Archive for the ‘Oil and Gas Sector’ Category

18 Jan

Salazar Departs Interior, Remembered for Advancing Renewables

Posted by John Renehan in Agency Administration, Development, Gas and Oil Leases, Natural Gas, Oil and Gas Sector, Renewable Energy, The Arctic.

Photo by Bob Johnson, USFWS Mountain Prairie, some rights reserved.

Photo by Bob Johnson, USFWS Mountain Prairie, some rights reserved.

One of the stars of the Green Mien since its inception has been Ken Salazar, Obama’s Secretary of the Interior, who announced he would be leaving Washington to return to his home in Colorado in March. He focused Interior on renewable energy and reorganized the formerly scandal-ridden agency into three agencies with clear and separate functions. We have written about his hand in the Extractive Industries Transparency Initiative, in developing oil drilling plans in Alaska, in offshore oil and gas oversight, and much more.

The White House has given no indication as to who might succeed him, and combined with the departure of EPA’s administrator Lisa Jackson and DOE’s Steven Chu, continuity of the Obama Administration’s policies toward energy development and climate change is in question. As these vacancies are filled, expect to read about expectations for the new administrators’ goals and policies here.

Salazar has broadened the scope of Interior’s activities from its traditional focus on mining, forestry, and oil and gas development to an emphasis on renewable energy. Since 2009, the department has authorized 34 solar, wind, and geothermal energy projects, settled a 15-year legal battle with American Indian tribes, and established seven new national parks. His handling of contentious oil and gas issues, like the Deepwater Horizon spill and allowing Shell begin exploration for oil in the Arctic, drew the most headlines.

President Obama once rebuked the famously blunt former lawyer for using cowboy language. “We have our boot on their neck to make sure they got the job done,” Salazar explained, referring to Interior’s oversight of BP officials in the Deepwater Horizon spill cleanup. Hopefully we’ll be able to find another character to replace him.

20 Dec

Where the Deer and the Drilling Rigs Play

Posted by Laura Lucas in Development, DOI, Oil and Gas Sector.

Yesterday, Secretary of the Interior Ken Salazar announced an ambitious plan for both the development and protection of the National Petroleum Reserve in Alaska (aka NPR-A). Released as the Final Integrated Activity Plan/Environmental Impact Statement, the plan covers both the development of oil drilling and pipelines in the reserve and protection for caribou, migratory birds, and other wildlife in the area. The plan is notable in that “[t]he Final IAP/EIS is the first management plan that covers the entire Reserve, including 9.2 million acres in the southwest area. Previous plans covered the northeast and northwest planning areas only. The comprehensive blueprint will allow for access to oil and gas resources on 11.8 million acres, which are estimated to hold 549 million barrels of economically recoverable oil and 8.7 trillion cubic feet of economically recoverable natural gas.”

Not everyone is on board - a few politicians claim the measures regarding pipeline construction aren’t detailed enough – but some environmental groups have expressed satisfaction with the final plan.

The full list of documents comprising the Final Integrated Activity Plan/Environmental Impact Statement can be found on the Bureau of Land Management website. (Scroll down to the heading “National Petroleum Reserve-Alaska Final Integrated Activity Plan/Environmental Impact Statement”.) The draft version of the plan, released back in March, is still available on the same webpage.

16 Nov

Second Term Preview of Environmental Regulation

Posted by John Renehan in Clean Air Act, Climate Change, Environmental Activism, Environmental Enforcement, Fuel Efficiency, Global Warming, Greenhouse Gas Emissions, Hydraulic Fracturing, Oil and Gas Sector, Pipelines, Renewable Energy.

Photo by Carl Chapman, some rights reserved

In the next four years, the Obama administration will make its mark on energy and environmental laws, working through pending legislation and proposed regulation as well as considering further reforms in response to environmental and industry lobbying.

A Marten Law memo has the rundown on anticipated changes to energy and environmental laws. Obama’s “all of the above” energy strategy, well chronicled at the Green Mien, is likely to continue. Federal renewable energy programs have seen opposition recently, and the outcome of the pending battle of the wind energy production tax credit will be an early test of the Obama Administration’s policy. Either way, renewable energy growth is likely to be lower in the coming years as production of natural gas continues to increase.

