Today's Chart Review:
U.S. Officials Cut Estimate of Recoverable Monterey Shale Oil by 96%
from Los Angeles Times by Louis Sahagan
Mark Your Calendars (All Times Eastern):
Wednesday: Distributed Solar Forum @ 8:30 am
Wednesday: National Town Meeting on Demand Response and Smart Grid @ 8:30 am
Wednesday: Platts 3rd Annual North American Refined Products conference in Houston @ 10 am
Wednesday: House Homeland Security hearing on cyber threats @ 10 am
Thursday: Distributed Solar Forum @ 8:30 am
Thursday: AEI book release, panel on conservative reform with McConnell, Cantor @ 9 am
Thursday: Center for Climate and Energy Solutions conversation on carbon pricing @ 9:30 am
16-18: Natural Gas
x-20: Utilities and Infrastructure
OPINIONS, EDITORIALS, PERSPECTIVES
22: New York Times
25: Roll Call
RESEARCH REPORTS, ISSUE BRIEFS, CASE STUDIES
26: North Dakota Petroleum Council
1) EPA Carbon Curbs to Reach Beyond Power Plant 'Fence,' Aiding Cap-and-Trade
from Reuters by Valerie Volcovici
President Barack Obama's landmark rules to cut power plant emissions will likely give a fresh push to regional U.S. carbon cap-and-trade systems by allowing for a holistic, state-wide view of new pollution targets, sources familiar with the process said. The Environmental Protection Agency is poised to allow states including California and Maryland to use existing emission-cutting schemes to reach their goals, according to the sources, instead of adopting a narrower method that would have limited states to tackling emissions at individual plants. As a result, existing trading schemes that many states are already using to reduce greenhouse gas output may now expand and flourish, experts and officials say. That would be a welcome if ironic outcome four years after Obama's initial effort to foster a federal cap-and-trade plan failed to get through Congress.
2) Green Groups Pressure Hillary Clinton on Keystone XL
from Wall Street Journal by Peter Nicholas
A collection of 30 environmental groups is preparing to send Hillary Clinton a letter calling on her to come out against the Keystone XL pipeline project, an illustration of the competing political pressures she faces even before she has even announced whether she will run for president. A draft of the letter obtained by The Wall Street Journal reads: “Secretary Clinton, will you stand with us against Keystone XL?...The draft, dated May 21, shows that signatories include the Center for Biological Diversity, Greenpeace andFriends of the Earth, as well as many small groups. Some well-known groups that aren’t signatories on the draft include the Sierra Club, Environmental Defense Fund, League of Conservation Voters and Natural Resources Defense Council, or NDRC. The Sierra Club, which has been one of the most active groups fighting the pipeline, won’t be signing the letter, according to its executive director, Michael Brune, who declined to say why.
3) Bay Faces Choppy Waves But Still Afloat
from Politico Pro by Darius Dixon
A Senate hearing on President Barack Obama’s fallback nominee to lead the Federal Energy Regulatory Commission left Norman Bay’s future very much in the air Tuesday. Republicans came into the hearing eager to test the two main fault lines of Bay’s candidacy — his thin résumé on energy policy and the aggressive crackdown he has led on firms accused of manipulating energy markets. They made it clear they’re skeptical that he’s ready to become chairman of the independent regulator that oversees the nation’s electric grid.
4) Senators Aim to Divide Obama Appointees Over Global-Warming Plan
from National Journal by Clare Foran
A new front has opened up in the fight over fossil fuels. A bipartisan pair of lawmakers is hoping to pit one federal agency against another in a bid to soften the blow of upcoming regulations to curb air pollution from power plants. And if they get their way, the Federal Energy Regulatory Commission—the executive-branch agency with oversight of the nation's electric grid—could act as a check on the authority of the Environmental Protection Agency.
5) Big Drama Over CSAPR May Be Over, Lawyers Say
from Politico Pro by Erica Martinson
Many questions still remain about the future of EPA’s Cross-State Air Pollution Rule, but attorneys closely following the situation don’t expect an appeals court to completely upend the rule’s requirement as it works through remaining issues. The Supreme Court last month upheld the rule, which aims to allocate pollution budgets to upwind states in the interests of protecting downwind states from illness-causing emissions. But EPA’s initial compliance deadlines have long passed for the rule, which it issued in 2011. And the high court sent the rule back to the D.C. Circuit Court of Appeals to deal with issues that remained.
