on the risks - at least in the short term - created by too strong a focus on transitioning to renewable sources of energy. California officials are concerned, for example, over a shortage in power supply and a "high risk" to its economy in order to meet a state mandate to provide 33% of its power from renewable sources by 2020.
(Note: Subscription required.)
We've posted several times on the challenges to local energy development presented by environmental groups and others. This article in the Plain Dealer reports on a new dispute brewing between the Oil & Gas Accountability Project - a Colorado-based interest group - and Ohio's oil and gas industry over widespread revisions now being drafted for Ohio production operations.
LimaOhio.com has an interesting article on the use of wind turbines by private individuals to offset utility costs. Payback period is an issue, though.
The NYT is reporting that environmentalists have lost every case before the U.S. Supreme Court this past term, speculating that it is connected to the Court's new conservative membership. Maybe its simply the merits of the cases?
A California Superior Court Judge has halted an expansion at Chevron's Richmond oil refinery until it produces a new environmental impact report and receives a new permit from the Richmond City Council, according to this article in the San Francisco Chronicle. The downside - workers will lose $50 to $75 million in income and the city will lose $61 million pledged to community programs until the issues get resolved.
Exelon Corp. has increased its takeover bid for NRG Energy, Inc., to $8 billion in stock, according to this article in the Houston Chronicle. The combination, reports the article, would result in the largest power generating company in the country if successful.
The Houston Chronicle is reporting on the arrest of 10 suspects charged with stealing about $2 million worth of oil and gas condensate from producers and oil companies in three West Texas counties.
Columbia Gas of Pennsylvania and Columbia Gas of Maryland have named Carol Fox as their new President, according to this article in the Pittsburgh Tribune-Review.
On June 24, 2009 the City of Cincinnati passed an Environmental Justice Ordinance ("EJ Ordinance"). Believed to be the first of its kind for a City, the EJ Ordinance requires certain “proposed projects” to undergo an environmental review by a City examiner and receive an EJ Permit before the project can operate in the City. An EJ Permit will be denied if the project would cause a public nuisance, which is defined as significantly interfering with public health by: 1) causing an excess cancer risk; 2) causing an excess risk of acute health effects; 3) causing an excess risk in the event of an accident; or 4) constituting an Air Pollution Nuisance as defined in Ohio Administrative Code 3745-15-07. The EJ Ordinance is set to take effect in six months. In the mean time, the City will need to allocate funding in the 2010 budget required to hire an EJ examiner, pay for required public notices, and cover costs for environmental consulting support.
A copy of the EJ Ordinance as it passed is attached.
A June 30, 2009 letter to Cincinnati Beacon by Vice Mayor David Crowley, who spearheaded the legislative effort, may be found here.
The Dayton Daily News is reporting on a study done by Environment Ohio that claims that dependence on fossil fuels could cost Ohio $993.6 billion by 2030, while a move to alternative sources such as wind and solar energy could save Ohioans money. That stands in stark contrast, according to the article, to claims made by the Ohio GOP regarding the Waxman-Markey climate bill.
The International Energy Agency lowered its global crude oil demand forecast for the next five years because of sluggish economic growth, according to this article in the NYT. Notably, the IEA believes that demand for crude oil will decline in 2010 for a second consecutive year, something that hasn't happened since the early 1980s.
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