On Sunday May 29, 2011, the Texas House passed legislation that could require drilling companies to publicly disclose the chemicals they use to crack tight rock formations in their search for natural gas. Governor Rick Perry has not indicated whether he will sign bill or not.
The State of Texas has filed its initial brief challenging U.S. EPA's endangerment finding that concludes that greenhouse gases (GHGs) pose a danger to human welfare, according to this release by the State Attorney General's office. "The EPA’s Endangerment Finding concluded that greenhouse-gas emissions contribute to the 'perceived but undefined danger' variously referred to as global warming or climate change. The States’ brief explains that the Endangerment Finding is legally flawed because the EPA 'refused to determine what ‘atmospheric concentrations’ of GHGs' pose a threat to humans – which is required by the Clean Air Act. When the EPA issues an Endangerment Finding, the Clean Air Act requires the agency to establish clear standards. The States’ brief explains that the EPA made no 'attempt to determine whether reducing GHG emissions will have any impact on climate change.'"
You can find a copy of the brief at the link as well.
The Energy and Climate Change Committee of Britain's House of Commons has issued a report finding "no evidence that the hydraulic fracturing process involved in shale gas extraction – known as ‘fracking’ - poses a direct risk to underground water aquifers provided the drilling well is constructed properly." For more see here.
The NYT is reporting on the potential for increased smog due to oil and gas operations: "Thousands of natural gas wells are expected to be drilled in Pennsylvania over the next few years, requiring a fleet of construction equipment, diesel engines and compressor stations. Together, they could be a large new source of smog-forming emissions along the Northeast corridor, much of which still struggles with old air quality standards at a time when U.S. EPA is preparing to make the rules stricter."
The Washington Times has a good article on the benefits to the local economy of domestic production: "Sunnyside's recent profits are through the roof, up more than 200 percent in the past three years. Mr. Battista's workforce has tripled since 2008, from five to 15 employees. Solar power wasn't the economic savior, however. Instead, the booming Marcellus Shale natural gas drilling industry gave the small-town businessman the means to build a bigger, better store and invest in new trucks to transport goods to gas companies drilling across western Pennsylvania."
The store opened 31 years earlier to do business with an infant solar-power industry that never materialized.
The Daily Local News is reporting that local regulation may be the next big obstacle to oil and gas development in Pennsylvania: "Kathryn Klaber, president of the Marcellus Shale Coalition, an industry group, told the commission Friday that drilling firms are having difficulty navigating the 779 zoning ordinances in the 1,491 municipalities in the Marcellus shale region."
Fortunately, in Ohio, the Division of Mineral Resources Management's preemption authority is pretty strong. See Ohio Rev. Code s. 1509.02.
The Pennsylvania Public Utility Commission (PUC), in a narrow 3-2 decision, has remanded the application of Laser Northeast Gathering Company, LLC, to an administrative law judge (ALJ) for a determination on whether the granting of a certificate of public convenience is necessary or proper for the service, accommodation, convenience or safety of the public (see this press release). This overturns an earlier decision of the ALJ finding that Laser Marcellus was not a public utility under Pennsylvania law, which had focused on whether the pipeline should have the power of eminent domain (see our earlier discussions here and here, e.g.).
For a copy of the relevant motion and related opinions, see here.
The Pennsylvania Department of Environmental Protection has released the findings of a third study showing no emissions levels that would be of public concern: "'The results show there are no emission levels that would be of concern to the health of residents living and working near these operations,' DEP Secretary Mike Krancer said. 'They are consistent with the results of our air monitoring in southwest and northeast Pennsylvania, the other two areas of the state with the most Marcellus drilling.'" (News Release.)
For a copy of the study, see here.
According to this article in the Pittsburgh Tribune-Review, Cheniere Energy Inc. has received approval from the Department of Energy to export 2.2 Bcf of LNG per day: "Cheniere said that under the Energy Department decision, it will have seven years to begin exports after Federal Energy Regulatory Commission approval. The terminal will maintain its ability to import LNG."
[CORRECTION: Note that the DOE order is for LNG exports to any permitted importing nation (not just China, as was reported in the Tribune-Review article) (we have corrected the post accordingly). In fact, the DOE announcement notes: "In August 2010, Sabine Pass Liquefaction, LLC filed a two-part application requesting authority to export up to 803 billion cubic feet per year of domestically produced natural gas as LNG for a period of 20 years. On September 10, 2010, the Department approved these exports to 15 countries with which the U.S. already has a Free Trade Agreement covering natural gas. Today the Department is extending this authorization to include all other countries except those that lack the ability to receive imports or those with which trade is prohibited by U.S. law or policy." Very interesting.
For a copy of that announcement, and a link to the order, see here.]
That's the message of the IEA according to this article in the WSJ: "The world oil market urgently needs extra supplies to prevent economic damage to importing countries that could derail the global recovery, the governing board of the International Energy Agency said."
