As their decade-long effort to demonize hydraulic fracturing – or “fracking” as they like to call it – lost its previous steam over the last couple of years, anti-fossil fuel conflict groups who raise money by stoking public fears related to the oil and gas industry have gradually shifted their main focus over to the pipeline segment of the business. Encouraged by the temporary victory given them by the Obama Administration related to the Keystone XL pipeline project, these conflict groups have become engaged in protests related to numerous midstream projects in the Northeast, in North Dakota (the Dakota Access Pipeline) and in West Texas (the Trans-Pecos Pipeline).
While their high-profile “wins” to date have been either temporary or, as with the Dakota Access Pipeline, illusory, nevertheless. Thus, they have chosen to engage in a constantly-increasing number of pipeline-related construction projects and incidents.
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The growing glut of natural gas on the global market – spurred in part by increased exports of Liquefied Natural Gas (LNG) by U.S. producers over the last year – reminds us of the dynamic nature of the domestic natural gas market, and the role shifting public policies have played into that over the years.
My own frame of reference here begins during the summers of 1977 and 1978, when I earned college tuition money by taking summer jobs on pipeline crews in deep South Texas. In 1978, the Congress and the Carter Administration had become convinced by some really bad science that the U.S. would actually run out of natural gas in a few decades, and thus needed to conserve what little remaining reserves it had on-hand for home heating usage. Acting on this belief, then-President Jimmy Carter signed into law the Natural Gas Policy Act (NGPA) and the Fuel Use Act (FUA), both of which had major impacts on natural gas markets, and both of which inhibited investment in new natural gas-buring infrastructure.
The NGPA discouraged investment in drilling for new natural gas reserves by allowing the federal government to establish ceiling prices producers could receive for various categories of natural gas that were established under the law. The FUA was even more prohibitive on the demand side of the natural gas ledger, prohibiting utility companies from building new gas-fired power plants. The result? A Democratic Administration ironically actively encouraged the building of dozens of new coal-fired and nuclear power plants all over the United States, many of which are still operating, much to the chagrin of today’s climate alarm lobby.
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Another CERAWeek conference has come and gone, producing, as it always does, literally hundreds of stories in the global energy-related media. But the biggest news related to the oil and gas industry that happened during the week was unrelated to the conference.
That of course was the precipitous drop in the global price of crude on Thursday and Friday, following the report of a record inventory build in the U.S. for long positions by a market that was already nervous about the slow pace of closing the global supply surplus despite the reported high level of OPEC nation compliance with the group’s production limits agreed that became effective on January 1.
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As the United States Senate finally begins taking up joint resolutions designed to reverse a handful of regulations implemented during the waning days of the Obama Administration, it’s worth discussing the indispensable role the Congressional Review Act (CRA) has come to play in halting regulatory excess, and more importantly, upholding the rule of law. While the merits of some of the regulatory actions targeted for reversal are certainly arguable, others lie so far outside the governing statutes that their reversal, either by congress or the courts, was almost inevitable from the day of their initial proposal.
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Even though the Alpine High resource sits geographically beneath the same land into which previous operators have drilled for many decades, it is in fact a new field in terms of the hydrocarbons being targeted. Because of this, one must view the Alpine High through the same lens used to view major new resource plays like the Eagle Ford Shale in Texas or the DJ Basin in Colorado.
, when operators in that area were drilling test wells involving 5-stage frac jobs and 3,000′ foot horizontal laterals, and were issuing celebratory press releases announcing oil wells that tested at initial flow rates of 1,000 barrels per day (bpd). Today, Eagle Ford operators are drilling wells with 2 mile or more laterals, frac jobs involving 30 or even more stages, and would want to commit harikari if a new well in the fairway of the play tested at only 1,000 bpd.
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President Trump and the House of Representatives are acting on oil and gas issues…: …but the Senate doesn’t appear to have gotten the memo.
In his first six weeks in office, President Donald Trump has issued executive orders on the following actions that impact the oil and gas industry:
- directing the Army Corps of Engineers to expedite the completion of the Dakota Access Pipeline;
- directing the State Department to expedite the cross-border permitting of the Keystone XL Pipeline;
- directing the EPA to reconsider its vastly over-reaching Waters of the United States (WOTUS) rule making, which is currently on appeal at the federal appellate court level; and
- directing the EPA to reconsider elements of the Obama Clean Power Plan.
During those same six weeks, the House of Representatives has taken Congressional Review Act (CRA) votes to reverse the BLM Venting and Flaring regulation, and the BLM Planning 2.0 regulation. In addition, the House has begun the process for reversing the Office of Natural Resources Revenue’s (ONRR) Mineral Valuation Regulation. Upon learning of that effort, ONRR on Feb. 22 suspended planned implementation of that rule, pending congressional action and/or the outcome of ongoing litigation related to it.
Meanwhile, in the United States Senate…the crickets are chirping.
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