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Commentary: While consumers rejoice, low oil prices cause "crises" to those governments and economies that are highly dependent on a high price for the volatile oil & gas commodities they produce. It may be instructive for decision makers in Alaska and Alberta, for example, to observe — as they develop their own creative solutions — ideas from abroad. Here is what the Ecuador’s Vice President Jorge Glas said yesterday in a Radio announcement about that country's dependence on falling oil prices (See our earlier story re: Ecuador – Pebble Project, Alaska). “We have already faced similar situations, as have many countries throughout Latin America. We have a technical government that is prepared to face this crisis." According to a recent posting of a Tiempo Story, "The Ecuadorian government is taking a number of steps to address the economic repercussions of the dramatic decline in oil prices. One such measure has been the revocation of the 5% increase in public sector wages which was scheduled for 2015. There have also been a number of proposals to cut the state budget by as much as $1.4 million. Ecuador’s Minister of Finance Fausto Herrera recently reported that the government will cut its capital expenditures by over $800 million, in addition to a $580 million cut from the budgets of current projects. With regards to the latter, there will be a direct cut of $200 million, while the remaining $380 million will be saved by optimizing spending." -dh |
On Friday, the Nebraska Supreme Court upheld the pipeline’s route through Nebraska while the U.S. House of Representatives voted to approve the project following Senate Energy Committee action. Prior to the release of the Nebraska Supreme Court decision, Michael Whatley (NGP Photo) of the Consumer Energy Alliance (CEA) appeared on Omaha’s KMTV to preview what to expect from the courts and what implications a decision would have. Following the decision, CEA issued a statement and spoke to several networks, including Nebraska Public Radio. Later on Friday, CEA issued a statement of support following the House’s vote to approve the project by a strong bipartisan majority, which was picked up on Omaha’s WOWT. (Note: We have long associated ourselves with CEA and other NGOs advocating reasonable, 'all-of-the-above' energy development policies and projects for North America. In fact, we believe that together such groups represent the common-sense, public interest 'sweet spot' creating the best blend of economic development, environmental conservation, job creation, and consumer benefits. -dh)
KTUU Television. (See story left column) The agencies in charge of six "mega projects'" that were put on hold in December by Gov. Bill Walker submitted reports this week outlining the operating costs and potential consequences if work is delayed or stopped permanently. The projects include the Ambler Mining District, the Juneau Access Road, the Susitna-Watana Hydro Project, the Knik Arm Bridge;, the Alaska Stand Alone Pipeline; and the Kodiak Launch Complex.
SIGNS OF THE TIMES, fron Schwab: Tpday, Tranocean, Ltd. (RIG) fell 2.30% to a new 52 week low of $15.72. During the last 52 weeks, RIG's price has ranged from $48.53 on January 10, 2014 to today's low of $15.72. Additionally, over the last 12 months, RIG has decreased 67.59% while its peers in the Oil & Gas Drilling industry decreased 47.73%.
TODAY'S ENERGY IN DEPTH ENERGY LINKS:
HF: New York, California and the perils of ignoring science. San Jose Mercury News,EID’s Dave Quast. Recent developments in the debate over hydraulic fracturing (fracking), however, show that these two states have fundamentally opposite approaches to leadership from Democratic governors. Gov. Andrew Cuomo of New York didn't lead, but rather followed when his Health Commissioner announced that the state would continue its ban on fracking. This despite the fact that the state's Department of Health couldn't find evidence that fracking is harmful.
The debate about fracturing must be based on sound science. Times Record News, column. Hydraulic fracturing has been accused by environmental groups of everything from polluting water supplies to contaminating the air to causing cancer to inducing earthquakes. Dr. Dan Hill, head and professor and Noble Chair of the Harold Vance Department of Petroleum Engineering at Texas A&M University, wrote a column that appeared in the Bryan/College Station Eagle on Dec. 30 that warned consumers “to keep an eye out for claims masquerading as ‘science.’”
The Myth of the Carbon Investment ‘Bubble’. Wall Street Journal, op-ed. Buzzwords about “stranded” and unburnable assets are making some investors anxious. The carbon-bubble movement is also putting pressure on endowments, foundations and pension funds to divest fossil-fuel equity holdings. Yet is the carbon-based investment risk real or is it part of a cry for action on climate change? Look closely and financial-market realities deflate the carbon-bubble theory.
U.S. Drivers Start 2015 With Cheapest Gas in Six Years. Bloomberg. Drivers paid an average of $2.2021 a gallon for regular gasoline at U.S. pumps last week, the lowest level for this time of year since 2009, according to Lundberg Survey Inc. U.S. oil output rose to 9.13 million barrels a day in the week ended Jan. 2, after reaching 9.14 million Dec. 12, the highest level in weekly Energy Information Administration data dating back to 1983. U.S. production has increased 66 percent in five years as companies have used horizontal drilling and hydraulic fracturing to tap into hydrocarbon-rich layers of underground shale rock.
