Energy & Environmental Law Blog : Energy & Environmental Lawyer & Attorney : Vorys, Sater, Seymour and Pease Law Firm : Oil, Gas & Green Technology

U.S. EPA is seeking comment on new data related to its July 25, 2008, proposed rule, Federal Requirements Under the Underground Injection Control (UIC) Program for Carbon Dioxide (CO2)  Geologic Sequestration (GS) Wells (73 FR 43492).  In particular, it seeks comment on "a waiver process to allow GS injection above and between USDWs [Underground Sources of Drinking Water] under specific conditions in lieu of a blanket prohibition on injection above and between USDWs."

Comments are due October 15, 2009.

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Duke Energy Corp. is planning a fourth wind farm in Wyoming, dubbed "Top of the World," according to this article in the WSJ.  When finished, estimates are that it will provide enough energy to power 50,000 to 60,000 homes annually.

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Baker Hughes has agreed to buy BJ Services in a $5.5 billion cash and stock deal, according to this article in the NYT.

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Items from over the last couple of days:

The WSJ is reporting on the possible increase in working natural gas storage capacity (note:  subscription required).

The Houston Chronicle is reporting on concerns that natural gas prices have further to fall.

The biofuel industry is facing substantial problems, according to this WSJ article (note: subscription required).

Efficiency will be the new watchword for the oil industry, reports this article in the Houston Chronicle.

California regulators are looking at a 'reverse auction' to increase the use/sales of solar power by California’s three big utilities, according to this article in the NYT.

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The NYT is reporting on a substantial price drop in the cost for solar panels.  Still, payout remains at 16 years (dropping from 22 years). 

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On August 27, 1859, Col. Drake drilled the world's first successful commercial oil well in Titusville, Pa.  To celebrate this 150th anniversary, Titusville has planned a series of events.  For more on this achievement and a calendar of activities, see here.

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In its Joint Explanatory Statement for the 2009 Omnibus Appropriations Act, Congress directed the Government Services Administration (GSA) to promote energy efficiency through the use of revolving doors.  In response, GSA is implementing its Revolving Door Initiative.  According to this Slate Article citing an MIT study, on average 8x as much air is exchanged when a swing door is opened as opposed to a revolving door and energy savings can be as much as 1.5% of total energy required to heat and cool a building.  Can GHG cap and trade legislation  be far behind!

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The NYT has both an interesting blurb and op-ed on peak oil and why the concept is based on poor data analysis and misinterpretations of technical material.  The NYT?  Whew . . . a look at the comments shows that we haven't entered the Twilight Zone after all.

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This is interesting.  The NYT is reporting that Chevron will be using a 29-megawatt solar steam plant sourced in one of its California oil fields to produce steam to inject into the field to enhance recovery.

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The Ninth Circuit Court of Appeals in a case titled Rialto v. West Coast Landing, recently discussed in detail and upheld the U.S. EPA's right to issue unilateral cleanup orders under CERCLA.  (42 U.S.C. 9606(a).)  The case is a good primer of the government's position on unilateral orders.

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The WSJ has an interesting article on the impact falling natural gas prices are having on the budgets of several producing states.  Texas, for example, has reportedly lost $1 billion in state revenue as a result.  (Note:  Subscription required.)

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The Binghamton Press & Sun-Bulletin has an article on sizable rally organized by landowner coalitions in support of oil and gas development in New York.  Opposition to the "Frack Act" - proposed by NY Representative Hinchey to tighten regulations on hydraulic fracturing - was a topic for the day.

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The oil and gas industry is beginning to detail the costs of climate legislation, according to this article in the WSJ.  A study commissioned by API (the American Petroleum Institute), for example, finds that the U.S. could rely on foreign sources for nearly 20% of its refined fuel if the Waxman-Markey climate bill passes in its present form.  (Note:  Subscription required.)

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Natural gas prices are in decline while oil prices are rising.  Gas prices hit a seven-year low due to declining demand and abundant supplies, according to this NYT article.  At the same time, the WSJ is reporting that crude oil prices have hit a high for the year at $73.89 a barrel (subscription required).

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The State Department has approved a permit that will allow construction of the Alberta Clipper pipeline to bring crude oil produced from Canadian oil sands into the U.S., according to this article in the LAT.  Interesting reasoning regarding environmental concerns . . .

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On August 17, 2009, US EPA announced a pre-publication of a Notice of Public Rulemaking that would create technology-based effluent standards for discharges from airport deicing operations.  The proposed rule, if adopted, would require airports that conduct deicing operations and have 1,000 or more annual jet departures and 10,000 or more total departures to collect spent aircraft deicing fluid and treat the wastewater from these operations.  The proposed rule would give airport operators the option of conducting treatment on-site or sending the wastewater off-site to a treatment contractor or publicly owned wastewater treatment works.  In some cases, the proposed rule would also require a reduction in the amount of ammonia discharged from urea-based airfield pavement deicers or the use of airfield deicers that do not contain urea.

