The first offshore wind farm in the United States has been approved for off the coast of Cape Cod, according to this article in the NYT. "The Cape Wind turbines would lie in Nantucket Sound, about five miles from the nearest shoreline, and cover 24 square miles, roughly the size of Manhattan. The tip of the highest blade of each turbine would reach 440 feet above the water." Interesting ... and, congratulations!
The Commodity Futures Trading Commission (CFTC) met yesterday to consider whether certain contracts offered for trade on ICE, the Natural Gas Exchange, or the Chicago Climate Exchange, performed significant price discovery functions - and therefore must be regulated. The Staff believes that 7 natural gas basis contracts meet the necessary criteria, with price locations at the Southern California border (with Arizona), PG&E Citygate (San Francisco area), Northwest Rockies (Wyoming, Utah, and Colorado), Alberta (Canada), Chicago, Houston Ship Channel, and Waha (West Texas near New Mexico border).
For more, including video, see here.
We've observed that a number of our recent posts illustrate the challenges faced by our nation's energy industry, environmental and otherwise. For a fun and vigorous defense of energy producers in general, see this article from the WSJ. A sample: "Oil, and foreign oil in particular, has been a favorite whipping boy for American politicians since the 1970s. They say that we are 'addicted' to oil, that oil fosters terrorism and that we can 'win the oil endgame.' While those claims are effective at rousing the masses, here's the reality: The world isn't using too much oil. It's not using enough."
(Note: Subscription required.)
The New York Department of Environmental Conservation (NYDEC) has decided to require an environmental impact review for each well proposed to be sited in the Catskills watershed, according to this article in the NYT. One probable reason: "The decision by the State Department of Environmental Conservation also means that New York City will not have to worry about spending billions of dollars on a filtration plant to protect its water supply from possible contamination by the drilling."
On May 13th, the Pennsylvania Department of Environmental Protection (DEP) will be hosting a meeting with industry members having permits to drill in the Marcellus Shale to discuss how to prevent gas migration. For more, see here.
Last week, the U.S. Senate Committee on Energy and Natural Resources heard testimony on the need for comprehensive carbon capture and storage (CCS) legislation, including support for several of the legal choices made in draft legislation - such as declaring that the federal government owns the subsurface pore space where it also owns the surface estate. You can find more here, including links to the written testimony and a video of the hearing.
The Texas Railroad Commission is re-examining the state's mandatory pooling rules, according to this article in the Star-Telegram. "[I]t's creating headaches for gas operators, landowners and state regulators alike as they try to figure out how to balance the rights of all the owners. How can they allow drilling to proceed for the 75 to 80 percent of owners who have signed leases without trampling on the rights of those who haven't?"
The Energy Information Administration (EIA) has posted its weekly natural gas storage report, finding that we had 1,829 Bcf of working gas in storage as of Friday, April 16, 2010 - a net increase of 73 Bcf from the previous week. Graphically:
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Note that this is above the 5-year range. For more, see here.
USEPA’s new lead renovation rule becomes effective today. The rule will affect businesses involved in the management, leasing and renovation of certain "target housing" and child occupied facilities (including public and commercial buildings).
Contractors performing renovation, repair and painting projects that disturb lead-based paint must be certified. Rule applicability thresholds are low - any work for hire that disturbs more than six square feet of painted surfaces indoors or more than twenty square feet outdoors must have a certified professional on-site to perform or directly supervise such work.
Unfortunately, USEPA does not have enough approved trainers to train every contractor required to be certified. It may be difficult for quite a while to find a certified contractor.
Dominion Transmission has announced its Marcellus 404 project, intended to "gather, process and transport the growing volumes of high-Btu (wet) Marcellus natural gas production in Marshall and Wetzel counties, West Virginia, and surrounding counties in West Virginia, Pennsylvania and Ohio."
The U.S. EPA has proposed adding the following sixteen additional chemicals to the Toxics Release Inventory of reportable chemicals.
Chemical Name CAS#
1-Amino-2,4-dibromoanthraquinone 81-49-2
2,2-bis(Bromomethyl)-1,3-propanediol 3296-90-0
Furan 110-00-9
Glycidol 556-52-5
Isoprene 78-79-5
Methyleugenol 93-15-2
o-Nitroanisole 91-23-6
Nitromethane 75-52-5
Phenolphthalein 77-09-8
Tetrafluoroethylene 116-14-3
Tetranitromethane 509-14-8
Vinyl Fluoride 75-02-5
Additions to the Polycyclic Aromatic Compounds (PACs) category:
Chemical Name CAS#
1,6-Dinitropyrene 42397-64-8
1,8-Dinitropyrene 42397-65-9
6-Nitrochrysene 7496-02-8
4-Nitropyrene 57835-92-4
This represents the first expansion of the list in over a decade. The EPA’s stated purpose in seeking to add these chemicals is to provide information for the potential development of new regulations as well as to provide the public with more information about chemicals in their communities. These chemicals have been identified by the National Toxicology Program as reasonably anticipated to cause cancer. EPA isaccepting comments on the addition of these chemicals through June 7, 2010.
