For those of you following the Klotzman proceeding at the Texas Railroad Commission, you can read the Klotzman Motion for rehearing here. #02-0278952 Klotzman Motion for Rehearing.PDF
Of the $70 million spent by Texas business PACs in 2011-12, $11.9 million, or 9%, was spent by PACs devoted to energy and natural resources issues/candidates. Here are the top spenders:
The above figures represent spending by these PACs both in-state and out-of-state.
Energy Future Holdings is the successor to TXU Corp., acquired by EFH in a $45 billion leveraged buyout. EFH, now threatened with bankruptcy, is one of the state’s largest electricity generators. The five EFH PACs spent more than $750,000.
Valero Energy’s PAC spent $729,000 of its $2 million in Texas and was a larger supporter of Senator Ted Cruz. ConocoPhillips’ PAC spent $221,000 in Texas and gave large sums to Texas Railroad Commissioners.
Lawyer and lobbyist PACs were also big spenders:
In 2010, Public Citizen issued a report on political contributions to Texas Railroad Commissioners. It found that total funds raised by commissioners increased from $511,000 in 2000 to $3.5 million in 2007-2008. Industry donors increased from $230,000 in 2000 to more than $2.1 million in 2008:
Contributions to sitting commissioners increased substantially in 2006 and 2008 election cycles:
Public Citizens’ conclusions:
- Most of the increase in funding of commission races is driven by industry and those who have an economic interest in the decisions made by the commission.
- Increased spending by large donors is likely putting pressure on smaller, independent operators to contribute.
- Fundraising rarely ceases, except just after an election.
The Railroad Commission has been up for review by the Texas Sunset Commission in the last two sessions of the Texas Legislature, and both times the legislature failed to enact any of the recommendations of the Sunset Commission — save one. In 2012, the legislature passed a bill requiring commissioners to resign if they decide to run for another elective office. Governor Rick Perry vetoed that bill. Among the Sunset Commission’s recommendations was that the commission should levy more fines for violation of commission rules. In the first quarter of 2013, the commission issued almost 14,000 notices of violations; it collected less than $200,000 in fines.
Last week I attended the State Bar Annual Advanced Oil, Gas and Energy Law Conference in Houston. This year is the 75th anniversary of the Oil, Gas and Energy Section of the Texas Bar (older than the State Bar itself), and there was a special dinner to honor the occasion, at which Daniel Yergin spoke. He is the author of the Pulitzer-prize-winning book The Prize, a history of the global prusuit of oil, money and power — a great read. More recently Yergin published his follow-up, The Quest: Energy, Security, and the Remaking of the Modern World, updating the history of global energy production and demand from the first Gulf War to the present.
Some tidbits from Yergin’s talk: politically, the biggest risk to the industry is the opposition to hydraulic fracturing — not a big issue in Texas, but a huge issue in eastern states and California — and the pressure for increased federal regulation of drilling. The biggest practical challenges to the industry in the US are dealing safely with wastewater from oil and gas operations, and, in some parts of the US, the industry demand for fresh water for fracing. Once again, peak-oil predictors have been proven wrong, by the triumph of technology. Texas has long been a leader in the industry not only because of its abundance of natural resources but also because of private ownership of oil and gas and the development of the legal theories and framework for the industry by the Texas bar and courts in the 20th century.
To see Yergin’s “world energy timeline, click here.
I highly recommend Yergin’s books – hugely informative and very readable.
A report recently released by the University of Texas’ Cockrell School of Engineering, “Measurements of methane emissions at natural gas production sites in the United States,” has re-energized the debate between industry and environmental groups over whether natural gas is good for the environment.
UT’s report is a peer-reviewed paper reporting on the results of measurements of methane emissions at 190 onshore natural gas sites in the US. It was sponsored by the Environmental Defense Fund, Anadarko Petroleum, BG Group, Chevron, Encana, Pioneer Natural Resources, Shell, Southwestern Energy, Talisman Energy USA, and Exxon. The study is part of a larger series of studies being sponsored by EDF to determine how much methane is emitted by natural gas exploration, production and transportion in the US. The issue is important because, on the one hand, burning of methane releases less carbon dioxide into the atmosphere than coal or oil, and on the other hand, methane is itself a powerful greenhouse gas that contributes to global warming. Over the first 20 years after it is released, methane is 72 times more potent than carbon dioxide as a greenhouse gas.
Those environmental groups who oppose further development of hydrocarbon resources argue that, because of methane emissions, natural gas is not a good alternative to other fossil fuels. They have argued, based in part on estimates of methane emissions from completion operations on wells using hydraulic fracturing, that the increased development of natural gas resources made possible by fracing is bad for the environment. The industry, and some environmental groups, see natural gas as a plus, a “bridge fuel” to development of renewable energy.
The debate over the greenhouse effect of methane was triggered by the release of a study by two Cornell University professors, Robert Howarth and Anthony Ingraffea, contending that EPA estimates of methane emissions were low, and that because of those emissions natural gas was a worse greenhouse gas than carbon dioxide and other emissions from burning coal. Howarth’s study has been widely criticized for using old data and vastly inflating methane emission estimates by the US Energy Department, the University of Maryland, MIT, Carengie Mellon Universty and the Worldwatch Institute.