Fracking, too, has contributed to the domestic supply surge, while prompting calls for closer regulatory scrutiny. In response, the Obama Administration has proposed regulation of fracking on federal lands, and EPA is studying the potential impact of horizontal drilling on drinking water.

Energy infrastructure questions are on the agenda, too. Most importantly, the Administration will decide whether to authorize a re-routed Keystone XL pipeline bringing oil from Canadian tar sands to the Gulf of Mexico. Proposals for coal and natural gas export terminals are making their way through state and federal agencies as well.

In the news this week is Obama’s stance on climate change, a topic he avoided during his election campaign. A second term will ensure that EPA will proceed with its plan to regulate greenhouse gas emissions under existing provisions of the Clean Air Act, a plan upheld last summer by the D.C. Circuit Court of Appeals. In addition, EPA is expected to release standards for greenhouse gas emission from power plants and refineries. Several challenges to air quality rules are still pending, though, notably the Cross-State Air Pollution Rule and the Boiler MACT rule affecting industrial facilities.

At a press conference Wednesday, President Obama responded to a reporter’s question about his specific plans to address climate change. You should read his entire response here, but he made himself clear that ignoring jobs and growth simply to address climate change is not on his agenda: “I won’t go for that.” An agenda for job growth that includes making a dent in climate change, however, is “something the American people would support.”

In addition to air and energy policy previews, Marten Law’s memo has summaries of expected policy developments in natural resources and hazardous waste regulation.

12 Oct

EPA Struggling to Keep Pace with Fracking

Posted by John Renehan in Environmental Enforcement, Gas and Oil Leases, Hydraulic Fracturing, Oil and Gas Sector, Oil Shale, Onshore Drilling.

Photo care of geograph. Some rights reserved.

Two reports were released by the Government Accountability Office this week detail challenges facing the EPA in overseeing the oil and gas drilling boom in the U.S. The growth of the dispersed and hard-to-follow fracking industry is the focus of the first report, while the second addresses the public health and environmental impacts of oil and gas development.

EPA officials report that inspection and enforcement of fracking sites is challenging due to limited information on many aspects of the industry. The EPA doesn’t receive information about new well sites in Ohio, for example, and their sheer number makes tracking them difficult. Baseline water-quality data are unavailable in most areas, so assessing groundwater contamination is difficult.

In addition, legal limits on EPA’s authority affects their ability to regulate some aspects of the fracking process. Exploration and production waste, for example, are not regulated under hazardous waste provisions in the Resource Conservation and Recovery Act. The Hill, with more details on the reports (here and here) notes that attempts to increase regulation of the industry have not advanced in Congress.

The second report notes that though all oil and gas development poses environmental and public health risks, the risks from shale gas development are particularly poorly understood. Studies the GAO reviewed, according to the report, “do not generally take into account the potential long-term, cumulative effects” so the extent and longevity of risks is unknown.

5 Oct

Training Energy’s Labor Force

Posted by John Renehan in Oil and Gas Sector, Power Plants, Technology.

Albany Township, PA. Photo by Nicholas Tonelli, some rights reserved.

As natural gas is booming, the industry is teaming up with the Labor Department to address a growing skills gap. Energy and utility industries are in growing need of skilled workers, especially those with backgrounds in science, technology, engineering, and math, and apparently these workers are becoming harder to find. Interviewed by The Hill, a Labor Department official expressed concern that the biggest obstacle to emerging energy industries is a shortage of workers with appropriate skills.

One way Labor is addressing the issue is by developing school curricula and supporting workforce-training programs. The Labor Department awarded a $15 million grant to western Pennsylvania community colleges’ training programs that feed workers into the region’s booming natural gas industry. If the program is successful, it could be replicated in North Dakota and other areas with growing energy industries. Energy firms are involved in the effort, donating equipment for training and supporting a nonprofit consortium to develop curricula and offer apprenticeships.

The electric utility industry, too, is facing the challenge of training a new workforce for the changing industry as many workers plan to retire in the coming years. Utilities are seeking workers with a new skill profile, combining electrical engineering with information technology, and sometimes struggling to find qualified workers to work on new “smart-grid” technology.

28 Sep

Arctic Drilling: What’s it Worth?

