Articles Posted in Energy Policy

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After the Texas freeze last February that resulted in loss of electric service to millions of Texans, the Texas Legislature passed laws requiring the Texas Railroad Commission and the Public Utility Commission of Texas to address the issues raised by the systems’ failures. One of those issues was the failure of natural gas supply to electric generators. Senate Bill 3 and House Bill 3648 require the RRC to collaborate with the PUC “to adopt rules to establish a process to designate certain natural gas facilities and entities associated with providing natural gas in this state as critical customers or critical gas suppliers during energy emergencies.” In response, the RRC has proposed a new rule, 16 TAC Section 3.65. The purpose of the new law is to let the PUC know what gas infrastructure is critical to continued delivery of gas to electric utilities during an electric supply crisis so that gas supply won’t be disrupted because gas suppliers don’t have the electricity necessary to operate their systems.

As explained in the RRC’s explanation of its proposed rule, the RRC proposes to designate all gas infrastructure as “critical.” The proposed rule therefor designates as critical gas suppliers and critical customers all wells producing gas and casinghead gas, gas processing plants, gas pipelines and facilities, compressor stations, local distribution company pipelines and facilities, gas storage facilities, natural gas liquids transportation and storage facilities, saltwater disposal facilities and pipelines, and “other facilities under the jurisdiction of the Commission the operation of which is necessary to operate any of the facilities” listed above. In its comments to the proposed rule the RRC explains that all of these facilities are “necessarily critical customers of electric entities during an energy emergency.”

The Commission chooses to include these facility types, located up and down the entire natural gas supply chain, because the statistics from Winter Storm Uri reveal that during the storm, every molecule of natural gas was important. … Each piece of the supply chain included in [the list of critical customers] contributes to the delivery of gas downstream. If one piece of the supply chain cannot operate, then the gas cannot be delivered for electric generation or other important uses. Further, daily gas production alone many not be adequate for peak demand during a weather emergency, which makes gas storage an important source of natural gas. Thus, natural gas storage facilities are included ….

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Link here to Texas Tribune article. Not a good idea. ERCOT definitely made some mistakes in the freeze, but it had no authority to require generators to winterize.  Everyone is still pointing the finger at everyone else. Another Texas Tribune article: the legislature is now considering creating a $2 billion taxpayer-funded account for those improvements.

 

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Dr. Scott Tinker and Switch Energy Alliance have released their second documentary about energy, Switch On. A great film.

Scott’s first documentary, Switch, debuted in 2012, an award-winning film that has now been seen by millions. It sought to educate Americans and the developed world about the sources and uses of energy in the developed world, our challenges and our choices. Scott’s second documentary focuses on the challenges of energy production and consumption for two billion people in the developing the world, and what is happening with energy in those places. Switch Energy Alliance was formed by Scott as a non-profit “dedicated to inspiring an energy-educated future that is objective, nonpartisan, and sensible.”

Dr. Tinker is a geologist, educator, energy expert and documentary filmmaker. He is Director of the Bureau of Economic Geology at the University of Texas at Austin and is the State Geologist of Texas. He holds the Edwin Allday Endowed Chair of Subsurface Geology and is Associate Dean for Research at the BEG. He has a gift for making difficult concepts simple and conveying information in an objective and entertaining way.

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The cover story in The Economist this week is titled “Crude awakening – The truth about Big Oil and climate change.”  It comes in the wake of the introduction by a group of new Democratic Congress members of a proposed “Green New Deal” to tackle climate change.

When I began my career some forty years ago the effect of carbon emissions on the earth’s climate was not a matter of concern. The focus was on cleaning up our water and air – under the Clean Water Act and the Clean Air Act. And those acts have had a big impact on our environment. Although burning fossil fuels contributed to air pollution and pollution from fossil fuels has been greatly reduced, the emissions regulated and reduced did not include carbon dioxide, which was not considered harmful to the environment. Remember catalytic converters? They have greatly reduced emissions of harmful chemicals, but not CO2.

The world has now come to the realization that climate change is real. A poll by Yale University late last year found that 73% of Americans agree. Extreme climate events in recent years have contributed to that change of opinion.

Yet the world’s dependence on fossil fuels is not receding. World demand for oil continues to grow by about 1-2% a year. CO2 emissions in the US, the second-largest polluter on the planet, are now rising again. ExxonMobil  says that global oil and gas demand will increase by 13% by 2030. It intends to spend more than $200 billion over the next seven years to develop its reserves. Continue reading →

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Dr. Scott Tinker, the Director of the Bureau of Economic Geology, University of Texas, and the Texas’ State Geologist, produced and starred in a film a couple of years ago called Switch.  It provides an overview of how we use energy in the world and the opportunities and challenges facing our future in trying to reduce our reliance on hydrocarbons. A great film. He also created a great resource for educators about the many facets of energy, found at www.switchenergyproject.com, with multiple videos explaining every facet of energy production and use, from biofuels to environmental impacts to fracking to coal.

Dr. Tinker has released a new set of educational videos at http://www.switchenergyproject.com/education/energy-lab, on topics such as How We Make and Use Energy, How Batteries Work, Unconventional Sources of Oil, Risks of Fracking, How Solar Works, and many others, all free on his website.

Now Scott is making a sequel to Switch, called Switch On, which focuses on energy poverty. Scott emailed friends:

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Flare
My clients regularly complain of flares from wells on their property. Most leases don’t require royalty payments on flared gas, so their royalty is going up in smoke. Flares often don’t function properly, resulting in emissions of toxic gases. Flares make noise.

TexasBarToday_TopTen_Badge_SmallThe Environmental Defense Fund recently released an excellent report on flaring in the Permian Basin, Permian-Flaring-Report-2017.  EDF analyzed flaring and venting by 15 major producers in the Permian for the years 2014-2015. Here’s what they found (click on image to enlarge):

EDF-graph-flaring
On average, these operators flared at a rate of 3 to 4 percent of their production in these years, more than 80 Bcf of gas. At $3/mcf, that’s $240 million of gas.

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The DC Court of Appeals and the US District Court for the Northern District of California have struck down orders of the EPA and the Bureau of Land Management postponing compliance dates for the Obama administration’s rules requiring the oil and gas industry to monitor and reduce methane emissions. Both courts held that the agency’s orders were “arbitrary and capricious” and in violation of the Administrative Procedure Act.  Clean Air Council, et al. v. E. Scott Pruitt, Administrator, Environmental Protection Agency and Environmental Protection Agency, No. 17-1145, opinion July 3, 2017; State of California, et al. v. U.S. Bureau of Land Management, et al., Case Nos. 17-cv-03804-EDL, 17-cv-388-EDL, opinion Oct. 4, 2017.

Methane is a powerful greenhouse gas contributing to human-caused global warming. The EPA’s rules, aimed at reducing emissions of methane from oil and gas facilities, were adopted in May 2016. They impose “new source performance standards” for finding and fixing leaks of methane in oil and gas production facilities. Those rules require operators to implement a leak monitoring plan using optical gas imaging to find and fix leaks from valves, connectors, pressure-relief devices, flanges, compressors and thief hatches on storage tanks.  The BLM issued similar rules in November 2016 to reduce waste of natural gas from venting, flaring and leaks during oil and gas production activities on Federal and Indian lands.

President Trump appointed Scott Pruitt as Administrator of EPA. Pruitt, as Attorney General of Oklahoma, sued the EPA at fourteen times on behalf of his state, attacking the EPA’s authority to regulate various industries. Pruitt rejects the scientific consensus that human activities contribute to climate change. Continue reading →

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John McFarland
 Graves, Dougherty, Hearon & Moody, P.C.
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