The long-awaited proposed revisions to TSCA were introduced in the U.S. House and Senate last week. As expected, these proposals, referred to as the “Safe Chemicals Act of 2010” in the Senate and as the “Toxic Chemicals Safety Act of 2010” in the House, contain numerous similarities to REACH. For example, the precautionary principle will apply, manufacturers will need to submit data on each chemical produced and its use, the EPA will be required to prioritize chemicals based on risk, the EPA will be expected to address high risk chemicals quickly. Chemical information submitted will be publically available, the scope of confidential business information will be significantly narrowed, and there is a focus on using safer alternatives to chemicals of concern.
Exxon Mobil has drilled the longest extended-reach well offshore California with a well that extends more than 7,000 feet below sea level and has a horizontal lateral reach of over one mile, according to this article in the Houston Chronicle. Nice.
The Energy Information Administration is reporting that natural gas storage increased last week by 87 Bcf to 1,756 Bcf, 64 Bcf higher than last year at this time and 246 Bcf above the 5-year average. Graphically:
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The Houston Chronicle has a number of interesting energy-related articles. Here, it notes that ConocoPhillips is planning on selling its stake in a Canadian oil-sands project to a Chines oil company for $4.7 billion. And here it reports on a plan by the Interior Department to review the royalties the federal government receives when leasing public lands for oil and gas development (as well as a more global review of what producers pay to develop resources off-shore).
Apache Corporation is planning on buying the Gulf of Mexico oil and gas assets of Devon Energy for $1.05 billion, according to this article in the NYT.
This is interesting. The NYT has an article looking at one possible solution to the problem of intermittent wind power generation: "One proposed solution to the intermittency problem is to tie many wind farms together with a transmission line — making an electric grid, as it were, consisting of wind turbines. Now, Willett Kempton of the Center for Carbon-free Power Integration at the University of Delaware and colleagues have shown how this 'all-for-one' approach might work with offshore wind farms along the Eastern Seaboard."
U.S. EPA is proposing to add emissions sources to its mandatory greenhouse gas (GHG) reporting program, including onshore petroleum and natural gas production, processing, transmission and storage facilities (see here). Its rationale: "Fugitive and vented GHG emissions from this industry (i.e., the petroleum and natural gas industry sector) are the second largest source of human-made methane emissions in the United States *** and represent a critical addition to the emissions data that EPA is already collecting under other parts of the MRR [Mandatory Reporting Rule]."
Facilities that emit 25,000 metric tons or more of CO2 equivalent per year would be captured in the program. Notably, "[d]ue to the unique characteristics of these industry segments, the proposed definition of 'facility' for onshore and offshore petroleum and natural gas production, and natural gas distribution differ from the definition of facility applied in the remainder of the MRR." For production facilities, the relevant definition proposed by EPA:
Onshore petroleum and natural gas production facility means all petroleum or natural gas equipment associated with all petroleum or natural gas production wells under common ownership or common control by an onshore petroleum and natural gas production owner or operator located in a single hydrocarbon basin as defined by the American Association of Petroleum Geologists which is assigned a three digit Geologic Province Code. Where an operating entity holds more than one permit in a basin, then all onshore petroleum and natural gas production equipment relating to all permits in their name in the basin is one onshore petroleum and natural gas production facility.
A public hearing has been scheduled for April 19, 2010, in Arlington, VA. The comment period will be open for 60 days following publication in the Federal Register.
[Update: The notice has now been published in the Federal Register, which can be viewed here. The related notice regarding CO2 sequestration can be found here. (Moved up.)]
The Energy Information Administration (EIA) has released its Short-Term Energy and Summer Fuels Outlook for April 2010. Among other things, EIA expects:
[T]he Henry Hub natural gas spot price to average $4.44 per million Btu (MMBtu) this year, a $0.49-per-MMBtu increase over the 2009 average, but a significant downward revision from the $5.17 per MMBtu projected in last month's Outlook. The price outlook is lower primarily because of an average 2 billion cubic feet per day (Bcf/d) upward revision to the 2010 domestic natural gas production forecast.
For more, see here.
This is cool. The Houston Chronicle has an article on a Chevron Corp. project in the Gulf of Mexico looking for oil nearly 6 miles below the ocean's surface using a new high-tech drillship called the Discoverer Inspiration. The risk is tremendous: "'You can do all the planning you want,' said Tom Jones, drilling superintendent of Chevron's Moccasin prospect, aboard the new rig called the Discoverer Inspiration. 'But there's only one way to find out, and that's to drill a well.'”