Posted by John Renehan in Gas and Oil Leases, Offshore Drilling, Oil and Gas Sector, The Arctic.

Beaufort Sea, Alaska, one of Shell’s drill sites. Photo by NASA/Kathryn Hansen, some rights reserved.

Last week, Shell called off its plans to drill in the Arctic until next summer after part of its spill-containment system was damaged. Earlier, encroaching sea ice forced the company to abandon its drill site in the Chukchi Sea off Alaska just a day after it started drilling. Now that Shell has spent $4.5 billion on its Arctic drilling sites since 2005, we might ask, is it worth the money?

Geologists from the United States Geological Service sparked a discussion on the costs of drilling in the Arctic this week, including a succinct piece in Grist. Their research suggests that the amount of oil that can be pumped out of accessible fields in the Arctic is significantly lower than previously thought, requiring huge exploration budgets to even access the oil (this considering Arctic oil in Greenland and Russia as well). They estimate that prices of $100 to $300 a barrel would be necessary for Arctic drilling to be economically feasible.

Right now, we know little about the average cost of producing oil in the Arctic besides that it is high. It is worth noting that in the 1970s, Canadian companies ended a decade of exploration projects by sealing off drilling sites because commercial production was too expensive. We do know, however, that in the oil boom in Mozambique, French Guiana, and Angola, marginal costs are less than $70 a barrel, and that plans for drilling there go through the 2020s.

Where does that leave us? Well, with 7,000 blocks of drilling leases over 38 million acres of the Gulf of Mexico up for auction in 2013. Sure seems like there are easier places to get your oil than the Beaufort Sea.

13 Aug

DOI Secretary Outlines “Preferred Alternative” for Development in National Petroleum Reserve in Alaska

Posted by Hester Serebrin in Environmental Impact Statements, Oil and Gas Sector.

Today the DOI’s Bureau of Land Management announced that DOI Secretary Ken Salazar had released a proposed plan that will be presented later this year as the “preferred alternative” in the Final Integrated Activity Plan and Environmental Impact Statement (IAP/EIS) for oil and gas development in the National Petroleum Reserve in Alaska (NPR-A).

The plan supposedly allows for such development while also “protecting world-class caribou herds, migratory bird habitat, uplands, and sensitive coastal resources that are central to the culture and subsistence lifestyle of Alaska Natives and our nation’s conservation heritage.”

You can compare the key features of preferred alternative, “Alternative B-2”, to other alternatives in the IAP/EIS in this chart.

3 Aug

Local Zoning and Natural Gas in Pennsylvania: Court Rules on Act 13

Posted by John Renehan in Development, Environmental Enforcement, Gas and Oil Leases, Marcellus Shale, Natural Gas, Oil and Gas Sector, Onshore Drilling, Real Estate, Wetlands.

Klingerstown, Pennsylvania. Photo by Scott Bauer, U.S. Department of Agriculture. Some rights reserved.

In February, the Pennsylvania General Assembly passed the Oil and Gas Act, revising the state’s regulation of oil and gas operations. Among other changes, “Act 13” required uniformity of local ordinances and granted the Pennsylvania Department of Environmental Protection the right to use its discretion in granting variances for distance restrictions from water and wetlands. The natural gas industry saw the legislation as a vital antidote to the maze of constantly changing local zoning ordinances in the gas-rich Marcellus region that leads to expensive litigation and increased production and development costs, but not everyone was cheering for Act 13.

Six townships, several individuals, and an environmental group joined Robinson Township in challenging the Act, and the Commonwealth Court issued their decision declaring the sections described above unconstitutional. The Court’s rationale for overturning the uniform zoning provision was that zoning is a police power of local districts and allowing nonconforming use in zoning districts violates substantive due process. In addition, the provision allowing Pennsylvania’s DEP to grant waivers for setback requirements from water and wetlands was declared null because the law offered insufficient guidance to the DEP regarding waiver standards.