NY shale ban to have little impact on national supply. Associated Press. New York's recent decision to ban fracking is hardly seen as a big loss for the nation's production of natural gas. That's because scientists say New York's available reserves of natural gas in the sprawling Marcellus Shale are minuscule compared to what can be extracted in other states. Penn State University geologist Terry Engelder estimates that the entire Marcellus Shale region has 127 trillion cubic feet of commercially viable shale gas reserves, mostly in Pennsylvania and West Virginia.
Saudi prince: $100-a-barrel oil 'never' again. USA Today, Q&A. Saudi billionaire businessman Prince Alwaleed bin Talal told me we will not see $100-a-barrel oil again. The plunge in oil prices has been one of the biggest stories of the year. And while cheap gasoline is good for consumers, the negative impact of a 50 percent decline in oil has been wide and deep, especially for major oil producers such as Saudi Arabia and Russia.
Shale Debt Matters Most to Stock Investors as Oil Plunges. Bloomberg. U.S. shale drillers may tout how much oil they have in the ground or how cheaply they can get it out. For stock investors, what matters most is debt. The worst performers among U.S. oil producers in a Bloomberg index owe about 5.7 times more than they earn, before certain deductions, compared with 1.7 times for companies that have taken less of a hit. Operations, such as where the companies drill or how much oil versus gas they pump, matter less.
INTERNATIONAL
Famous Canadians call for no-development zone. CBC News. Some prominent Canadians are calling for action to prevent hydraulic fracturing, commonly known as fracking, and other resource development near Gros Morne National Park on Newfoundland's west coast. Last summer, UNESCO called on Canada to do more to protect the world heritage site, following a proposed fracking operation which generated much public outcry and ultimately failed in 2013.
CALIFORNIA
Political uproar over oil permitting resurfaces. Bakersfield Californian. Kern County politicians are preparing for "war" with federal and state oil regulators over a permitting slowdown whose roots reach to a 2011 backlog that led Gov. Jerry Brown to oust two top Sacramento officials. At issue then and now is increased scrutiny of oil producers' applications to dispose of wastewater by injecting it deep underground, an activity considered integral to Kern's petroleum industry.
COLORADO
Lower gas prices offer an opportunity. Reporter-Herald, editorial. The OPEC oil embargo of the early 1970s, gasoline prices have been volatile and often ever-climbing. In the aftermath of the 9/11 attacks and the wars in Iraq and Afghanistan, the price of a gallon of gas eclipsed the $4 per gallon mark. In response, the United States greatly expanded its "all-of-the-above" approach to energy development. New methods of hydraulic fracturing in shale formations, coupled with horizontal drilling, have allowed well sites that had seemingly been tapped to be re-tapped.
ILLINOIS
Slow going for shale registration in Illinois. State Journal-Register. A Denver energy firm has become the first company to register for hydraulic fracturing in Illinois since regulations for the controversial oil production technique were approved in November. As of last week, Strata-X Energy also was the only registrant.
Fresh water for Illinois. The Southern Illinoisan, LTE. I just read Senator Dick Durbin's fine editorial on Paul Simon and his interest in fresh water, especially "the coming world crisis in water." It puzzles me how Senator Durbin can grasp the huge need for fresh water worldwide, yet dismiss our rights and needs for same water right here in Illinois and in the United States where it pertains to fracking for oil.
NORTH CAROLINA
Coal ash, HF, renewable energy top green list. News & Observer. The first permits allowing commercial extraction of natural gas from underground shale by hydraulic fracturing are expected to be issued this year. First, the General Assembly has to either vote into law a new set of fracking rules or let them take effect without acting on them. The Mining and Energy Commission has spent the past 2 1/2 years writing those rules. Last week, an environmental group sued to scrap the commission’s work on the same grounds as the governor’s lawsuit. It asserts that the legislature’s control over boards that carry out executive branch functions is unconstitutional.
NORTH DAKOTA
North Dakota HF town’s economy. Raw Story, blog. Just over a decade ago, this sleepy farming community on the fringe of North Dakota’s Bakken shale formation hosted the state’s first horizontal oil well to be hydraulically fractured, or fracked, helping set in motion an economic revolution that shook the world.
NORTHEAST
Shale helps America — whether you like it or not. Press & Sun-Bulletin, op-ed. Energy continues to make headlines. While New York refuses to issue permits for high-volume hydraulic fracturing, oil broke the $50 a barrel mark, bringing gasoline to $2.50 a gallon nationally. That's more than a dollar a gallon pocketed by drivers every time they fill up compared to last year.
Center for Sustainable Shale Development aims to raise standards. Tribune-Review. Two years after a group of environmentalists joined forces with four natural gas producers to set standards for the shale drilling industry, organizers of the collaboration stopped to consider a few important questions. “It needed someone to take a look at the organization to say, ‘Where are we? Where do we want to go? How do we get there?'” said Susan Packard LeGros, who was hired as director of the Center for Sustainable Shale Development nearly a year ago.