Howarth has issued a press release criticizing the UT study, saying it relied on data from the nine companies who helped sponsor the study. He pointed to a study published last month by the National Oceanic and Atmospheric Administration (NOAA) as more representative of a worst-case scenario. It studied air emissions in an entire basin in Utah. “They’re finding methane emissions that are 10 to 20 times higher than this new study,” Howarth says, “and I think [that’s] probably more representative of at least those western gas fields, when industry does not realize it’s being watched.”
UT was criticized last year over possible bias in a study published by UT Austin’s Energy Institute, “Fact-Based Regulation for Environmental Protection in Shale Gas Development.” After review by an independent commission appointed by the University, UT withdrew the study. Its author had failed to reveal that he sits on the board of Plains Exploration and received substantial compensation from the company. The review panel concluded that the report was not “fact-based” or subject to serious peer review and that a summary press release of the report was misleading and “seemed to suggest that public concerns were without scientific basis and largely resulted from media bias.” (See my report on the controversy here.)
So what does the new UT study really tell us? Its measurements of methane released from completion and fracing operations are substantially lower than EPA’s estimates. But its measurements of gas released from pneumatic pumps and controllers and equipment leaks were either comparable to or higher than EPA estimates. Overall, the study’s estimates of methane emissions were in line with EPA’s most recent estimates. Lower measurements of emissions from well completions may be a result of better completion techniques that capture more methane, either for sale or flaring. UT’s study also attempted to measure methane emissions from “well unloadings”; while it found emissions from those events to be substantial, it concluded that its sample size was not sufficient to extrapolate emissions from that source and more sampling would be necessary. For a good explanation of emissions from “well unloadings” and well completions, you can watch the video on UT’s website explaining its study. EDF’s website explaining its efforts to better measure methane emissions is also instructive.
The debate continues.
I subscribe to the Economist, and it recently sent its subscribers a booklet, Pocket World in Figures, that contains rankings of 198 countries in categories ranging from longest river to biggest cities to number of refugees to living standards, etc. Here are some interesting statistics related to energy from that booklet:
Top 10 Oil Producers 2012 (‘000 bbls/day)
Saudi Arabia 11,530
Top Ten Oil Consumers 2012 (‘000 bbls/day)
Saudi Arabia 2,935
South Korea 2,458
Top 10 Natural Gas Producers 2012 (billion cubic meters)
Saudi Arabia 102.8
Top 10 Natural Gas Consumers 2012 (billion cubic meters)
Saudi Arabia 102.8
In coal production, China ranked 1st (2012), with 1,825 million tonnes oil equivalent, with the U.S. a distant second at 515.9.
The U.S. ranks 30th in number of cars owned per 1,000 population (2011), behind countries such as Australia, Germany, France, Norway, Spain, and the Czech Republic.
In 2011, China produced 14,485,000 cars. Number two was Japan at 7,159,000. The U.S. ranked 6th, at 2,966,000, behind Germany, South Kora and India (3,054,000).
China ranked 1st in emissions of carbon dioxide in 2009 (7,687 million tonnes). Following it (in order): U.S. (5,267 million tonnes), India (1,979), Russia (1,574), Japan, Germany, Iran, Canada, South Korea, and South Africa. In the rank of carbon dioxide emissions per person, U.S. ranked 10 (17.3 tonnes per person). The leader was Qatar at 44 tonnes per person, followed by Trinidad & Tobago, Kuwait, Brunei, UAR, Aruba, Bahrain, Luxembourg and Australia.
The historic floods in Colorado have inundated hundreds of oil and gas wells, dislodging tanks and threatening significant pollution of the flood water.
The disaster has raised questions across the country about regulation of drillsite locations in areas that could be subject to flooding. The Colorado Oil and Gas Conservation Commission Wednesday released a statement that it “is aggressively assessing the impacts of the flood to oil and gas facilities,” including by mapping drilling sites within flooded areas, tracking reports from the ground, and sending out inspection teams. A similar disaster occurred in 2010-2011 in North Dakota, where floods from thawing snow along the Missouri River caused flooding of wells, resulting in contamination of flood waters by fracking fluids, drilling mud and saltwater. That flood prompted changes in North Dakota’s regulation of wasterwater storage. The North Dakota Industrial Commission amended its rules to prohibit the use of open pits except in cases of emergencies. Companies can still store drilling waste in open pits for up to 72 hours after drilling a well or after securing approval from the commission.
Here are stories and additional photos of the impact of Colorado’s flooding on its oil and gas sites:
The Texas Railroad Commission has no rules governing the placement of oil and gas wells in areas subject to flooding or the storage of fluids in flood-prone areas. With Texas in the middle of a historic drought, it might seem incongruous to be concerned about flooding. But we are all hoping for historic rain events to re-fill our reservoirs and break the drought. Meanwhile, thousands of new wells have been drilled across Texas, including wells in watersheds for rivers like the Guadalupe, Nueces and Frio that cross the Eagle Ford. Prudence dictates that Texas consider adopting rules that would diminish the risk of significant contamination by flood events like those recently experienced by Colorado and North Dakota.
