Energy Department looks at impact of LNG exports on U.S. prices
(Wall Street Journal; Dec. 22) - Federal officials will soon weigh in on a fight between companies that want to export some of America's growing supply of natural gas and big manufacturers that oppose the exports because they rely on cheap domestic gas. If the Department of Energy finds that LNG exports will raise domestic prices and fail to serve the country's best interests, it could block applicants from exporting to most nations except those with free-trade agreements with the U.S. That could doom the projects.
In the next few weeks, Washington's number-crunchers are set to estimate whether exports would cause U.S. prices to swell - a finding they will use in deciding the fate of more than a half-dozen projects across the nation. The battle, which pits manufacturers such as Dow Chemical against energy producers like ConocoPhillips, shows how the boom in U.S. fossil-fuel production is upending markets and forcing policy makers into decisions they didn't imagine facing just a few years ago.
Producers are setting their sights on markets in Europe and Asia where natural gas fetches three to four times the price in the U.S. But Dow Chemical and others say allowing exports will crimp the supply available to U.S. users and drive up prices here. The Energy Department is looking at whether exports will drain U.S. supplies and inflate domestic prices. The Energy Information Administration, part of the Energy Department, is expected to deliver its analysis in a few weeks.
EPA issues new emissions rules
for oil- and coal-fired power plants
(Washington Post; Dec. 21) - The EPA announced Dec. 21 a regulation that was more than two decades in the making, requiring coal- and oil-fired power plants to control emissions of mercury and other poisons for the first time. About 40 percent of the nation's roughly 1,400 coal- and oil-fired utilities lack modern pollution controls on toxic emissions; the new requirement is expected to prompt the closure of some of the oldest and dirtiest plants.
Congress gave the EPA the authority to limit these toxins - which include mercury, arsenic, acid gas, nickel, selenium and cyanide - in 1990, but disagreements among federal regulators, industry officials and activists over how best to regulate them have stalled action until now. The rule will take effect in about 60 days, and the EPA said the new regulations are slated to fully take effect in three years.
The rules could face legal and legislative hurdles, however. Some utilities have vowed to fight it in court, while the top Republican on the Senate Environment and Public Works Committee, James M. Inhofe (Okla.), said he would seek to block it in Congress. Some utility and coal industry officials said cleaning up these plants will cause severe economic hardship and could lead to power outages in regions of the country.
Ohio State study questions natural gas
job creation numbers
(Platts; Dec. 20) - Natural gas drilling in Ohio offers several benefits, but enough new jobs to impact the state's economy isn't one of them, a new economic study released this week by Ohio State University says. The two largest benefits of opening up shale drilling in Ohio are the environmental gains of cleaner gas displacing coal for power generation and lower electricity costs benefiting the state's massive manufacturing economy, the authors said.
The study examining the economic impact of drilling in Ohio faults previous industry-funded studies - that predict as many as 200,000 jobs - for using impact models long discarded by academic economists for routinely overestimating job-creation numbers. Co-authors Mark Partridge and Amanda Weinstein said the number of permanent jobs is likely to be a more modest 20,000. "Previous studies on the economic impacts of natural gas appear to have widely overstated the economic impacts," the authors wrote.
In addition to being funded by industry - "not the best sources of information for economic effects (regardless of the industry)" - those studies ignored that oil and gas operations are three times more capital intensive than other industries, resulting in fewer jobs per dollar spent. Those studies also have ignored the displacement effects of gas drilling - be it coal miners laid off because power plants burn more gas or tourism workers eliminated because of drilling's effects on the environment - the study said.
N.J. debates larger role for natural gas
(NJ Spotlight; Dec. 19) - Like it or not, natural gas will probably play a bigger role in New Jersey's energy future. That was the consensus of a panel of experts who convened Dec. 16 at Rider University for a NJ Spotlight Roundtable on natural gas to debate the pros and cons of promoting greater reliance on the fossil fuel -- a stance embraced by the recently adopted state Energy Master Plan.
From expanding the state's network of interstate gas pipelines, to encouraging fleet owners to switch their vehicles from diesel to compressed natural gas, to generating electricity more efficiently and with less pollution, the plan envisions gas replacing more carbon-polluting alternatives. "The reality is that it's a game changer for this country," said Ed Graham, president and chief executive officer of South Jersey Industries, owner of South Jersey Gas, one of four regulated gas utilities in New Jersey.