Idea for gas terminal off East Coast rankles HF foes. Associated Press. All that would peek above the ocean waves off New York and New Jersey would be two small buoys tethered to underwater pipes. But they’re already casting a large shadow, with potential effects on the economy of the New York metropolitan area, the marine environment, and even America’s future as a net importer or exporter of energy. Liberty Natural Gas wants to build a deep-water port in federal waters 19 miles off Jones Beach, New York, and 29 miles off Long Branch, New Jersey. Its stated purpose is to bring additional natural gas into the New York area during times of peak demand, thereby lowering home-heating prices.
Shale shows some fraying due to low oil prices. Observer-Reporter. Within the past several years, shale drillers across the country were able to accomplish what most people would have thought impossible just a decade ago. But the “shale gale,” which delivered lower gasoline and natural gas prices for consumers, was a beacon for jobs in a moribund employment environment, prompted manufacturers to bring operations back to the United States and was instrumental in helping to lower the country’s trade deficit, is facing some headwinds of its own.
NY weighed 'phased rollout' of shale. WGRZ News. New York had been considering a "phased rollout" of large-scale hydraulic fracturing in the months prior to deciding to ban it, with the proposal received well by public-health experts the state had asked for advice. The revelation was included in a series of letters from three experts from top universities, who had been contracted by the state to review its proposals for shale-gas drilling and recommend ways to improve them.
MSC opposes calls for industry inclusion in database. Pittsburgh Business Times. The Marcellus Shale Coalition remains opposed to efforts to include the oil and gas extraction industry among those having to report pollution releases. On Wednesday, environmental advocacy group PennFuture and eight other organizations sued the Environmental Protection Agency, seeking to compel it to extend reporting requirements to the industry.
Idea for Gas Terminal off East Coast Rankles Foes. Associated Press. All that would peek above the ocean waves off New York and New Jersey would be two small buoys tethered to underwater pipes. But they're already casting a large shadow, with potential effects on the economy of the New York metropolitan area, the marine environment, and even America's future as a net importer or exporter of energy.
OHIO
FirstEnergy projects support expanding shale gas facilities. Farm and Dairy . FirstEnergy Corp. has completed $6 million in new transmission projects and is evaluating additional system upgrades across its Ohio Edison service area to meet rising electric demand growth driven by the shale gas industry.
Ohio General Assembly faces big questions. Columbus Dispatch. Legislative Republicans share the governor’s desire to lower Ohio’s income tax, but they have disagreed with Kasich’s effort to pay for it through ideas such as expanding the sales tax and increasing commercial-activity, cigarette and fracking taxes. Kasich will make another hard push for what he considers a fair severance tax on fracking, and he is likely to bring back other tax changes as well to further lower the income tax, which has been cut by 10 percent. Faber has said he wants to focus on eliminating income taxes for small-business owners and sole proprietors.
TEXAS
Service companies turn to innovation to weather price downturn. Midland Reporter-Telegram. Oilfield service companies know that falling crude prices are always accompanied by shrinking cash flow, reduced budgets and falling activity. Since prices began their sharp, steady decline in October, service companies have begun preparing not only for reduced demand for their services, but for their customers to begin requesting lower rates.
Prepare now for likely effects of low oil prices. Longview News-Journal, editorial. Oil isn’t just any commodity, of course. The prices of corn or wheat are important, but don’t begin to compare with how the U.S. economy lurches to and fro along with the price of oil. But while Texans like to believe we’ve seen it all before, chances are we haven’t seen anything quite like the current swoon in the price of oil, and the likelihood is that the market isn’t going to be “straight” anytime soon.
Local control is extremely Texan. Express-News, op-ed. If, say, the Texas Commission on Environmental Quality or the venerable Railroad Commission took the environmental impacts of fracking seriously, maybe folks in the city of Denton wouldn’t have felt compelled to pursue a fracking ban. But beyond this, local control sort of strikes us as a Texas thing
Following a campaign of promises, lawmakers must now deliver. Express-News. Consider Gov.-elect Greg Abbott’s call Thursday for a repeal of local ordinances prohibiting such things as fracking for oil, banning plastic shopping bags and limiting which trees landowners can cut on their property. Those comments by Abbott, a small-government GOP conservative widely supported by tea party groups, immediately raised eyebrows in Denton, a tea party Republican stronghold in North Texas that banned fracking in a local vote.
Scientists seek cause of Irving earthquakes. Dallas Morning News. The earth under North Texas barely stirred for at least a century, until something down there snapped in 2008. Swarms of small quakes rippled up from unknown faults beneath the soil. They rustled Cleburne, Azle and Irving. Last week’s 15 temblors around the old Texas Stadium site included the strongest yet in Dallas County, and their waves shook downtown office towers.
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