6) Russia Signs China Gas Deal After Decade of Talks
from Bloomberg by Elena Mazneva and Stepan Kravchenko
Russia reached a deal to supply natural gas to China through a new pipeline, while the price of the fuel, the sticking point through more than a decade of talks, wasn’t announced. President Vladimir Putin is turning to China to bolster Russia’s economy as relations sour with the U.S. and European Union because of the crisis in Ukraine. Today’s accord, signed during a two-day visit by Putin toShanghai, will allow Gazprom to develop giant gas fields in eastern Siberia distant from existing markets in Europe. Alexey Miller, chief executive officer of Russian gas exporter OAO Gazprom, signed the contract in Shanghai with Zhou Jiping, chairman of China National Petroleum Corp. The agreement is for 38 billion cubic meters of gas annually over 30 years, Miller said. He declined to give a price.
7) Santa Cruz Becomes First California County to Ban Fracking
from Reuters by Rory Carroll
Santa Cruz on Tuesday became the first California county to ban fracking, the latest in a string of moves by local governments in the state to take a stand against the controversial oil and gas producing method. Fracking, or hydraulic fracturing, relies on injecting water, sand and some chemicals deep beneath the earth's surface to break up rock and free up oil and gas trapped below.Environmentalists say the chemicals used in the process can pollute underground water supplies and cause other damage. The scenic county of Santa Cruz does not have any oil or gas production, but advocates said momentum for a ban took shape after reports surfaced saying that oil companies were exploring the possibly of fracking in neighboring San Benito county.
8) 10 Years of Pollution, $2 Million in Penalties
from National Journal by Ben Geman
Citgo was convicted of criminal charges under the Clean Air Act in 2007 for operating two large tanks at its Corpus Christi East Plant without emissions controls from 1994 to 2003. The lack of controls, prosecutors say, exposed nearby residents to the carcinogen benzene and other compounds. But seven years after the conviction, the case is still a focus of attention in this industrial port city on the Gulf Coast of Texas, where refineries abut largely poor and minority neighborhoods. Victims are continuing to press their case for restitution payments from Citgo for hundreds of people.
9) Rift Widening Between Energy And Insurance Industries Over Climate Change
from Forbes by Ken Silverstein
Being a big business, the insurance industry is a strong backer of free enterprise and its laissez-faire leaders. But a rift could be developing now that some major carriers are staking claims in the climate change cause while many of their congressional backers have remained skeptical of the science. For insurers, it’s not about the political machinations but rather, it’s about the potential economic losses. If even part of the predictions hold — the ones released by the Intergovernmental Panel On Climate Change that ascribe temperature change to humans with 95 percent certainty — then the rate of extreme weather events will only increase and the effects would be more severe. That, in turn, would lead to greater damages and more payouts.
10) Green Groups Ready to Sue EPA Over Dead Fish
from The Hill by Timothy Cama
A coalition of environmental groups that sued the Environmental Protection Agency (EPA) to force it to issue standards for industrial cooling water intake devices is likely to go back to court to challenge the regulation. Lawyers told reporters that the rule issued Monday does not do enough to change the status quo, in which states exercise nearly all authority over power plant and factory intake devices that can harm fish.
11) Oklahoma Lawmakers to Unveil New Tax Rate Proposal for Wells
from Houston Chronicle by Sean Murphy (AP)
An incentive for a 1 percent tax rate for horizontally drilled oil and gas wells would be increased to 2 percent and extended to all wells drilled in Oklahoma under a bill drafted in the Oklahoma Legislature on Monday. The bill, which is expected to be considered by House and Senate budget panels on Tuesday, calls for the new 2 percent rate to be in effect for the first three years of a well’s production. After that, the rate would increase to the standard production tax rate of 7 percent. The tax rate on production from traditional vertical wells, which is currently 7 percent, would also drop to 2 percent for three years.
12) U.S. Stock-Index Futures Advance Before Fed Minutes
from Bloomberg by Sofia Horta e Costa
U.S. stock-index futures advanced, after equities fell for the first time in three days, as investors awaited minutes from the Federal Reserve’s latest meeting to help gauge the strength of the economic recovery...Futures on the Standard & Poor’s 500 Index (SPX) expiring next month rose 0.3 percent to 1,873.2 at 10:20 a.m. in London. The equity benchmark is 1.3 percent away from a record reached on May 13. Dow Jones Industrial Average contracts rose 44 points, or 0.3 percent, to 16,381 today.
13) Bakken Shale Oil Safe for Rails, Industry Group Says
from Wall Street Journal by Chester Dawson
Crude oil from the Bakken Shale formation doesn't pose special risks to rail transport and shouldn't require a separate classification regime than other hazardous liquids, North Dakota oil producers said in a study releasedTuesday. The report compiled for the North Dakota Petroleum Council, a lobbying group for energy producers in the state, found that Bakken oil is comparable in volatility to gas-rich oils from other shale formations in other regions. The study is a precursor to a final report due out in June, the group said. The North Dakota oil producers' study follows a report with similar results issued last week by a refining industry group. Both reports come amid greater regulatory scrutiny of Bakken oil shipments by rail following several fiery accidents over the last year.