That's the title to a recent post by John Stossel discussing, among other things, the movie Gasland. "But as I write in my syndicated column this week, it turns out that the film misleads: The best fire scene in the movie was shot in Colorado, where the filmmaker is in the kitchen of a man who lights his faucet. But Colorado investigators went to that man's house, checked out his well and found that fracking had nothing to do with his water catching fire. His well-digger had drilled into a naturally occurring methane pocket."
It's good. Read the whole thing.
Ohio EPA and Ohio DNR appear to have reached agreement on a policy regarding the use of POTWs for brine disposal: "Disposing directly into a surface water body, either directly or via a Publicy Owned Treatment Works (POTW), is not listed as one of these options [for brine disposal found in Ohio Rev. Code Section 1509.22]. Moving forward, ODNR does not envision using its authority to allow for discharges to surface waters either directly or via a POTW."
For a copy of the writing, see here.
The WSJ has an interesting article on long-haul natural gas trucks. The costs appear prohibitive at the moment: "United Parcel Service Inc., which runs one of the country's biggest truck fleets, pays about $95,000 for an average long-haul "tractor"—the front part of the 18-wheeler, housing the engine and driver. It recently ordered 48 natural-gas versions at a cost of $195,000 apiece—about double the cost of a diesel model, said Mike Britt, UPS's director of engineering and maintenance." Still, very interesting.
We've frequently noted the articles in the media on hydraulic fracturing. The NYT had one on May 7th (mis)stating: "But the practice [i.e., hydraulic fracturing] also pours millions of gallons of dangerous chemicals into the ground and into wastewater treatment systems, which in some cases cannot remove all the potential toxins. There are also numerous documented cases in which fracking fluids leaked into aquifers and contaminated drinking water." (From Google cache; emphasis is ours).
What you don't see often is the following:
Correction: May 17, 2011
An article on May 7 about the Obama administration’s appointment of a panel of experts to find ways to make hydraulic fracturing safer misstated the prevalence of cases in which fluids from the gas drilling process have been proven to have contaminated drinking water. There are few documented cases, not numerous ones, although federal and state investigations into reports of such incidents are continuing.
And even that isn't necessarily correct (what documented cases?) ... Still, the NYT should be commended for trying.
U.S. EPA has directed six natural gas producers in Pennsylvania to disclose how they intend to dispose of their drilling wastes. "EPA’s action follows a request by PADEP asking drillers to voluntarily stop taking wastewater to Pennsylvania wastewater treatment plants by May 19. EPA wants to know where drillers are now going to dispose of their wastewater and will work with PADEP to ensure EPA has access to this information."
For a copy of the letters see here (for a sample letter and the enclosure).
It's starting to look like a frontal assault.
The NYT is reporting that President Obama has announced steps that this administration will take to increase domestic oil production: "In his weekly radio and Internet address, Mr. Obama said the administration would begin to hold annual auctions for oil and gas leases in the Alaska National Petroleum Reserve, a 23-million-acre tract on the North Slope of Alaska. The move comes after years of demands for the auctions by industry executives and Alaska’s two senators, Lisa Murkowski, a Republican, and Mark Begich, a Democrat." In addition: "The administration will also accelerate a review of the potential environmental impact of drilling off the southern and central Atlantic coast and will consider making some areas available for exploration. The move is a change from current policy, which puts the entire Atlantic Seaboard off limits to drilling until at least 2018."
The WSJ is reporting that California regulators are proposing to require the state's natural gas utilities to undertake safety tests on decades-old pipelines in response to the PG&E explosion that occurred in the fall of last year. "The proposed order, issued late Tuesday, stems from an explosion last September of a natural-gas line owned by PG&E Corp. that killed eight people and destroyed dozens of homes in San Bruno. A federal investigation showed the pipeline, built in the 1950s, had manufacturing defects but had never had a safety test that might have revealed such flaws."
(Note: Subscription required.)
We've mentioned recently a number of attacks on domestic production, and wanted to note that it's not everyone. Here is an article from the Tucson Citizen commenting on the recent Duke University study, for example: "Upon further reading [], 'The authors admit they have no baseline data at all, which makes it impossible to characterize the state of those water wells prior to recent development.' So we don’t know if nearby drilling caused 'contamination' or if the presence of methane there is a natural phenomenon. The headline does not match the story."
The Energy Information Administration (EIA) has issued its Short-Term Energy Outlook for May. Regarding natural gas, it summarizes:
Natural gas working inventories ended April 2011 at 1.8 trillion cubic feet (Tcf), about 11 percent, or 230 billion cubic feet (Bcf), below the 2010 end-of-April level. EIA expects that working gas inventories will build strongly during the summer and approach record-high levels in the second half of 2011. The projected Henry Hub natural gas spot price averages $4.24 per million British thermal units (MMBtu) in 2011, $0.15 per MMBtu lower than the 2010 average. EIA expects the natural gas market to begin tightening in 2012, with the Henry Hub spot price increasing to an average of $4.65 per MMBtu.
