FERC Winter Market Assessment
The Federal Energy Regulatory Commission's Office of Enforcement has posted its Winter 2009/2010 Energy Market Assessment. This chart is telling:
NY Marcellus Debate
The NYT has a good article on the debate taking place in New York over drilling in the Marcellus Shale. Interesting: "As New York environmental officials draft regulations to allow drilling in the shale as early as next year, thousands of residents like the Laceys in upstate counties have banded together in coalitions to sign leases with gas companies for drilling on their land — for $5,000 to $6,000 an acre for a term of five years, and royalties of up to 20 percent on whatever gas is found."
Oil Imports Down
The United States is importing less oil this year due to increased domestic production and decreased demand, according to this article in the Kansas City Star. "For example, in the last three months of 2008, imports were never less than 10.5 million barrels per day, and since Oct. 1 of this year imports have never been higher than 10.1 million and have been as low as 8.84 million barrels per day, according to the Energy Information Administration."
Lost Energy Jobs
The Marietta Times is reporting that AMP-Ohio has decided to abandon a multibillion-dollar coal-fired power plant in Letart Falls, Ohio. That means a loss of 1,600 construction jobs and a payroll of $220 million for the area.
Energy Research
The WSJ has an interesting article on the alternative energy research taking place. "The government's multibillion-dollar push into energy research is reinvigorating 17 giant U.S.-funded research facilities, from the Oak Ridge National Laboratory here to the Lawrence Berkeley National Laboratory in California."
[Note: Subscription required.]
Additional PA Regulation
The Pennsylvania Fish & Boat Commission will soon begin inspections of exploration and drilling sites in the Marcellus Shale to protect state waterways and wetlands, according to this article in the Wayne Independent. "'Because of the importance of this issue, waterways conservation officers and field staff have set aside other job duties and functions for a period of time in order to conduct these field inspections,' said Austen [the agency's executive director]."
Fortuna Settlement
WCAX is reporting that Fortuna Energy, Inc., has settled with the State of New York and agreed to renegotiate lease terms with landowners over claims that it improperly extended its leases.
E&P Operations - Air Pollution
Air pollution is becoming an issue of increasing concern for some with respect to exploration and production operations. The Star-Telegram has an article, for example, noting that the Texas Commission on Environmental Quality is seeking voluntary reductions in air emissions from E&P operators in the Barnett Shale.
Green Jobs and the Stimulus
The Washington Times has an interesting article on the stimulus' creation of green jobs. Takeaway paragraph: "But the reality is that after a big dose of spending in the stimulus bill, no more than 100,000 or so jobs have been created, economists say, and the prospects are for only modest growth in alternative energy jobs for years to come." And to make matters even more interesting, the article notes that the jobs are fairly expensive to create.
PA Wastewater Treatment Applications Up
The Patriot-News is reporting that the Pennsylvania Department of Environmental Protection is seeing a number of applications for wastewater treatment facilities related to the increased drilling in the Marcellus shale.
Natural Gas Price Prediction - WM
The Houston Chronicle has an article about a Wood Mackenzie prediction that natural gas prices in the near term are likely to remain low - at least until increased demand for electric generation takes hold.
PA Forest Drilling
The impact of Marcellus drilling in Pennsylvania state forests is being felt, according to this article at philly.com. Interesting - The article states that the Department of Conservation and Natural Resources made $166 million last year from a single lease auction, more than the total for the last 53 years.
Another Climate Change Disclosure Settlement
New York Attorney General Andrew Cuomo has entered into another settlement requiring a company to include information on climate change risks in its annual financial reports. On November 19, 2009, the Attorney General announced a settlement with AES Corporation. Under the settlement, AES is required to disclose “timely and relevant information to investors about financial risks associated with the production of global warming pollution.” This is the third agreement the New York Attorney General has entered related to climate change financial disclosures. Under these agreements, the companies are required to disclose material risks associated with climate change in their annual Form 10K disclosure to the SEC.
More information on the settlement can be found here.
Storage Still Increasing
The Energy Information Administration (EIA) reported a net increase of 20 Bcf into storage as of November 13, 2009. Total working gas in storage - 3.833 Tcf. Graphically:
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For more, see here.
PA Commission Approves Dominion Sale
The Pennsylvania Public Utility Commission has approved the sale of Dominion Peoples Natural Gas Company to Peoples Hope Natural Gas Cos. This reversed the decision of the administrative law judge rejecting the sale. For the Commission press release, see here.
Cabot Sued
That didn't take long. The Wayne Independent is reporting that local landowners in Dimock Township, PA, are suing Cabot Oil & Gas for damages allegedly sustained when Cabot's drilling operations caused methane to contaminate the plaintiffs' drinking water.