"There's no way we keep the lights on without a lot of natural gas," said Steven Gabel, president of Gabel Associates, an energy and environmental consulting firm based in Highland Park, N.J. He said 25,000 megawatts of coal-fired plants are likely to be retired because of new EPA rules. "The arithmetic is unassailable," he said. But Dena Mottola Jabroska, of Environment New Jersey, argued that hydraulic fracturing used to extract shale gas poses a huge threat to the drinking water of millions of people.
Pennsylvania drilling fee debate will extend into 2012
(Times-Tribune, Scranton, PA; Dec. 19) - An effort will be made next year in the Pennsylvania legislature to use a formal process - a House-Senate conference committee - to resolve differences over Marcellus Shale impact fee legislation.
A county-optional impact fee remains a major sticking point between the two Republican-controlled chambers and Gov. Tom Corbett. This year's Senate bill contains a state-administered fee, while the House-approved bill gives counties the option of levying a fee (favored by the governor). The dollar amount of the fee and the extent of local zoning control over drilling activities need to be worked out, too. The Senate bill would set the first-year drilling fee at $50,000, while the House is at $40,000.
Senators representing Southeast Pennsylvania are under pressure from constituents to vote for an impact fee that generates enough revenue to address public purposes other than just cleaning up after drilling activities, said Sharon Ward, executive director of the Pennsylvania Budget and Policy Center, a Harrisburg think tank that supports a state severance tax.
Small drillers object to flat fees per well
(Pittsburgh Tribune-Review; Dec. 19) - All of the leading drilling fee proposals under consideration by Pennsylvania lawmakers call for flat fees - but that doesn't mean they'll have the same effect on every driller. Most deep-shale drillers are expected to pay a flat fee that will be equivalent to 1 percent to 3 percent of revenues to help pay for the roads, housing and social services they impact.
But because the fee is the same for every well and not tied to production, small drillers that don't produce as much gas say they would end up paying a higher percentage of their revenues. Their rate could be the equivalent of 9 percent.
Two small, closely connected drilling companies have been lobbying state officials - with some success - to lower the proposed shale-drilling impact fees for a few small companies such as theirs. People should be "very concerned" about bigger companies muscling out smaller ones, said Louis D. D'Amico, president and executive director of the Pennsylvania Independent Oil and Gas Association. It's unfair for small companies to pay the same fee because it essentially taxes them at a higher rate, he said.
Fracking wastewater handling varies by state
(Kansas City Star; Dec. 22) - America's race for cheap natural gas and energy independence has been outpacing the flow of state rules aimed at assuring people that gas production won't harm their health. Today 24 states have wells that use hydraulic fracturing, with regulation largely up to state environment departments. States have been issuing new rules and guidelines, but often years after the boom began.
The biggest environmental issue of late is what happens to the wastewater that comes up when a well is fracked. The water is full of salt and contains naturally occurring radioactive elements and metals from deep layers, as well as fracking chemicals. Pennsylvania geology lacks many underground wells where wastewater can be stored. Companies increasingly recycle the water by cleaning it for new fracking jobs. The salt sludge that is removed is sent to landfills. Some of wastewater goes to wells in Ohio.
In New York state, there are no deep natural wells to store wastewater permanently. Drillers will need to send any wastewater that can't be recycled to other states for treatment or storage. Texas, where the shale gas boom began, has thousands of storage wells for fracking wastewater. On Dec. 13, Texas regulators required operators of new wells that get permits after Feb. 1 to disclose the chemicals and the amount of water they use to fracture them.
Drillers want state to pre-empt local laws in Idaho
(The Associated Press; Dec. 20) - Natural gas wildcatters aim to ask lawmakers to stop cities and counties from passing laws meant to halt development of Idaho's emerging oil and natural gas fields, foreshadowing a 2012 legislative fight over how much power local governments should have in their own backyards. An environmental group fears the proposal could weaken groundwater protections.
Snake River Oil & Gas, which is exploring for gas in western Idaho, is developing the measure for legislative consideration after Washington County proposed an ordinance with strict size limits, expensive bonds, multimillion-dollar insurance policies and restrictions on well locations, among other things.
