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President Trump’s Latest Energy Executive Order Is Not Just About Coal

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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.

Some major aspects of the Order contain significant implications for the oil and natural gas industry as well.

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.
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Conflict Groups Find A New Boogeyman – Pipelines

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, the conflict industry obviously sees this coordinated attack on the midstream segment as a money-makernevertheless.  Thus, they have chosen to engage in a constantly-increasing number of pipeline-related construction projects and incidents.

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Lessons Learned Through Two Oil Busts

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“How does this bust differ from the bust in the ’80s?”

I get asked that question quite often, partly because I’m growing old and it shows on my face, and partly because I’ve been in the oil and gas industry since 1979, and people assume — rightly or wrongly — that I know some stuff because of that. I did live through that bust in the ’80s, and it wasn’t fun. I got laid off from a job in 1985 and was out of work for a few months — the only time I’ve been unemployed since I was 16 years old — and that caused me and my wife great financial hardship.

So I do remember those days all too well. To understand why that bust happened, you first have to go back to the oil shocks of the 1970s, when the Saudis and other OPEC nations implemented oil embargoes, first in 1973 and then again in 1979.

Two memories from that period of time stick with me to this day. The first is of filling my mother’s 1972 Pontiac Grand Ville up with gasoline on the day in 1974 when the price of gas at the local Circle K in Beeville, Texas, reached the then unheard of sum of 50 cents per gallon. That was the first time I had ever had to come up with 10 bucks (the aircraft carrier-size Grand Ville had a 26-gallon tank) to fill up a car with gas. I knew I was going to have to start working overtime or get another job if I was going to keep putting gas in that car. The second memory is of sitting at a long-disappeared Texaco station at the corner of Richmond Avenue and Buffalo Speedway in Houston during the summer of 1979, having to wait in a very long line of cars on an odd-numbered day to pay over $1 per gallon for my allotment of gas to fill up my Chevy Caprice. Another 26-gallon tank that was even more costly to fill.

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Culture of Innovation: Doug Suttles with Encana

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The history of the oil and natural gas industry in North America is in many ways intertwined with the history of the railroad, which in the mid-19th century became the main means of transcontinental transportation for Americans and Canadians.

As these great railroad systems were constructed across the continent, the companies building them gained ownership of great swaths of land, and, as importantly, obtained ownership of the minerals beneath the land. In the United States, as oil and natural gas began to be discovered across the Midwest and Rocky Mountain states, a good deal of it lay beneath land owned by rail companies like Burlington Northern, Union Pacific and Santa Fe.

These companies all eventually created subsidiaries to manage their oil and gas royalty holdings, and those subsidiaries eventually evolved into some of the country’s largest independent producers: Burlington Resources, Union Pacific Resources and Santa Fe Energy. Those companies are all gone today, having been merged with or acquired by ConocoPhillips, Anadarko Petroleum and Devon Energy, respectively, but their place in history is firmly established.

 

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Is The Constantly Changing Natural Gas Market About To Change Again?

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.

 

Read The Full Piece Here

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Little-Used Congressional Review Act Becoming An Indispensable Tool

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.

Read the Rest Here.

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The Alpine High: A Big Deal Last September, An Even Bigger Deal Today

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.

The evolution of the Alpine High today sits at about the same place as the Eagle Ford Shale sat in mid-2010 , 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.

Read the entire piece here.

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The Oil And Gas Situation – Protesters Moving To Texas, The Senate Not Moving At All

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.

Read the entire piece here.

 

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