From: Brydon Ross- Energy Producing States Coalition
To: Scott Jenkins,
Subject: EPSC July Newsletter
Date: Fri Aug 08 01:01:08 MDT 2014
Body:
A monthly newsletter from the Energy Producing States Coalition
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August Newsletter


 

Events

Anchorage, AK
The Council of State Governments will be holding their national meeting in Anchorage, AK on Aug. 9- 13. Over 1,200 attendees have registered and it should be an action-packed conference. Several EPSC members will be in attendance and if you are interested in learning more about the conference, please click here.
 
Events – Idaho Falls, ID
The Intermountain Energy Summit will be held on Aug. 19-20 in Idaho Falls, Idaho featuring U.S. Energy Secretary Ernest Moniz as a keynote speaker, as well as Congressman Mike Simpson, chairman of the House Appropriation Subcommittee for Water and Energy Development.
 
More information on the event can be found at: www.intermountainenergysummit.com

Natural Resource and Economic Development

DOT Issues New Crude by Rail Regulations – On July 23, the Department of Transportation issued new regulations covering shipments of crude oil via rail. The department proposes “enhanced tank car standards, a classification and testing program for mined gases and liquids and new operational requirements for high-hazard flammable trains (HHFT) that include braking controls and speed restrictions. Specifically, within two years, it proposes the phase out of the use of older DOT 111 tank cars for the shipment of packing group I flammable liquids, including most Bakken crude oil, unless the tank cars are retrofitted to comply with new tank car design standards. The ANPRM seeks further information on expanding comprehensive oil spill response planning requirements for shipments of flammable materials.” According to a story in Politico, the “proposed rules include mandates for phasing out older, less-sturdy rail tank cars during the next two to five years, tightened speed limits, improved brakes, permanent requirements for railroads to share data with state emergency managers and steps to address concerns that crude oil produced in North Dakota’s Bakken region is unusually prone to ignite. The rules also include provisions affecting ethanol, another flammable liquid frequently shipped by rail.”
 
Financial Times Notes US as “Indispensable Country” in Energy Production – A widely circulated article in the Financial Times discusses how the US shale revolution has effectively mitigated potential price surges from global security crises. The article notes the incredible pace and expansion of production in the Bakken and Eagle Ford areas. For example, the Texas Railroad Commission notes that production in the Eagle Ford went from 15,000 barrels of crude oil per day in 2010, to 838,000 barrels per day in 2014.
 
Shale Prevented U.S. Oil Crisis - Vice Chairman of the global consulting firm IHS and oil historian Daniel Yergin said that the U.S. would "be looking at an oil crisis" if not for the recent surge in U.S. crude oil production, reports NPR.  Yergin went on to say that the potential carbon footprint of fossil fuels is a negligible factor in determining world demand, and that the U.S. should allow crude oil exports now that the global oil supply has seen a "rebalancing."
 
North Dakota Tops List – Again – For GDP Growth – Energywire reports that according to the Commerce Department’s Bureau of Economic Analysis, North Dakota’s GDP grew more than any other state for the second year in a row. The 9.7% growth rate has been largely attributable to booming oil and natural gas production, but it also found that the growth has helped boost other related support industries and services.
 
Hydraulic Fracturing has Doubled Gas Production in Ohio – The Columbus Dispatch reported that hydraulic fracturing has nearly doubled natural gas production and grown oil production by 62 percent from 2012 to 2013. According to state officials, there 85 wells in the Utica Play in 2012 and 350 wells have been permitted in the first 6 months of 2014. Regulators expect nearly 800 wells in the Utica by 2015 and nearly 5,700 direct jobs are tied to production in the state.
 
Production in Parts of Utica on Par with Marcellus Shale – Ohio’s Utica Shale play is seeing signs of promising production increases that are rivaling wells in the nearby Marcellus region, according to an article in Fuel Fix. Industry analysts were quoted in the article that daily gas production could hit 5 billion cubic feet per day in 2018. The most recent high performing wells were located east of Columbus in Belmont and Monroe Counties.
 