FERC Investigates Pipeline Rates
The Federal Energy Regulatory Commission (FERC) has initiated Section 5 rate investigations for Natural Gas Pipeline Company of America, LLC (NGPL), Northern Natural Gas Company, and Great Lakes Gas Transmission LP. The purpose of the investigations - to determine whether the companies over-recovered costs causing their rates to be unjust and unreasonable.
Very unusual. For more, see here.
Deepwater Turbines
The NYT has an article on locating wind turbines for energy production miles off the coast on floating facilities. Very interesting.
SPCC Rule - Final Amendments (2009)
U.S. EPA published its most recent amendments to the Spill Prevention, Control, and Countermeasure (SPCC) Rule last Friday, November 13, 2009 (74 Fed. Reg. 58784). Unintended foreshadowing, perhaps ...
By way of background, the SPCC Rule was originally adopted on December 11, 1973, to address the potential impacts of oil discharges to navigable waters of the United States. The Rule was amended - after years of comment and discussion - on July 17, 2002, in ways that substantially increased the demands imposed on crude oil producers and others when preparing and implementing their SPCC plans. Recognizing the increased burdens placed on producers, EPA extended the deadline for compliance several times to review and address the issues created by its regulatory amendments.
Continue Reading...Thank You
Many thanks to Attorney.org for including us in their list of top environmental and land use law blogs.
EPA Announces More Stringent Emissions Limits for Sulfur Dioxide
Climate change is not the end-all-be-all of regulating our air, says EPA. Yesterday, the EPA announced a proposed rule that will change the primary National Ambient Air Quality Standards for sulfur dioxide. This rule would eliminate the current 24-hour and annual standards and replace them with a new, more stringent, one-hour standard of between 50 and 100 parts per billion (ppb). EPA is also proposing changes to its monitoring and reporting requirements that may require more reporting for facilities surrounding urban areas and more frequent notification to the public of short term SO2 levels. A public hearing will be held in Atlanta on January 5, 2010 and a final rule is to be expected by June 2, 20010
Peak Oil - Safe Until 2030
The NYT has an article on the peak oil controversy and a recent study by IHS Cambridge Energy Research Associates finding that oil production will continue to grow for the next two decades. The report concludes that oil supplies will reach 115 million barrels a day around 2030 and remain there through 2050. The real challenge according to the authors - investment and access, not actual below ground supplies. Interesting.
No Necessity Defense
We reported previously on an activist who had bid nearly $2 million on federal Bureau of Land Management leases that he did not have. The NYT is reporting that he will not be allowed to claim that he acted out of necessity to protect the environment from climate change as a defense. The activist is being charged with felony counts of making false statements and interfering with an auction.
BP Gulf Oil Discovery
The Houston Chronicle is reporting that BP confirmed the presence of oil in deep water reservoirs in the Gulf of Mexico in a western extension of the Kaskida field. The find may be as much as 3 billion barrels of crude oil equivalent.
Devon to Sell Gulf of Mexico Assets
Devon Energy Corp. announced today that it plans on divesting itself of its Gulf of Mexico and international assets, according to this article in the Bismarck Tribune. Anticipated after tax proceeds - $4.5 to 7.5 billion.
Mitchell Energy and the Barnett
The Houston Chronicle has a good article on Mitchell Energy's contribution to shale exploration. "And now Mitchell's persistence in trying to coax energy from the common-yet-stubborn formations could be paying off for others, as shale natural gas is being embraced as a potentially huge energy source."
Samson Applies for Maryland Permits
The Cumberland Times-News is reporting that Samson Resources Co. has applied for four drilling permits in Allegany and Garrett, Maryland counties to explore Marcellus production. If approved, they would be the first project of its kind in the last 15 years in Maryland. Interesting.
EIA Storage Report
The Energy Information Administration's (EIA's) weekly storage report is out. "Working gas in storage was 3,813 Bcf as of Friday, November 6, 2009, according to EIA estimates. This represents a net increase of 25 Bcf from the previous week. Stocks were 350 Bcf higher than last year at this time and 409 Bcf above the 5-year average of 3,404 Bcf."
Graphically:
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For more, see here.
Are you a fan of Brown Pelicans?
On November 11, the Department of Interior announced the brown pelican’s removal from the endangered species list. The brown pelican was listed as endangered in 1970 after near decimation attributed to the pesticide DDT. The pelican’s recovery is largely attributed to the 1972 ban on the general use of the pesticide.
