CO2 Sequestration Rule Announced

U.S. EPA has finalized a rule governing the sequestration of carbon dioxide, according to this press release.  More specifically:  "EPA finalized a rule that sets requirements for geologic sequestration of carbon dioxide, including the development of a new class of injection well called Class VI, established under EPA’s Underground Injection Control (UIC) Program. The rule requirements are designed to ensure that wells used for geologic sequestration of carbon dioxide are appropriately sited, constructed, tested, monitored, and closed. The UIC Program was established under the authority of the Safe Drinking Water Act."

For more, including a pre-publication copy of the rule, see here.

(Update:  For a copy of the Federal Register version, see here.)

Updated Gulf Report

The WSJ is reporting that chemical dispersants worked better than previously thought in breaking up oil spilled in the Gulf of Mexico:  "The updated [NOAA] report finds that of the estimated 4.9 million barrels released after the Deepwater Horizon off-shore rig exploded and sank last April, roughly 77% either was directly recovered, burned off, skimmed, dispersed or evaporated or dissolved. *** The most significant change from the August report is that government scientists have doubled the amount of oil classified as 'chemically dispersed'— from 8% in August to an estimated 16% now."

You Can't Drill Here

The Post-Gazette is reporting that Pittsburgh has banned natural gas drilling.  A challenge in the future?

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Natural Migration

This article from the Columbus Dispatch reminded us that natural gas migration is often blamed on oil and gas operators, ignoring the fact that this type of migration occurs naturally in many producing regions:  "Naturally occurring natural gas led to Thursday's explosion at Darbydale Elementary School, which is to remain closed for the rest of this week.  South-Western officials expected to open the school Wednesday, but inspectors discovered today that natural gas seeping from underneath the building caused the fire in the boiler room."

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NYT: "There Will Be Fuel"

The NYT has an interesting article on energy supplies:  "Just as it seemed that the world was running on fumes, giant oil fields were discovered off the coasts of Brazil and Africa, and Canadian oil sands projects expanded so fast, they now provide North America with more oil than Saudi Arabia. In addition, the United States has increased domestic oil production for the first time in a generation."  But all is not well given this abundance:  "And while moderately priced oil and gas bring economic relief, they also make renewable sources of energy like wind and solar relatively expensive and less attractive to investors unless governments impose a price on carbon emissions."

It even notes a time-tested solution for high energy prices - High energy prices.  "The same high prices that inspired dire fear in the first place helped to resolve them. High oil and gas prices produced a wave of investment and drilling, and technological innovation has unlocked oceans of new resources."

Worth a read.

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Texas: Pipeline Safety

The Houston Chronicle is reporting that more than half of the natural gas transmission lines in Texas are vulnerable to failure:  "In Texas alone, more than 25,000 of nearly 46,000 miles of transmission pipe are older than 1970 ***.  Federal regulators warned companies more than 20 years ago to reconsider the use of all pipelines built with lower-quality welding techniques that were widely employed in pipe factories prior to 1970 ***. Also a potential problem is some aged protective coating on pipes that actually can make them more vulnerable to corrosion, according to a number of pipeline experts."

Natural Gas Storage

The Energy Information Administration (EIA) has released its weekly storage report:  "Working gas in storage was 3,840 Bcf as of Friday, November 5, 2010, according to EIA estimates. This represents a net increase of 19 Bcf from the previous week. Stocks were 31 Bcf higher than last year at this time and 342 Bcf above the 5-year average of 3,498 Bcf."  Graphically:

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Short-Term Energy Outlook

The Energy Information Administration (EIA) has released its Short-Term Energy Outlook for November, and the projected spot price for natural gas in 2011 is not robust:

The decline in prices over the past two months was partly the result of high production, mild weather, and the absence of significant hurricane activity in the Gulf of Mexico, all of which contributed to the large inventory build. Projected Henry Hub prices rise to $4.22 per MMBtu in January 2011 because of the increase in winter space-heating demand. EIA has lowered the average 2011 Henry Hub price forecast from last month's Outlook by $0.27 per MMBtu, to $4.31 per MMBtu, based on the upward revisions in the domestic production and inventory forecasts.  (Emphasis is ours.)

For more, see here.

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Update: EPA Frac Study

We've reported previously on the study being done by U.S. EPA on the potential impact of hydraulic fracturing on drinking water (see here, e.g.).  EPA announced yesterday that eight of the nine frac companies that it had sent a voluntary information request had agreed to provide the sought-after information.  Halliburton refused and is being chastised, by subpoena, by EPA.  From its cover letter:  "EPA believes that Halliburton's response is inadequate and inconsistent with the cooperation shown to date by the other eight companies.  Since Halliburton appears not to be committed to providing all the requested information on an expeditious schedule, EPA, therefore is ordering the submission of the information outlined in the enclosed Subpoena and Information Request, pursuant to the authorities cited therein."

For a copy of the related press release, see here; for a copy of the letter and subpoena, see here and here.

An Accurate Headline

From the NYTObama's Enthusiasm for Gas Drilling Raises Eyebrows.  "President Obama's newfound interest in expanded natural gas drilling yesterday surprised many on all sides of the drilling debate, from environmentalists to drillers and even the coal industry."  Indeed.

WV Development Can Go Forward

Earlier this week, the West Virginia Supreme Court of Appeals cleared the path for oil and gas development in Chief Logan State Park, according to this article in the Charleston Gazette.  The pivotal question, according to the court, was whether "the statutory provision prohibiting the DNR from authorizing mineral exploitation within West Virginia state parks, i.e., W. Va. Code § 20-5-2(b)(8), preclude the issuance of the well permits for which Cabot has applied?"  The court found that it did not, holding that "W. Va. Code § 20-5-2(b)(8) has no preclusive effect upon the requested permits herein insofar as this statutory language was enacted after the 1960 deed conveying the subject property was executed. As such, W. Va. Code § 20-5-2(b)(8) cannot be applied to retroactively modify the parties' written agreement memorialized in their deed."  (Emphasis is ours.)

For a copy of the court's decision, see here (Cabot Oil & Gas v. Huffman, Case Nos. 35508, 35509, 35510, and 35511).

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PA Marcellus Air Study

We've reported several times on the emergence of alleged air contamination issues relating to E&P operations, primarily out of the southwest and U.S. EPA.  Not surprisingly, the claim has come to the Appalachian Basin.  The Pennsylvania Department of Environmental Protection (DEP) has released a report on a short term air quality study conducted near Marcellus Shale natural gas operations in southwestern Pennsylvania.  According to DEP Secretary John Hanger, "The data shows no emission levels that would constitute a concern to the health of residents living near these operations."  (Emphasis is ours.)

For a copy of the report, see here.