14) ‘Conservative’ Nebraska Court Prepares to Plumb Keystone
from Politico Pro by Talia Buford
The fate of one of President Barack Obama’s most politically charged decisions may come down to an arcane legal question: Is the proposed Keystone XL oil pipeline like a telephone wire? That’s one of the main issues facing the Nebraska Supreme Court as it prepares to take on Keystone, an internationally watched controversy with symbolic importance for Obama’s legacy on climate change and real implications for Democrats in November. The seven justices are expected to hear arguments sometime by October on a lower-court ruling that rejected Republican Gov. Dave Heineman’s authority to approve the pipeline’s route in Nebraska. The case prompted the Obama administration to postpone its own review of Keystone in April, a move that may push the president’s ultimate decision past the midterm elections.
15) Bank Loan Standards Bending for Oil Companies Amid Shale Rush
from Fuel Fix by Collin Eaton
As major shale plays fuel the nation’s energy production, some aspects of Texas banking are starting to echo the overzealous oil and gas lending of the past, says David Zalman, chairman and CEO of Houston-based Prosperity Bancshares. Loans have become very cheap for oil and gas companies, Zalman said in a recent interview with FuelFix, and some banks are offering 10-year payout terms for loans that would normally get five-year terms.
16) Gas Explosions Appear Inevitable, Given State of Pipes
from Wall Street Journal by Cassandra Sweet
On January 25, 2009, a police officer in Gloucester, Mass., came home after a shift, greeted his dog, Penny, and flipped on the lights. Then his house blew up. The blast killed Penny, left patrolman Wayne Sargent badly burned and destroyed the house his grandfather built. Investigators quickly identified the cause: natural gas from a cracked cast-iron distribution line with a recent history of leaks. It was installed in the street in 1922. The U.S. Transportation Department three years ago issued a "Call to Action" urging gas companies to replace thousands of miles of decrepit iron pipe. But it could take some utilities until 2050 to get up to snuff.
17) Funding Shortfall Hits Shell's Plan to Reduce Gas Burning
from Wall Street Journal by Benoit Faucon
Efforts to reduce natural-gas burning in Nigeria are being hindered by a lack of government funding, Royal Dutch Shell PLC said Tuesday. In 2012, Shell's Nigerian joint-venture Shell Petroleum Development Co. said that it planned to invest $4 billion on oil and gas projects including gas-gathering facilities to avoid "flaring". Flaring is the burning of natural gas released when oil is extracted from fields, and one of the main causes of pollution in the West African nation. However, speaking at the Anglo-Dutch company's annual shareholder meeting in The Hague, Chief Executive Ben van Beurden said that a "shortfall in funding" from Shell's government partner in the venture was hindering efforts to cut flaring.
18) U.S. Natural Gas Won’t Replace Russian Supply as Europe Seeks Options
from Houston Chronicle (Bloomberg)
U.S. LNG supplies expected to start in the first quarter of 2016 won’t be enough to compensate for Russian supplies that meet about 30 percent of Europe’s gas needs, said Jean Abiteboul, president of Cheniere Supply & Marketing Inc. U.S. LNG exports won’t have any bearing in the current conflict and deliveries will likely target higher-price markets in Asia, said Will Pearson, director for global energy and natural resources at consultant Eurasia Group. “You cannot replace Russian gas with any kind of LNG, especially by U.S. LNG only,” Abiteboul said yesterday in an interview at the Flame conference in Amsterdam. “It will probably force people to think more accurately on the diversification of supply, security of supply and not only price and could give an additional chance for LNG imports into Europe, including U.S.”
Utilities and Infrastructure
19) U.S. Utility's Control System Was Hacked, Says Homeland Security
from Reuters by Jim Finkle
A sophisticated hacking group recently attacked a U.S. public utility and compromised its control system network, but there was no evidence that the utility's operations were affected, according to the Department of Homeland Security. DHS did not identify the utility in a report that was issued this week by the agency's Industrial Control Systems Cyber Emergency Response Team, or ICS-CERT...Such cyber attacks are rarely disclosed by ICS-CERT, which typically keeps details about its investigations secret to encourage businesses to share information with the government. Companies are often reluctant to go public about attacks to avoid potentially negative publicity.
20) Duke-PJM Drama Raises More Questions About Energy Market Alignment
from E&E by Jeffrey Tomich
...A PJM analysis would later show that peak load on that day fell short of the forecast and power plants in the region performed better than they had under similar circumstances a few weeks earlier. A transcript of the brief and uncomfortable conversation between Cecil and Marr is one of several exhibits to a formal complaint the company filed against PJM with federal regulators. In it, Duke seeks to recover almost $10 million in compensation for losses related to natural gas it purchased but didn't need. Charlotte, N.C.-based Duke said its own analysis of power and gas markets suggested that the Lee plant west of Chicago wouldn't be called to run on Jan. 28, and that it bought millions of dollars of natural gas at high prices only because it was directed by PJM to do so.