Local zoning and setback issues affect the cost, timing, and even feasibility of natural gas production, so the day after the Court’s decision, Pennsylvania Governor Tom Corbett announced an appeal directly to the Pennsylvania Supreme Court. The dissenting opinion, which according to Reed Smith’s Alert  on the ruling could offer suggestions for the appeal, argued that “incompatible uses” can be allowed in a comprehensive zoning framework, and attacked the majority’s attempt to call on substantive due process protections. It noted that most substantive due process cases regarding zoning challenge the ordinances as too restrictive, while the petitioners in this case do the opposite, which is inconsistent with constitutional zoning precedent. Furthermore, the shortcoming the Court sees in DEP guidance regarding setback waivers appears to be something the legislature could rectify easily, according to a Buchanan, Ingersoll & Rooney memo. Finally, the natural gas industry – barred from intervening in the case at the lower level – will be able to participate in the Supreme Court appeal process by filing amicus briefs.

6 Jul

The Scramble to Regulate Fracking

Posted by John Renehan in Air Pollution, Fracking, Gas and Oil Leases, Hydraulic Fracturing, Oil and Gas Sector, Oil Shale.

North Carolina, now open for fracking. Photo by US Fish and Wildlife Service, some rights reserved.

As the risks and potential benefits of fracking become impossible to ignore for local and state governments, communities are taking action to address the shale gas development that seems inevitable in many places. At the state level, North Carolina’s legislature voted to override Governor Beverly Perdue’s veto of Senate Bill 820, opening the doors to fracking and shale gas development in North Carolina and establishing a regulatory framework. In addition, Colorado local governments are attempting to address air quality issues from hydraulic fracturing and imposing temporary moratoriums.

In North Carolina, Governor Perdue vetoed the fracking legislation for its inadequate environmental protection, though she expressed support for shale gas development in general. To override a veto requires a two-thirds majority vote in both chambers of the General Assembly. The Senate voted 29 to 13 to override the veto, and with Republicans needing every last vote in the House of Representatives, a five-term Democrat accidentally pushed the wrong button to open the state to fracking. A do-over was not granted, perhaps because the vote took place late Monday night in a marathon 36-hour legislative session. Details on the legislation can be found in a McGuireWoods memo here.

Separately, (thanks to a Davis Graham & Stubbs memo for its insight) local governments in Colorado have imposed temporary moratoriums banning fracking until better regulations addressing air quality and other environmental impacts are developed. Localities in Colorado cannot ban oil and gas operations altogether, but many are stepping up their efforts to regulate environmental impacts associated with oil and gas operations, an area whose jurisdiction is uncertain. Colorado and other states are trying to pass statewide legislation to preempt local regulation, but the jurisdictional uncertainty remains for now.

15 Jun

Offshore Drilling: Alaska, and More.

Posted by John Renehan in Environmental Enforcement, EPA, Gas and Oil Leases, Offshore Drilling, Oil and Gas Sector, The Arctic.

Photo by Jim Bain. Some rights reserved.

The Interior Department is very publicly scrutinizing every detail of Shell’s plan to begin drilling in the fragile Arctic this summer. Top officials are personally reviewing equipment bound for the drilling sites in Alaska and held a press conference Thursday to tout DOI’s robust testing.

The past year has seen a series of approvals for Shell’s plans. In March, DOI approved Shell’s oil spill response plans, following the EPA’s announcement in September that it had granted air pollution permits to ships associated with the drilling sites.

Last May, the Obama administration created an inter-agency team to streamline the Alaskan permitting process to help speed up domestic development and responding to political pressure over high gasoline prices as well as what Republicans have called bureaucratic permitting delays.

But the Interior Department, increasing its safety standards and scrutiny of drilling plans, wants to ensure it is seen as taking every precaution in the wake of last year’s BP spill in the Gulf of Mexico. Interior’s Bureau of Safety and Environmental Enforcement director James Watson called his agency’s standards “the most rigorous safety and oversight program ever.”

Meanwhile, despite the delays to Shell’s Alaska plan, Republican South Carolina senator Lindsey Graham introduced a bill that would allow his state to open parts of its coast, to offshore drilling 10 to 100 miles off the coast – after which it would petition the federal government for approval.

Further abroad, the questions and politics of offshore drilling are alive and well in France – Paris on Wednesday suspended  exploratory permits for offshore oil in its district of Guyana, in northeastern South America. The French environment minister cited concerns for the local marine environment and said the permits will be suspended until the mining code is reviewed. Shell and other oil companies have found significant oil reservoirs in the region, which they believe mirror the oil reserves off the coast of western Africa.

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