New Carbon Capture Plant Betting Big on EOR – NRG Energy’s partnership with JX Nippon Oil and Gas Exploration for the $1 billion Petra Nova Carbon Capture is seeking to be model for future coal projects by selling recovered oil rather than the CO2 gas itself. The project, recently featured in an article by the Wall Street Journal, will strip 40% of the CO2 from existing NRG coal units outside of Houston and pipe the gas to oil fields nearly 80 miles away. Backers say the extra gas will be used to boost production through enhanced oil recovery (EOR) and raise daily production at the West Ranch oil field in Jackson County from 500 barrels per day to 15,000 barrels per day.
 
Goldman Sachs Report on Natural Gas Supply/Prices – A new report was recently issued by Goldman Sachs stating that shale production was ‘driving the fear out of the marketplace’, according to a story by Bloomberg.  Natural gas will trade at about $4 to $5 per million British thermal units for the next 20 years, according to Goldman Sachs, while the U.S. Energy Information Administration predicts average prices below $5 for the next 10 years and below $6 until 2030.
 
American Coal Exports Limited by Infrastructure Delays- Infrastructure challenges could put U.S. coal companies at a disadvantage when it comes to exporting their product. According to the Associated Press, the Surface Transportation Board announced its second major delay in a draft evaluation of the Tongue River Railroad, a line that would make mines in the Powder River Basin along the Montana-Wyoming border available to burgeoning and less restrictive markets in Asia. Delays that like this one that prohibit the movement of coal have led to a projected decline in rates of production in the next decade.

Study Finds 3rd Party Solar Leasing to Account for Large Majority of Residential PV Systems – A study by GTM recently found that third party leasing agreements now make up 68% of all residential photovoltaic (PV) systems. Third-party solar providers include companies like SolarCity, Vivint Solar, and SunRun which provide leasing or financing options for residents that want more to install solar systems. Although the firm predicts that third-party leasing will decline slightly in future out-years, their report estimated that the U.S. residential PV market will exceed 1 gigawatt for the first time in 2014 due in large part to strong consumer demand and attractive tax policies that encourage installation.
 
To access the full report, please click here.

Offshore Development News

Obama Administration Opens up Atlantic for Seismic Testing – For the first time in several decades, the Obama Administration has given the green light to allow companies to conduct new seismic testing activities for the floor of the Atlantic Ocean to determine potential oil and natural gas reserves. Existing seismic data is nearly 40 years old and that will now be updated as part of the Bureau of Ocean Energy Management’s record of decision for the forthcoming Five Year Plan (2017-2022).
 
House Committee Arctic Hearing – The House Transportation and Infrastructure Subcommittee on Coast Guard and Maritime Transportation held a hearing on July 23 to examine environmental protection, natural resource management, and scientific monitoring and research as it pertains to US Arctic policy.
 
Witnesses for the hearing included: Vice Adm. Peter Neffenger, vice commandant, Coast Guard; Rear Adm. Jonathan White, oceanographer and navigator of the Navy; David Balton, deputy assistant secretary for oceans and fisheries, State Department; Capt. Dave Westerholm, director of Office of Response and Restoration, National Oceanic and Atmospheric Administration; and Ed Fogels, deputy commissioner of the state of Alaska's Department of Natural Resources.
 
The Administration’s arctic strategy can be found here.
 
Interior Department Achieves Milestone for Offshore Commercial Wind Energy Development in New Jersey - Bureau of Ocean Energy Management (BOEM) Acting Director Walter Cruickshank announced the proposed sale of leases for nearly 344,000 acres offshore New Jersey for commercial wind energy leasing.  Based on an analysis prepared for BOEM by the Department of Energy’s National Renewable Energy Laboratory, the New Jersey Wind Energy Area as currently delineated, if fully developed, may be able to support up to 3,400 megawatts of commercial wind generation, enough to power about 1.2 million homes.