More information on the proposed rule can be found at:  http://www.epa.gov/guide/airport/

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A government auction for offshore leases was fairly quiet, according to this article in the Houston Chronicle.  The recession and an abundant supply of natural gas are contributing factors to the somewhat less-than-enthusiastic reception by industry.

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Hold the date.  The Pennsylvania DEP will be conducting public hearings in October for two permit applications for proposed wastewater discharge facilities in Wyoming County associated with natural gas drilling activities.  For more information, see here.

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If you have an appeal before ERAC, take note!

As part of Ohio's Budget Bill, Am. H.B. 1, amendments were made to Ohio Revised Code 3745.05(F) which placed strict time limits on the Ohio Environmental Review Appeals Commission.  The amendments mandates that the Commission issue a written order affirming, vacating or modifying the action appealed no later than the following schedule (1) December 15, 2009 for appeals filed before April 15, 2008, or (2) July 15, 2010 for appeals filed between April 15, 2008 and October 15, 2009, or (3) one year not later than twelve months after the filing of the appeal.

Due to these statutory amendments, the Commission is now issuing orders limiting de novo hearings to one hour total, split among the parties.  No discovery or dispositive motions, requests for continuance of hearing date or extensions of applicable deadlines will be considered or ruled upon by the commission.  Parties must file a case summary 5 days before the hearing date.  The case summary shall not exceed pages and must contain the assignments of error for review, a statement of facts and citations of pertinent authorities.  Some cases are being scheduled for hearing within a few weeks of notice of same. 

There is a movement to amend the statute due to due process and constitutionality concerns.  Time will tell -- the first hearings are scheduled for mid-September.

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The Houston Chronicle has an article today on the challenges facing oil refineries generally, and in the Gulf Coast in particular.  One report discussed in the article predicts that roughly 6% of U.S. refining capacity will be forced to close within the next two years due to a decline in demand.

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Natural gas futures prices fell to a seven-year low, according to this article in the WSJ.  (Note:  Subscription required.)

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The WSJ has an article on the interplay between natural gas and wind power entitled "Wind and Natural Gas: Frenemies Forever."  Frenemies?

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In March of 2008, New York's governor issued an executive order directing the creation of a state energy plan.  A draft of that plan has now been published that recommends the "environmentally responsible development of [the Marcellus Shale] to large scale production, which would generate economic benefits, including increasing the stable supplies of indigenous fuel, lowering gas transportation costs for consumers, generating new State and local tax revenues, and increased revenues for landowners from land use agreements with natural gas companies."

More on the report can be found here.

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Hydraulic fracturing remains a hot topic, particularly in the Marcellus Shale region where it appears to be relatively unknown.  For example, the Ithaca Journal has an article looking at related waste disposal issues and recent regulatory activity by the NY DEC.

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The NYT is reporting on an interesting investment in biofuels made by the Southern Ute Tribe in Colorado - introducing a strain of carbon-dioxide consuming algae into water tanks located near a natural gas processing plant having a significant carbon dioxide waste stream.

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The Houston Chronicle has an article on the potential use of state lands for energy development as states faced with increasing budget deficits are looking for new sources of revenue.  Interestingly, Ohio plays a major role in the piece.

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The Denver Post is reporting on anticipated efforts of the natural gas industry to impact climate legislation in the Senate.  The take away from the Sierra Club, which lobbied heavily in the House, on the industry's absence from House negotiations:  "[I]f you aren't at the table, you're on the menu."

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The Hill is reporting on a new study commissioned by the National Association of Manufacturers and the American Council for Capital Formation, which finds that the Waxman-Markey climate legislation passed earlier this year by the House could cost the country 2 million jobs by 2030.  A copy of the controversial study can be found here.

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Amaranth Advisors has agreed to pay a $7.5 million fine to settle charges that it manipulated the price of natural-gas futures contracts on two occasions in 2006, according to this article in the NYT.

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Using oil tankers to store production offshore is on the rise, according to this article in the WSJ.  The cause - contango in the oil futures market.  (Note:  Subscription required.)

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The WSJ has a good article on the utility of futures markets to hedge against the risk that natural gas prices will fall for producers.  (Note:  Subscription required.)

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The Energy Information Administration (EIA) has published its Short-Term Energy Outlook for August.  Among other things, it concludes:

[T]he monthly average Henry Hub natural gas spot price [will] stay below $4 per thousand cubic feet (Mcf) until late in the year as natural gas inventories are projected to set a new record high at the end of this year's injection season (October 31). The Henry Hub price is projected to increase from an average of $3.92 per Mcf in 2009 to an average of $5.48 per Mcf in 2010.