The Pittsburgh Tribune-Review has an interesting article on new rules being considered in Pennsylvania for wastewater treatment and disposal from drilling activities. Did you know that the industry is reusing more than 60% of its wastewater, for example?
The NYT is reporting that a petition drive to delay the implementation of climate legislation in California until state unemployment falls to 5.5% or less for four consecutive quarters is being bankrolled by Texas oil companies. The reason (in part): "A Valero spokesman, Bill Day, said costs would rise at the company’s two large refineries in California under the new emissions law because refineries use a lot of electricity and natural gas to heat and refine crude oil. Electricity prices would go up under the law, he said, and the consumption of natural gas produces carbon emissions that would be penalized under the legislation."
EOG Resources, Inc., has announced that it plans to re-focus its energies on oil exploration and development rather than natural gas, according to this article in the WSJ. "The Houston-based energy company said that it would sell as much as $1.5 billion in natural gas assets over the next 14 months to fund its exploration and may even seek a partner to develop other gas fields as part of an ongoing strategy to search out more U.S. oil reserves."
(Note: Subscription required.)
The Energy Information Administration (EIA) held its 2010 Energy Conference earlier this week, with a keynote address by Energy Secretary Chu. It has posted many of the presentations, which you can find here. Some look very interesting.
The Energy Information Administration (EIA) will be modifying the methodology it uses to estimate production data to, among other things, use more recent data from non-sampled companies. See here. For more, see this WSJ article: "But the Energy Information Administration, the statistical unit of the Energy Department, has uncovered a fundamental problem in the way it collects the data from producers across the country—it surveys only large producers and extrapolates its findings across the industry. That means it doesn't reflect swings in production from hundreds of smaller producers." The belief is that EIA has overestimated production as a result - and that these changes will correct the issue.
(Note: Subscription required for WSJ article.)
At least, that's a significant possibility raised in this article in the Denver Post. Colorado legislation directing Xcel Energy to come up with a comprehensive plan to cut pollution at the utility's smaller, aging coal-fired plants gives primary consideration to switching to natural gas. Long term contracts might be one way to accomplish that: "To facilitate that [i.e., long-term price stability], the act says utilities may, with PUC approval, enter into guaranteed gas contracts of three to 20 years."
The Cleveland Plain Dealer has an article on purchasing natural gas for the upcoming year. It's advice: "For the consumer, this means take your time [when deciding on a natural gas purchase plan for your home] and stop worrying about next winter." See the article for the author's reasoning.
ASTM International has issued its new Standard Guide for Financial Disclosures Attributed to Climate Change (ASTM E2718-10). This Standard is intended for voluntary use by reporting entities who disclose financial impacts related to climate change.
The Energy Information Administration (EIA) is reporting a net injection of 12 Bcf for the week ending March 26, 2010. This puts working gas in storage near the high end of the 5-year range (at 1,638 Bcf):
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For more, see here.
The Dallas Morning News is reporting that Edward "Coots" Matthews has died. For those who don't know, Coots was a famous oil well firefighter who served as part of the inspiration for the 1968 John Wayne classic "Hellfighters," and a co-founder of the oil fire fighting company Boots & Coots.
The Department of Transportation and U.S. EPA have issued a final joint rulemaking setting the nation's first greenhouse gas emission standards, and new stringent fuel-economy standards, for 2012 through 2016 model-year vehicles. "They require these vehicles to meet an estimated combined average emissions level of 250 grams of carbon dioxide per mile, equivalent to 35.5 miles per gallon (MPG) if the automobile industry were to meet this carbon dioxide level solely through fuel economy improvements. Together, these standards will cut greenhouse gas emissions by an estimated 960 million metric tons and 1.8 billion barrels of oil over the lifetime of the vehicles sold under the program (model years 2012-2016)."
For more, see here.
The Houston Chronicle is reporting that Royal Dutch Shell has started producing from its Perdido hub in the deep water Gulf of Mexico. "The Perdido complex will handle production from three deep water fields called Great White, Silvertip and Tobago, which are located about 200 miles south of Freeport. It is designed to produce 100,000 barrels of oil and 200,000 cubic feet of gas per day." Nice.
We've previously noted that some major oil producers are looking to the shale basins for natural gas production. See here, e.g. Well, it seems that turn-about is fair play - the Star-Telegram is reporting that some independent natural gas producers with large positions in the shale basins are turning to oil. For example: "Oklahoma City-based Chesapeake has derived more than 90 percent of its production from natural gas. But McClendon, speaking at Hart Energy's annual Developing Unconventional Gas conference at the Fort Worth Convention Center, said today's economics 'just compel you to look for oil.'"
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