21) Mining Group Runs Ads Attacking Obama's Climate Regs
from The Hill by Laura Barron Lopez
The National Mining Association is running online and radio ads in key states blasting the Obama administration's rules aimed at curbing carbon emissions from coal-fired power plants. The 60-second radio ad, which will run throughout the rest of May and into June, opens with the sound of someone shouting "ridiculous" as they tear open an envelope. "That's the sound of people opening their electric bills to discover they've nearly doubled," the narrator states in the ad, which is running in Arkansas, Colorado, Indiana, Pennsylvania, Virginia and Michigan. "An 80 percent cost hike is something we better get used to if extreme new Obama administration power plant regulations take effect," the ad states. The rules, which would limit the carbon output of new and existing power plants, are critical pillar of Obama's climate change legacy.
OPINIONS, EDITORIALS, PERSPECTIVES
22) Credibility Questions on Fukushima
from New York Times by Editorial Board
At the most dire moment of the crisis at the Fukushima Daiichi nuclear plant three years ago, nine-tenths of the employees, including executives, panicked and fled the plant following an explosion. So reports one of Japan’s most prestigious newspapers, The Asahi Shimbun. This report, based on previously undisclosed testimony by the plant manager, Masao Yoshida, is in direct conflict with the official account of that fateful day provided by the plant’s operator, Tokyo Electric Power Company, or Tepco. It calls into question the truthfulness of both the company and, indeed, the government, which even now is trying to persuade the public to go along with the reopening of 48 nuclear reactors shut down after the accident, which traumatized the country.
23) Putin Sees China as a Gas-Hungry Ally
from Bloomberg by Meghan L. O'Sullivan
Russian President Vladimir Putin and Chinese President Xi Jinping are likely to find they have more in common than ever as they meet this week, starting today in Shanghai for a Sino-Russian summit and later in St. Petersburg for an economic forum. Both men are coming under sharp criticism from the West: Putin for his annexation of Crimea and Xi for his forays into the contested waters of the South China Sea. For all the fascinating and potentially consequential strategic conversations that may take place between these two men, the one to look out for will be whether they conclude a much-delayed energy deal to pipe huge amounts of Russian natural gas to China starting in 2018. The two countries have been discussing such a deal for years, and continued today in Shanghai. To outsiders, the energy marriage of the one of the world’s largest producers to one of the world’s largest consumers seems obvious and inevitable. But several issues have kept the two sides from consummation.
24) Will Exxon Have The Guts To Drill Deep In The Arctic?
from Forbes by Christopher Helman
Exxon Mobil affiliate Imperial Oil has submitted plans to drill for oil in the iceberg-strewn waters of the Canadian Arctic (this story in the WSJ talked about it today). The spot would be about 110 miles northwest of Tuktoyaktuk. The well could reach a depth of more than 24,000 feet. Drilling could take three years, given the fact that work is limited to the 120-day summer window when that section of the Beaufort Sea is relatively iceberg free. Environmental groups are concerned, of course, that the short drilling season would limit the ability of Exxon to cope with catastrophe, such as a blowout and oil spill.
25) The Critical Infrastructure Protection Act
from Roll Call by Peter Pry
On Thursday, May 8 at 2 p.m., in Cannon 311, my expert colleagues and I testified in an open hearing on the threat of electromagnetic pulse to critical infrastructures. The hearing will prepare members of the Subcommittee on Cybersecurity, Infrastructure Protection and Security Technologies to consider a vitally important bill, arguably the most important bill before this Congress — the Critical Infrastructure Protection Act (HR 3410) — that would prepare the nation for a natural or nuclear EMP catastrophe. CIPA is sponsored by Rep. Trent Franks, R-Ariz., Chairman of the Congressional EMP Caucus, and the leading expert on EMP in Congress. The EMP threat used to be largely classified. The Congressional EMP Commission correctly judged that secrecy about EMP was a greater threat to the nation than transparency, and so published unclassified reports in 2004 and 2008 to inform citizens and the utilities that they need to be protected.
RESEARCH REPORTS, ISSUE BRIEFS, CASE STUDIES
26) Bakken Crude Quality Assurance Study
from North Dakota Petroleum Council
The study confirmed that Bakken is a light, sweet crude with low corrosivity, and that it may be hauled safely using existing DOT-111 tank cars under current federal specifications. The study also found that one of the tests DOT requires to determine the packing group for flammable liquids like crude oil is not optimal. The limitations of the test required for measuring initial boiling point can result in the same sample of crude being assigned to Packing Group I (<95°F IBP) or Packing Group II (>95°F IBP). The American Petroleum Institute is currently working to determine improved, more precise classification standards for assigning flammable liquid packing groups.