Court Decisions

Environmental Groups Sue Over Prairie Chicken – Several environmental groups have brought legal action relating  to the Interior Department's decision last March to list the lesser prairie chicken as a "threatened" rather than an "endangered" species because it still allows a limited number birds to continue to be killed through take permits.
 
According to an article in E&E News, the lawsuit challenges the Fish and Wildlife Service's decision to allow exemptions to Endangered Species Act protections for the prairie chicken in its so-called 4(d) rule. The suit, which was filed in US District Court of the District of Columbia, claims the rule would allow more than 1,300 of the birds to be killed or disturbed each year.
 
Colorado Supreme Court Rules Local Anti-Fracking Measures Can Stay on Ballot - The Colorado Supreme Court recently granted approved for ballot initiatives seeking to give local government more control over oil and gas drilling and to add an environmental bill of rights to the state constitution. Business groups challenged the veracity of the initiatives, but the court ruled that the language in the five initiatives met the standards for clarity required by statute – according to a story in the Denver Post.
 
To read the court’s majority opinion, click here.
 
Colorado Court Strikes Down Longmont Ban – The District Court of Boulder County Colorado recently issued a summary judgment enjoining a hydraulic fracturing ban passed by voters in the city of Longmont. The judge found the ban conflicts with existing authority in state law with the Colorado Oil and Gas Conservation Commission. According to the Denver Business Journal, Judge D.D. Mallard stated, “The state interest in production, prevention of waste and protection of correlative rights, on the one hand, and Longmont’s interest in banning hydraulic fracturing on the other, present mutually exclusive positions." As part of the ruling a stay was issued that prevents hydraulic fracturing in Longmont pending an appeal by the defendants.

Clean Air Regulations

States Likely to Need Extension on Air Rules Says McCabe – According to an article in BNA, Janet McCabe – the Acting Administrator of EPA’s Office of Air and Radiation – recently told a group of attendees at an ICF International breakfast that many states would likely need extensions outside of the President’s one-year time frame to submit implementation plans to reduce CO2 emissions from existing power plants. She pointed out that many states still would need to pass new regulatory regimes or pass authorizing legislation to put parts of the plan in place or to join multi-state emission reduction efforts. She also outlined four key areas that states and other stakeholders have centered their comments around, namely:
  • why the agency decided to use 2012 as the “starting point” for the emissions reductions? Several states note that using 2012 as the target date to reduce emissions fails to recognize any early actions taken to reduce carbon emissions;
  • how the agency treated the nuclear power fleet in the proposed regulations;
  • how states can work together to meet emissions targets; and
  • how states can effectively build energy efficiency and renewable energy into their implementation plans.

Clean Water Regulations

Administrator McCarthy Says ‘Waters of US’ Proposal 'has fallen totally flat on its face'   - In a speech before farmers in Kansas City, EPA Administrator McCarthy acknowledge public perception problems with the agriculture community over the proposed rules concerning the jurisdictional definition of “waters of the US.” In a story by E&E News, she acknowledged that although the agency was well-intentioned the new rule 'has fallen totally flat on its face.' The rule has stirred significant controversy in agriculture and development industries and the American Farm Bureau recently issued a 16 page analysis criticizing public perceptions and remarks made by the agency concerning the rule.
 
EPA Uses Clean Water Act to Impose Limits on Pebble Mine – On July 18, the EPA announced it was imposing restrictions on the expansive Pebble Mine Project in Alaska that supporters say could create over 1,000 jobs and millions of dollars in revenue for the state. The action was taken by EPA came before the company applied for a Clean Water Act permit for the project.  The agency stated, “EPA Region 10 is proposing this action because the Clean Water Act requires the agency to protect the nation’s waters, including the protection of fisheries. The Bristol Bay watershed is an area of exceptional ecological value with salmon fisheries unrivaled anywhere in North America. Development of a mine at the Pebble deposit would result in one of the largest open pit copper mines in the world and would threaten this valuable resource. Simply put, this is a uniquely large mine in a uniquely important place.”
 