A couple of items to note regarding hydraulic fracturing in the news:
It's unclear who owns the minerals underlying much of Ohio's state park system, according to this article in the Columbus Dispatch. "Of the 115,300 acres of state parks, the Ohio Department of Natural Resources estimates that it owns the gas rights for 34,590 acres. That's less than one-third of the state park land that could be opened to drilling if lawmakers approve one of several proposals."
Interesting. And a good map illustrating the issue.
A Texas court of appeals recently upheld a lower court's award of $2 million to a producer for a regulatory taking imposed by the City of Houston via a permit revocation (see City of Houston v. Maguire Oil Company, et al., Fourteenth Court of Appeals, Case No. 14-09-00701-CV). The genesis of the taking - the misapplication of a local ordinance imposing drilling restrictions. For a copy of the case, see here.
The NYT is reporting on new climate lawsuits brought, in the main, by teenagers against various federal and state agencies claiming that they haven't done enough to protect earth's atmosphere for future generations. "Most of the individual plaintiffs in the suit, filed in United States District Court in San Francisco, are teenagers, a decision apparently made to underscore the intergenerational nature of the public trust that the earth’s atmosphere represents. More novel, however, is the suit’s reliance on the public trust doctrine, which dates to Roman times."
The San Francisco Chronicle is reporting that Chevron has agreed to purchase additional Marcellus assets in Pennsylvania from Chief Oil & Gas LLC and Tug Hill Inc. "The transaction is expected to close by the end of June and will give the company access to about 5 trillion cubic feet of gas in the area, the company said. In February, Chevron completed its $3.58 billion purchase of Atlas Energy Inc., a Moon Township, Pa., owner of 622,000 acres in the Marcellus Shale."
U.S. EPA and the Army Corps of Engineers (Corps) have published for comment a guidance document that describes how the agencies intend to identify waters protected by the Clean Water Act and implement the Supreme Court's decisions in Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers (531 U.S. 159 (2001)) and Rapanos v. United States (547 U.S. 715 (2006)). You can find the guidance document, and supporting documents, here (Docket ID No. EPA-HQ-OW-2011-0409).
Comments are due July 1, 2011.
With the renewed targeting of the profits made by some of the majors in the oil and gas industry, we thought some perspective is in order. From ExxonMobil:
Here’s a simple fact of economics that’s getting everyone in Washington pretty excited this week: When prices increase for a commodity like oil, companies that produce and sell that commodity earn more money.
***
For every gallon of gasoline, diesel or finished products we manufactured and sold in the United States in the last three months of 2010, we earned a little more than 2 cents per gallon. That’s not a typo. Two cents. (Emphasis is ours.)
What are the taxes on a gallon of gasoline? 48-cents?
Continue Reading...According to this press release, the Illinois Attorney General has filed suit against independent producer Capco Offshore of Texas, Inc., for a spill of thousands of gallons of oilfield waste, including brine and crude oil, into ditches and farmland in Jasper County, Illinois. The suit alleges "water pollution and oil spill liability claims for the April 5 overflow of a concrete storage pit at the well site just south of Willow Hill. After a citizen complaint, the Illinois Department of Natural Resources’ Office of Mines and Minerals (IDNR/OMM) and the Illinois Environmental Protection Agency (IEPA) estimated at least 1,000 barrels, or 42,000 gallons, overflowed at the site near the Embarras River."
The Houston Chronicle is reporting that U.S. EPA will soon release guidance in fracking with diesel: "Federal regulators will soon clarify the rules for natural gas companies that inject diesel fuel into the ground as part of their hydraulic fracturing operations, the head of the Environmental Protection Agency said Tuesday." Don't they still need rules?
According to this article, Shell Oil Company has announced that it will no longer seek to drill for oil this summer in certain parts of the United States: "Shell Oil Company has announced it must scrap efforts to drill for oil this summer in the Arctic Ocean off the northern coast of Alaska. The decision comes following a ruling by the EPA’s Environmental Appeals Board to withhold critical air permits. The move has angered some in Congress and triggered a flurry of legislation aimed at stripping the EPA of its oil drilling oversight." That's after spending nearly $4 billion on the project.
U.S. EPA has extended several deadlines that you may find relevant:
First, EPA has been asked to reconsider the requirement to submit requests to use best available monitoring methods during the 2011 calendar year by April 30, 2011 and pursuant to its authority under CAA section 307(d)(7)(B) consequently is extending the deadline contained in those provisions until July 31, 2011. Second, EPA has also been asked to reconsider the time period during which owners and operators of certain specific sources could automatically use BAMM without having to request approval by the Administrator. As a result of this second request, pursuant to its authority under CAA section 307(d)(7)(B) EPA is also extending the date by which owners and operators of certain specific sources would not be required to request approval by the Administrator for the use of BAMM from June 30, 2011 until September 30, 2011. (Emphasis is ours.)
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