President Donald Trump’s 100th day in office is this Saturday, and the debate is raging about what he has or has not accomplished during that short period of time, which in the past has traditionally been a sort of “honeymoon” period for new presidential administrations. It’s highly debatable whether or not this particular President received any sort of honeymoon at all, since such periods in the past have involved semi-favorable coverage from the press and a good deal of cooperation from congress, but that’s another subject for another writer.
My mission here at Forbes.com is to talk about public policy related to energy in general, and oil and natural gas in particular. Focusing strictly on that area of policy, it seems to me that , which, since I’m pretty old, goes back to Dwight D. Eisenhower.
Shortly after he took office in 2009, former President Barack Obama famously told the Republican congressional leaders, “Elections have consequences, and at the end of the day, I won.” Those words are as true today as they were then, and those who deal with public policy matters in the oil and gas industry are finding out that the 2016 election mattered in a really big way. You might even say it was “Yuge”.
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As crude oil from the Bakken region began to flow into the Dakota Access Pipeline (DAPL) in mid-April, Reuters carried a story indicating that the largest refiner on the East Coast will no longer be taking delivery of Bakken crude via rail:
“It’s the new reality,” said Taylor Robinson, president of PLG Consulting. “Unless there’s an unforeseen event, like a supply disruption, there will be no economic incentive to rail Bakken to the East Coast.”
Thus, the DAPL has already begun to improve the economics of drilling for and producing oil from the Bakken Shale, whose rig count has begun to rise over the last few months. And while the aggressive and often-violent protesters who spent half a year opposing the project’s completion would never admit it, DAPL is also already improving the safety of moving Bakken crude out of the basin to be sold and refined.
While rail companies and regulators have moved in recent years to improve the safety aspects of shipping crude by rail following several high-profile incidents, the truth remains that pipelines are far and away the safest means of moving crude oil to market. Rail will remain a part of the transportation mix for Bakken oil – it represented about 25% of that mix during February of this year – but its market share there will grow smaller in the coming months. That’s a positive for producers, refiners and the public.
Unfortunately, , where Andrew Cuomo continues to cost his constituents billions of dollars each year through his efforts to obstruct the building of needed natural gas pipelines in the Empire State. Gov. Cuomo is of course most famous for orchestrating a statewide ban on hydraulic fracturing, a ban that has denied New Yorkers to share in the riches provided to Pennsylvanians, West Virginians and Ohioans by the massive Marcellus Shale resource, which also extends into Southwestern New York.
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[Note: I posted this piece at Forbes.com on April 22, 2013, but it remains relevant today.]
Today is Earth Day, and it is very likely that the fact that abundant fossil fuels like oil, natural gas and coal, are natural resources, and gifts to humanity from Mother Earth herself will be lost amid all the frightful doom and gloom predictions that will be launched by environmental activists and repeated by various media outlets.
All the vitriol thrown at these fossil fuels by the environmental community notwithstanding, it is a simple fact that our prosperous, modern, energy-hungry society was made possible by the existence of these fuels. Without the discovery of and ability to produce fossil fuels, it is likely that mankind would still be mired in a Medieval form of existence, reliant on burning wood for heat, horses for transportation, and still living largely in the dark after nightfall.
But what about wind, solar and nuclear? The production of modern wind turbines, solar panels and nuclear power plants are extremely energy-intensive enterprises, and are by and large powered by the burning of fossil fuels. In other words, without the massive energy levels generated by the fossil fuel chicken, the “green” energy eggs would not have been possible.
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Hey, guess what? There’s a bunch of natural gas out there along the Texas and Louisiana Gulf Coast!
That’s what the US Geological Survey (USGS) announced on April 13, with its assessment that the combined Haynesville and Bossier shales, sandstones and carbonates contain a gigantic volume of natural gas, which the USGS estimates at a total of 304 trillion cubic feet (tcf) in place. That represents enough natural gas to supply country’s entire demand for natural gas for about 12 years, just from two formations, and it represents a 330% increase over the agency’s 2010 resource estimate.
As USGS noted, the formations also contain a very large volume of oil and natural gas liquids:
The Bossier and Haynesville Formations of the onshore and State waters portion of the U.S. Gulf Coast contain estimated means of 4.0 billion barrels of oil, 304.4 trillion cubic feet of natural gas, and 1.9 billion barrels of natural gas liquids, according to updated assessments by the U.S. Geological Survey. These estimates, the largest continuous natural gas assessment USGS has yet conducted, include petroleum in both conventional and continuous accumulations, and consist of undiscovered, technically recoverable resources.
The updated estimate is a part of an ongoing USGS program to re-visit many of the largest oil and gas producing basins in the country, in order to create a more accurate picture of the resource available for the nation’s use as we move into the future. The agency previously released an updated estimate of oil contained in the Wolfcamp formation in the Permian Basin, which I analyzed last November. This is an important exercise designed to better inform public policy decisions related to energy, especially given the amount of ridiculous mis-information that gets into the media every day, such as the always-present but never correct “peak oil” and “peak gas” theories.
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A couple of weeks back I wrote about the shifting focus of anti-fossil fuel conflict groups in their efforts to impede the nation’s energy development in various parts of the country. That focus, which since about 2008 had centered on the boogeyman “fracking”, has now shifted to a new, midstream boogeyman in the form of pipelines.
That previous piece focused on an incident involving a natural gas pipeline leak in Alaska’s Cook Inlet, which is operated by Hilcorp, and the manner in which Hilcorp’s efforts to coordinate with regulators to address the issue were distorted by one of those web-based media groups, EcoWatch. Repairs to that pipeline are underway, with no discernible impacts to surrounding wildlife or the environment, but it placed Hilcorp on these groups’ radar as a target for exploitation.