Short-Term Energy Outlook
The Energy Information Administration (EIA) has published its Short-Term Energy Outlook for November. Among other things, it projects the average Henry Hub spot price for natural gas to be just over $5.00 per Mcf in 2010:
Although prices have more than doubled since reaching a low of $1.83 per Mcf on September 4, EIA expects any further price run-up to be limited through the remainder of the year. High storage levels and resilient domestic production are expected to keep prices around $5 per Mcf in the coming months, even as space-heating demand increases and economic conditions improve. Beyond the winter, limited demand growth constrains price increases through the forecast. The projected Henry Hub spot price averages $4.03 per Mcf in 2009 and $5.01 per Mcf in 2010.
For more, see here.
Oil Spill Rule Final Amendments Announced
U.S. EPA has announced that it finalized amendments to the Oil Spill Prevention, Control and Countermeasure (SPCC) Rule designed to clarify and tailor regulatory requirements to particular industry sectors. Once the rule gets posted, we will provide an update.
[Update: For a pre-publication copy, see here.]
Hurricane Impacts
Hurricane Ida could take offline nearly two-thirds of Gulf of Mexico oil production according to this article in the Houston Chronicle. "Houston-based Weather Insight expects oil and gas producers to report about 750,000 barrels of daily crude oil production and 3 billion cubic feet of natural gas production shut in by Tuesday."
PA Forest Lands for Lease
The Pittsburgh Post-Gazette is reporting that the Pennsylvania Department of Conservation and Natural Resources is set to lease almost 32,000 acres of state forest land for natural gas drilling operations to meet its budget mandate to raise $60 million for the 2009-2010 budget year. "The leases require a minimum bid of $2,000 an acre and royalties of 18 percent."
Amendments to Safe Drinking Water And Federal Water Pollution Control Act
The Chemical Facility Anti-Terrorism Act of 2009 (H.R. 2868) passed the House on Friday along party lines with 91% of Democrats voting for the measure and 100% of Republicans voting against it. The Act proposes to amend the Homeland Security Act of 2002 to provide for the regulation of security practices at chemical facilities and to amend the Safe Drinking Water Act and Federal Water Pollution Control Act to enhance security of public water systems and wastewater treatment works.
More information on H.R. 2868 can be found here.
E&P Operations Challenged in NY
An Ithaca, NY researcher and environmentalist has created a list of more than 250 alleged wastewater spills, instances of well contamination, and methane migration related to E&P operations in NY over the last 30 years - challenging the notion that the industry is well-regulated, according to this article from pressconnects.com. The apparent genesis of the analysis: New drilling regulations proposed in NY and increased interest in the Marcellus shale.
Demand for Coal Increasing
The Houston Chronicle is reporting that coal demand has increased worldwide, except of course domestically. "'Nobody is seeing any effect of the stimulus in the U.S.,' said steel industry analyst Charles Bradford of Affiliated Research Group. 'There is recovery in world steel output.'”
Industry Job Outlook
The Houston Chronicle is reporting on the local industry's job outlook. "Houston's upstream oil and gas industry — consisting of exploration and production, oil field services and equipment manufacturing — lost 13,800 jobs in the 12 months ending September 2009." And it's not necessarily limited to Texas.
End of Injection Season
The Energy Information Administration is reporting that storage ended at 3.788 Tcf for this injection season, well above the 5-year average and the old record set in 2007. Graphically:
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Senate Committee Approves Climate Bill
Senate Democrats on the Environment and Public Works Committee approved a climate bill (S. 1733) sponsored by Senator Boxer (D-CA) without any Republican support, according to this article in the NYT. Interestingly, Senator Baucus (D-MT) voted against the measure.
New Carbon Nanotube Study
A study published in Nature Nanotechnology recently found evidence of harm to lungs associated with inhalation of multi-walled carbon nanotubes. The study, conducted by North Carolina State University, the Hamner Institutes for Health Sciences, and the National Institute of Environmental Health Sciences discovered that multi-walled carbon nanotubes, when inhaled, reach the pleural lining surrounding the lungs. Asbestos fibers, when inhaled, reach the same part of the lungs and have caused mesothelioma. Researchers indicate that this study was too short to determine whether multi-walled carbon nanotubes would cause mesothelioma and state that additional study is needed to determine what causes the nanotubes to be toxic. Lead investigator James Bonner recommended that the nanotubes be treated asbestos fibers and that inhalation of these nanotubes be minimized, until more is known.
Challenges to Energy Development Continue
We've posted several times on the challenges raised by environmental groups and others regarding hydraulic fracturing specifically and energy development more generally (see, e.g., here and here). Along those lines, Environment Texas recently published a report entitled, "Toxic Chemicals on Tap: How Gas Drilling Threatens Drinking Water." Don't expect the challenges to abate any time soon.
Marcellus News
Chief Oil & Gas, LLC, has announced that its leasehold interest in the Marcellus Shale has increased to more than 560,000 acres; that it currently has 39 wells drilled into the shale (28 horizontal and 11 vertical); and that it has set a $325 to $350 million development budget for 2010 to drill approximately 70 wells. Interesting.