Significant scrutiny for the high-profile project has been underway for some time and litigation has been conducted by the state and project backers who claim the agency has been pursuing a preemptive veto for the mine and has actively engaged opposition without letting the regulatory process unfold. According to an article in the Washington Times, an investigation found the agency is began circulating internal memos in 2008 to pursue a preemptive veto for the Pebble mine before any scientific reviews had taken place. 

Congressional News

House Energy and Commerce Committee Chair Outlines Energy Pillars - House Energy and Commerce Committee Chairman Fred Upton (R-MI) addressed the Energy Information Administration 2014 Energy Conference to share his new vision for America’s energy policy – the Architecture of Abundance. Upton outlined the five pillars needed to construct this new architecture: modernizing infrastructure, maintaining diverse electricity generation, permitting a new manufacturing renaissance, harnessing energy efficiency and innovation, and unleashing energy diplomacy. He described a number of steps the House has already taken toward constructing a 21st century energy policy, and expressed optimism for the future in achieving bipartisan success.  A copy of his remarks can be reviewed here.

State News

Sandpiper Pipeline Project Wins Approval from ND Regulators - The North Dakota Public Service Commission recently approved Enbridge’s 600-mile Sandpiper pipeline project that will transport 225,000 barrels per day of Bakken crude to terminals in Minnesota and Wisconsin. According to a story in the Forum News Service, will utilize existing company rights of way and those of utilities. The company still needs approval from the utility commissions in both Minnesota and Wisconsin, but the project is expected to be completed by 2016.
 
North Dakota Industrial Commission Approves New Flaring Policy – The North Dakota Industrial Commission recently approved a new six-step  policy that would substantially reduce the amount of flared natural gas at well sites by requiring operators to capture and remove  74 percent of their gas out of flare stacks by October 1st. Those requirements would gradually increase over time to 90 percent by 2020 with the possibility of it increasing to 95 during that time frame. According to an article in the Wall Street Journal, the state flares nearly 30 percent of its natural gas at the well site due to a lack of pipeline and storage infrastructure. Last April alone, the wells flared 10.3 billion cubic feet of gas worth roughly$50 million at spot market prices.
 
Denton Fracking Ban to Ballot - Following an eight-hour hearing on Tuesday, on July 15 the Denton (TX) City Council voted 5-2 to send a measure to the November ballot asking voters whether the city should adopt a ban on hydraulic fracturing. By failing to adopt the ban and sending it to the voters, the City Council sent a strong sign of opposition to an outright ban. Should voters ultimately adopt a ban in November, Denton would be the first city in Texas to adopt a ban.
 
New England Govs Focus on Energy - According to Fox Business News, “The premiers of the Eastern Canadian provinces and governors of the New England states said Monday that delivering clean energy to this corner of the United States is one of the most important issues facing the region.” The six U.S. governors and five Canadian premiers were meeting in New Hampshire to discuss a host of economic priorities for the region, including two controversial energy projects: the Northern Pass transmission line (which would deliver hydropower from Canada to New England) and the reversal of the Portland-Montreal pipeline to deliver oil sands to the New England region. Environmental groups opposing oil sands protested the meeting.
 
South Portland City Council Votes to Ban Oil Sands Exports to Tankers – By a vote of 6-1, the City Council of South Portland Maine approved an ordinance that bans the transfer of crude oil onto tankers in the port city. The move comes after sustained effort by environmental organizations who have petitioned the City Council to enact a ban in order to prevent a potential reversal of the Portland Montreal Pipeline that may serve as an export terminal for Canadian oil sands. Currently, the pipeline in South Portland serves as the New England hub for importing crude oil and distributing fuel regionally.

Recruiting

As a reminder, EPSC membership is open to any state legislator or legislature that is serious about energy production and that supports the Mission Statement of the EPSC. Currently, membership is neither time consuming nor expensive. Members do not pay dues to EPSC. If you know of colleagues that might be interested in joining, all that is needed is to fill out this form.

Website
If you have suggestions for issues, content or event updates, please contact Brydon Ross.
 

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