Idaho already has temporary rules governing the industry, with lawmakers next year set to make them permanent. John Peiserich, a lawyer for Snake River's Arkansas-based parent company, said Dec. 20 that adding a patchwork of onerous new county regulations could doom a nascent Idaho industry before it's even off the ground. "We like a consistent regulatory environment," he said.
Encana blasts EPA over report
linking tainted water to drilling
(Calgary Herald; Dec. 20) - Encana and the EPA faced off Dec. 20 over a report linking natural gas development with contaminated water in Pavillion, Wyo. During a conference call, Encana picked apart the Dec. 6 EPA report fingering hydraulic fracturing as the probable culprit for the tainted water in Pavillion. The second-largest producer of natural gas in North America called for an independent review of the report.
"It is our belief that the EPA made critical mistakes and misjudgments at almost every step in the process," said David Stewart, environmental lead for Encana's Wyoming operations. "From the way it designed the study to the way it drilled and completed its wells, to the way it collected and interpreted the data, to its decision to release a preliminary draft report without independent third-party review."
The disputed EPA results were based on samples taken from two deep wells drilled in Pavillion last fall and in April. The samples found traces of methane, benzenes and other chemicals used by industry in hydraulic fracturing for oil and gas. Encana said it would be submitting a detailed report on its wells to the EPA by Jan. 27, when a 45-day comment period closes. The EPA report also is subject to a 30-day peer review. The EPA defended its findings, reiterating the chemicals found were common to hydraulic fracturing, were not naturally occurring, and had been used in the Pavillion field.
Heating oil distributors oppose
Maine loan guarantee for gas line
(Morning Sentinel; Waterville, ME; Dec. 19) - A bill to be considered in next year's legislative session in Maine could make it easier for natural gas pipelines to obtain financing. But some groups, including those representing heating oil interests, are crying foul, saying the proposal is unfair and amounts to the state underwriting one source of energy.
Republican Sen. Roger Katz said he sponsored the bill with the proposed Kennebec Valley Gas Co. pipeline in mind. Plans call for the $85 million pipeline to pass through Katz's district. "In my view, this gas pipeline is the most important economic development project in the last 20 years in this area," he said. "We all know that our high energy costs are making it really difficult to attract and retain good businesses."
His bill would raise the Finance Authority of Maine's cap on insuring loans. The agency helps businesses secure loans by guaranteeing to repay up to 90 percent of the debt if the borrower defaults. The agency's current lending cap is $7 million, far less than the cost of the pipeline. The Maine Energy Marketers Association sees the bill as endorsing a particular energy source and interfering in the market, said Jamie Py, association president. The group represents sellers of several products, including heating oil.
India could buy LNG from Israel
(The Jerusalem Post; Dec. 19) - Israel has offered to export natural gas to India, according to Dec. 19 report in the Indian daily Economic Times. Negotiations for the gas deal are set to intensify when India's foreign minister visits Israel in January, according to the report.
India currently receives most of its natural gas from Gulf countries such as Qatar and Oman, but the country is experiencing gas deficiencies. Plans for a major India-Iran gas deal soured following a recent Indian condemnation of Iran's nuclear program. A planned gas pipeline from Iran to India via Pakistan was also scrapped due to security considerations. Meanwhile, India's domestic supply of gas, primarily from the Krishna-Godavari basin, has seen a decrease in production following pricing disputes.
Recent discoveries of gas in the Leviathan and Tamar fields have the potential to turn Israel into an important player in the natural gas industry. Estimates show that Leviathan has some 16 trillion cubic feet of gas. Tamar has an estimated 8 trillion cubic feet of gas, with production to start possibly in 2013. The nation is considering LNG exports.
Rising Asian demand drives global
coal consumption growth
(U.S. Energy Information Administration; Dec. 20) - Global coal demand has almost doubled since 1980, driven by increases in Asia, where demand is up over 400% from 1980-2010. In turn, Asian demand is dominated by China; demand in China increased almost five-fold between 1980-2010 and accounted for 71% of Asia's consumption and almost half of coal consumption globally in 2010.
The U.S. Energy Information Administration, part of the Energy Department, has prepared an animated map of global coal consumption: See animated map and read more....