Clean Energy Jobs and American Power Act to be Revised
John Kerry announced plans for a “dual track” to revise the Clean Energy Jobs and American Power Act (S. 1733) along with Senator’s Lindsay Graham and Joseph Lieberman. This announcement comes after Senate Republicans in the Environment and Public Works Committee walked out of Committee hearings that were to begin on Tuesday. Senator Kerry indicated that they will work with business groups and the White House to develop a compromise on the climate legislation. According to Senator Kerry, the Senate Committee is expected to continue its work on the bill and the revisions developed by the two “tracks” would be merged into a single bill.
More information on the Clean Energy Jobs and American Power Act can be found at Senator Kerry’s website. This legislation was introduced September 30, 2009. Another hearing before the Senate Committee on Environment and Public Works is scheduled for November 5, 2009 at 9:00 AM. This legislation mandates a 20% reduction of greenhouse gas emissions from 2005 levels by 2020 and includes measures to allow for greenhouse gas emissions trading.
U.S. Oil and Gas Reserves
The Energy Information Administration (EIA) has published its estimates of U.S. crude oil and natural gas reserves as of the end of 2008. The summary:
Proved reserves are those volumes of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved reserves of natural gas rose enough not only to replace production, but also to grow by almost 3 percent over 2007, largely due to continued development of unconventional gas from shales (see Table 1). In contrast, even though discoveries of crude oil rose for the third year in a row, proved reserves of crude oil fell by more than 10 percent.
The outlook is better, however, under new SEC rules. For more, see here.
Smart Thermostats?
The NYT is reporting on new technology being developed to adjust home power use by collecting data on customer usage and local weather. Looks like energy management may reach the residential level at a not too distant point in the future.
America's Natural Gas Revolution
That's the title to an article in the WSJ on the potential of shale gas in the U.S. It starts: "The biggest energy innovation of the decade is natural gas—more specifically what is called 'unconventional' natural gas. Some call it a revolution." Very interesting, and written by two authors from IHS CERA.
Funding Approved for US EPA Study of Hydraulic Fracturing
Senate and House of Representative conferees have approved a $32.24 billion Interior and Environment Appropriations Bill for fiscal year 2010, including monies for U.S. EPA to conduct a second study of hydraulic fracturing:
Hydraulic Fracturing Study .--The conferees urge the Agency to carry out a study on the relationship between hydraulic fracturing and drinking water, using a credible approach that relies on the best available science, as well as independent sources of information. The conferees expect the study to be conducted through a transparent, peer-reviewed process that will ensure the validity and accuracy of the data. The Agency shall consult with other Federal agencies as well as appropriate State and interstate regulatory agencies in carrying out the study, which should be prepared in accordance with the Agency's quality assurance principles.
For more, including a copy of the text of the bill, see here.
[Update: The American Petroleum Institute (API) has published a new guidance document on best-industry practices for drilling and cementing wells that may be hydraulically fractured. A copy can be found here.]
Houston Chronicle Shale Gas Series
The Houston Chronicle is running a series on the growth of natural gas production from shale formations. The first report - on the Haynesville Shale - can be found here. A sample:
For years, companies have used hydraulic fracturing — injecting water into underground formations to break apart rocks and release more oil and gas. The Woodlands-based Mitchell Energy perfected the techniques in the Barnett shale formations in North Texas. But it wasn't until Devon Energy acquired Mitchell in 2002 that engineers added horizontal drilling — turning the drill bit at a 90-degree angle to tap into a larger section of the strata.
A New Focus for Carbon Capture and Storage
The NYT is reporting that some policymakers are looking at oil refineries, natural gas processing plants, chemical plants, cement factories and ethanol plants as a new and different target for carbon sequestration. The reason - It would be simpler and cheaper.
Stormwater Rule Survey
U.S. EPA is proposing to survey three groups regarding their stormwater management practices, including the following: 1) the owners, operators, developers, and contractors of newly and redeveloped sites; 2) the owners and operators of municipal separate storm sewer systems; and 3) states and territories.
SEC Accounting Guidance Change
The WSJ is reporting that the Security and Exchange Commission has amended its guidance on how the agency interprets reserve accounting rules for oil and natural gas companies. The primary changes: Removing the exclusion for unconventional methods used in oil sands and shale gas development and changing the price used in determining reserves.
For more, see here (look for SAB, "Staff Accounting Bulletin" 113).
(Note - Subscription required for WSJ article).
Rig Count Up
Baker Hughes is reporting that the number of rigs drilling for oil and gas in the U.S. rose last week to 1,069, according to this WSJ article. Gas rigs - 728.
(Note - Subscription required.)