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Some thoughts on the domestic oil and gas situation as we move into April…
The rigs just keep on coming…: The industry activated more than 70 additional drilling rigs during the month of March, bringing the total new rigs activated during the first quarter of 2017 to more than 200. My “bold” prediction as the year began was that it would take four months, not three, for the U.S. industry to bring that number of new rigs onto the market. So, ok, I was too timid.
Interestingly, more than a dozen of these newly-active rigs have moved into the Haynesville Shale region, which is experiencing a somewhat surprising resurgence of activity, even in the seemingly interminable weak price market for natural gas. The play’s abundance of pipeline takeaway capacity and proximity to major export facilities are two of the main reasons for this uptick in activity, as detailed by Forbes contributor Jude Clemente in his piece of March 25.
March’s increase in rigs drilling for oil was also less focused on the Permian Basin than in prior recent months, with other basins like the Eagle Ford, the SCOOP/STACK and the DJ Basin also seeing significant upticks in activity. How much longer this rising rig count can last is anyone’s guess, but it was a major reason why…
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An interesting facet of the news media’s coverage the past couple of days about President Trump’s Executive Order on Promoting Energy Independence and Economic Growth (hereinafter referred to as “Order”) is that the coverage focused mostly or entirely on the Order’s impacts on the U.S. coal industry and coal-related jobs. Granted, the Order was cast as the President’s effort to essentially rescind major parts of former President Obama’s “Clean Power Plan”, which most recognize was an effort by his Administration to damage the nation’s coal industry. But just as the “Clean Power Plan” had impacts and produced major regulatory efforts that reached far beyond the coal industry, President Trump’s newest executive order also impacts other segments of the nation’s energy sector.
Here is a review of several of them:
- Section 2 of the Order directs all relevant agencies to “review all existing regulations, orders, guidance documents, policies, and any other similar agency actions (collectively, agency actions) that potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources.” This is a very broad-ranging mandate that, when combined with other aspects of the Order, is likely to create a vast array of proposed regulatory rescissions and reforms.
- This makes them different from the Democrats….how, again?: With the Democrats threatening to shut down the federal government over the pending expiration of the current continuing resolution (CR), Republican “leaders” in both the House and Senate have already conceded that they will continue to fund Planned Parenthood and Obamacare, and will deny President Trump’s request for funding for the border wall. I’m sorry, but didn’t we just have an election about every one of those funding priorities last November, and didn’t the voters indicate they prefer to reverse all three of those decisions by the pathetic GOP congressional leadership? What am I missing here?
- Let’s just rename it The Federal Bureau of Non-Disclosure.: You would have had to search long and hard to find it due to the mainstream fake media blackout on anything not harmful to President Trump, but the Weekly Standard reports that House Intelligence Committee Chairman Devin Nunes pointed out yet again that the FBI is still stonewalling his Committee’s requests for information related to its investigation of the Democrats’ Trump/Russia fantasy. In response to Nunes’s statement, the FBI sent a spokesman out to say “We’re cooperating”, and then presumably went back to stonewalling the Committee.
- But was her son, Scut, involved? What about his toady, Grover Dill?: Speaking of stories you can’t find, a former Obama official named Evelyn Farkas told Mika Brzezenzski (or however you spell that name) on MSNBC early in March that she and many other Obama officials had indeed participated in an organized effort to circulate raw surveillance intelligence involving members of the Trump Transition Team, and had gladly shared the intel with members of the fake news media, unmasking some American citizens in the process. She told this all to MSNBC gladly, and in a manner that made it obvious she is in fact proud of her actions. She apparently did not understand that, in the process of that interview, she was potentially admitting to the commission of multiple felonies by herself, other Obama officials and members of the fake news media. Thus, the fake news media has been jointly sitting on this story hoping it would just fade away. Trouble is, the story has been getting a ton of attention in the realm of talk radio this week, so suddenly Ms. Farkas felt the need to go back on cable TV on Thursday to deny everything she had told Mika. And her friends in the fake news media will nod their heads and move on. Nothing to see here, all is well.
- Editor: you really think the public will buy that cock and bull story? Reporter: Well, sure, er, the Democrats will, at least.: Rather than report on the admissions of Ms. Farkas, the fake (literally fake, since it is no longer in print) magazine Newsweek ran with a “blockbuster” story about how our suddenly intrepid (now that he’s bashing a Republican) bi-polar FBI Director James Comey really, truly, no kidding was begging to run to the NY Times late last summer with an op-ed in which he would reveal the Russian efforts to “rig” the elections. And guess who stopped him? Why, our hero, Barack Obama, of course! Also of course, this Newsweek “blockbuster” is based solely on the word of not one, but two (!) source…who naturally remain unidentified. *sigh* #Fakenews at its finest.
- A story you can easily find this morning is the Wall Street Journal’s report that General Mike Flynn has offered to testify before the Senate Intelligence Committee in exchange for immunity. Upon hearing of this offer by Gen. Flynn, talking heads all over the fake news media exploded, and immediately jumped to the conclusion they have jumped to 1,000 times before over the last 21 months, which is that “this is finally it” for President Trump. Trouble is, if you read the whole WSJ story, you find this statement from Gen. Flynn’s lawer:Mr. Kelner, Mr. Flynn’s attorney, decried the “unfounded allegations, outrageous claims of treason” and other charges by lawmakers and media commentators.“No reasonable person, who has the benefit of advice from counsel, would submit to questioning in such a highly politicized, witch-hunt environment without assurances against unfair prosecution,” he said.That doesn’t sound much like someone who’s getting read to toss the POTUS under the bus. It sounds a lot like someone who saw the shameful travesty that happened with Scooter Libby during the last Republican presidential administration, and who wants to avoid the same fate.
But hey, it’s all Trump Derangement Syndrome, all the time in the fake news media.
That is all.