Texas pumped 2.575 million barrels of oil per day in June, exceeding Iran’s production of 2.56 million barrels/day. Texas now ranks ahead of seven members of OPEC in oil production.
The U.S. is now the world’s largest exporter of refined fuels, including gasoline and diesel. The U.S. met 87 percent of its energy needs in the first five months of 2013. This is expected to be the highest annual rate since 1986. Net imports of oil and petroleum products will fall to 5.4 million barrels a day by 2014, down from 12.5 million in 2005, according to the Energy Information Administration. It is expected that the U.S. will pump 7.75 million barrels/day by the end of the year. West Texas Intermediate’s price is now above $107/bbl.
Meanwhile, the Houston Chronicle reported that a “growing number of experts” are now saying that the increased production of oil will result in a significant decline in prices. Amy Myers Jaffe, executive director for energy and sustainability at the University of California at Davis, recently wrote that “The most likely scenario – absent war – is for oil prices to decline significantly.” She sees a repeat of the decline in oil prices from the 1980s. If you superimpose a curve of oil prices from the 1980s over today’s price curve, “we’re already on the other side of the hump,” said Jaffe. The decline will be a result of rising supplies and falling fuel demand, exacerbated by higher fuel prices, less driving, less demand from emerging nations like China, the rising dollar, replacement of oil with cheaper natural gas, and OPEC’s inability to cut production enough to prop up prices. “Don’t lose sight of the fact that [oil prices are] a cycle. We get in this mania that whatever the price is it’s going to be that forever.”
Julia Trigg Crawford has waged a well-publicized fight to prevent condemnation of an easement across her farm for the XL Keystone Pipeline. On August 27, the 6th Court of Appeals in Texarkana denied her appeal of TransCanada Keystone Pipeline’s award of an easement over her property. Crawford has vowed to appeal to the Texas Supreme Court.
The Court of Appeals’ opinion says that Ms. Crawford had two arguments: first, that the Texas statutes granting pipelines condemnation authority do not apply to interstate pipelines; and second, that Keystone had failed to meet the showing required by the Texas Supreme Court in Texas Riceland Partners v. Denbury Green Pipeline-Texas, 363 S.W.3d 192, 202 (Tex. 2012) that the pipeline must show “a reasonable probability … that the pipeline will at some point after construction serve the public by transporting gas for one or more customers who will either retain ownership of their gas or sell it to parties other than the carrier.” The Texarkana court held that Keystone had met that burden. The court also held that the relevant Texas statutes do grant condemnation authority to interstate common carrier pipelines.
The portion of the XL Keystone pipeline from Cushing, Oklahoma to Port Arthur, Texas is nearing completion. That segment of the pipeline has been able to proceed even though the Obama administration has not yet approved the segment of the system that would carry heavy crude from Canada across the northern segment of the XL Pipeline system.
The Supreme Court’s Denbury opinion initially caused significant consternation in the pipeline industry and generated unsuccessful efforts in the last Texas legislative session to amend Texas condemnation statutes to facilitate pipeline condemnations. The Crawford case is an indication that the industry’s fears that Denbury would significantly impair pipeline construction in Texas are unfounded and that Texas appellate courts have been able to apply Denbury without much trouble.
I subscribe to a news clip service on the oil and gas industry, where I get a lot of my ideas for this blog. Almost half of the news stories for August 20 had something to do with hydraulic fracturing (“fracing” or “fracking” – the latter spelling seems to have become predominant in the media, although the industry continues to use the former). Most of the fracing stories have to do with the controversy over its environmental consequences – is it safe or not? Does it reduce carbon emissions or not? Does it pollute groundwater or not? Does it need more regulation or not? Recently the debate over fracing is bubbling up in Europe, expecially the UK, and in the California legislature.
An interesting article reflecting on the debate is in The Guardian, titled “Fracking debate: what does the battle for lead-free air teach us?” The author compares the current debate to past debates over the toxicity of lead — the discovery in the 18th century that lead was poisonous when ingested, and the more recent debate over the safety of lead in gasoline. In both instances environmentalists warned of its danger, the industry opposed its elimination, and politicians waffled. The article’s conclusion:
So what lessons can we draw from the story of lead? First, that society will enthusiastically adopt new technology without considering the consequences. Second, that you cannot rely on industry to act in the public interest, even when their practices are going to pollute the entire planet. Third, that politicians are no more responsive to issues of public health than they were in the 18th century. Fourth, that remedial action only happens when individuals make their voices heard above the clamour of vested interest. And finally disinformation is a standard industry tactic whenever profits are under threat.
I’m not sure that the current fracing debate is exactly analogous to the history of lead contamination, or that environmentalists are always right in their conclusions any more than that industry is always disseminating disinformation; but I do agree that it is important for politicians and the public to pay heed to the debate and seek the truth. Much is at stake, and the demand for energy, the driving force behind all of the controversy, is insatiable.