The EIA also expects natural gas storage to set a new record this year, with "3,800 Bcf at the end of October, 235 Bcf above the previous record of 3,565 Bcf reported at the end of October 2007."

And for those of you interested in CO2 emissions, the EIA has started reporting on projected CO2 emissions from fossil fuels - projecting, for example, that they will decline by 5 percent this year due to lower coal emissions.

A copy of the full report can be found here.

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Local opposition has put a stop to a carbon capture and storage demonstration project in Germany, according to this article in the Guardian.  It's good to know that 'numbyism' - i.e., 'Not under my back yard' - isn't just a U.S. phenomenon.

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The Energy Information Administration has updated its report on liquefied natural gas (LNG) and the role it can have in the U.S.  Did you know:

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The NYT has an interesting article on addressing global warming through geoengineering, i.e., through the use of technology.  At the same time, it rightly cautions us against unintended consequences.

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The Waynesboro News Virginian has a good article on the development of wind energy in Virginia's national forests and the conflicts it creates for environmental groups.

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The Fort Worth Star-Telegram has an interesting article on the similarities between Canada's Horn River Basin and the Barnett Shale in terms of natural gas production possibilities.

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The federal government is holding millions of dollars for acres of energy leases in the Rockies that it has yet to issue despite being paid, according to this article in the LAT.  The reason - bureaucratic delay because of environmental protests and lawsuits.

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The NYT is reporting that the Federal Trade Commission has promulgated a new rule aimed at curbing manipulation of the oil market - but not with respect to speculators.  A copy of the FTC's related press release and new rule can be found here.

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The Houston Chronicle is reporting on how several large producers are reacting to natural gas supply surpluses and demand declines - with greater production?  The prisoner's dilemma.

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The Energy Information Administration (EIA) has published an analysis of the Waxman-Markey climate legislation recently passed in the House.  It focuses on the impacts of the legislation's energy and environmental policy proposals on consumer energy choices and the implications for the economy.  While not comprehensive, it does reach some interesting conclusions.  For example:  "ACESA [i.e., the Waxman-Markey bill] increases the cost of using energy, which reduces real economic output, reduces purchasing power, and lowers aggregate demand for goods and services."

A copy of the full report can be found here.

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The NYT is reporting on the possible impact shale gas may have on the passage of climate legislation.  For example:  "[S]ome politicians on Capitol Hill are pushing for new natural gas incentives in climate legislation moving through Congress. They note that the fuel resource sits in many states, like Michigan and Pennsylvania, whose lawmakers are needed for passage of a bill."

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On July 31, 2009, Representative Louise Slaughter introduced legislation to amend CERCLA and create a grant program to assist with the investigation and remediation of waterfront brownfield sites. Under the proposal, eligible entities could receive up to $500,000 to assist with the design and implementation of water quality improvements, low impact development approaches, green infrastructure, remediation and management of sediments, or flood damage prevention associated with waterfront brownfields remediation and reuse. The legislation has been referred to the House Energy and Commerce Committee.

A copy of the proposal can be viewed here.

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The WSJ has an interesting (brief) article on the testimony anticipated from one of the energy markets' largest speculators in today's CFTC hearings.  His (expected) view:  That the agency should limit trading in NYMEX natural-gas futures contracts because in-and-out activity can distort the underlying gas price.  (Note:  Subscription required.)

[Update:  For more, see this NYT article reporting on the CFTC Chairman's desire to regulate energy markets not to address price volatility necessarily but rather an over-concentration in the market.  And this article in the Houston Chronicle, which reports on testimony supporting limits on futures contracts that individual traders can hold for physical delivery of natural gas, but not on financial contracts where physical delivery is not part of the arrangement.]

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The United States District Court for the District of Kansas granted class certification regarding free gas claims in Schell, et al. v. Oxy USA, Inc. (Case No. 07-1258-JTM).  According to the plaintiffs, the case centers around the issue of whether the surface owner or the lessee has the implied duty to make gas useable for house gas use under the relevant oil and gas leases.  A case to watch if you are a producer with free gas clauses in your lease.

A copy of the court's decision can be found here.

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We reported earlier on the possibility of a vast new oil field below the Bakken in North Dakota.  The Houston Chronicle has an interesting article discussing the possibilities of this field as well.

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The Pittsburgh Post-Gazette is reporting on a study done by Penn State researchers finding that a proposed "extraction tax" would hurt natural gas development in Pennsylvania.  A copy of the study can be found here.

[Update:  It's not only industry associations doing the research.  Broome County, NY, had an Economic Impact Study done by researchers at the University of North Texas and just released the preliminary results finding that Marcellus production could mean billions to local governments over the next decade.  A copy of the press release and preliminary results can be found here.  (Moved up.)]

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