In an attempt to minimize safety risks, the secretary of the Department of Transportation (DOT) should direct the administrator of the Pipeline and Hazardous Materials Safety Administration (PHMSA) to begin collecting information from operators of federally unregulated onshore natural gas gathering and hazardous liquid pipelines, the Government Accountability Office (GAO) said in a new report. The DOT should establish an online clearinghouse or other resource for sharing the information on pipeline safety practices that is collected, said the GAO. It noted that the data should be similar to what PHMSA collects annually from operators of regulated gathering pipelines (mostly located in non rural areas), such as fatalities, injuries, property damage, location, mileage, size, operating pressure, maintenance and the causes of incidents and consequences. The nation's pipeline network includes an estimated 200,000-plus miles of onshore gathering pipelines, many of which have not been subject to federal regulation based on their generally rural location and low operating pressures.
The Federal Energy Regulatory Commission has issued a favorable environmental assessment for PetroLogistics Natural Gas Storage to expand the working gas capacity of its Choctaw Hub facility near Baton Rouge, LA, by more than 10 Bcf. PetroLogistics is seeking the go-ahead to expand the working capacity of the Choctaw Hub facility to 26.6 Bcf from its existing 16 Bcf. The project calls for the addition of two compressor units totaling 27,000 hp; a 13-mile, 30-inch diameter expansion header pipeline; and a number of interconnections with interstate and intrastate pipelines [CP11-50]. The Louisiana-based storage company has targeted the expansion for an in service date later this year. When the expansion is completed, the Choctaw Hub will have maximum withdrawal capability of more than 1.2 Bcf/d, and maximum injection capacity in excess of 700 MMcf/d. Choctaw Hub currently has bidirectional interconnects with three interstate pipelines -- Florida Gas Transmission, Texas Eastern Transmission and Southern Natural Gas -- and two intrastate pipelines (CrossTex LIG Pipeline and Bridgeline Gas) and is situated in the center of both supply and market centers, and is near the Henry Hub, one of the most liquid trading points in North America.
D'Lo Gas Storage LLC has launched a nonbinding open season to gauge market interest in a multicycle salt cavern, an interstate natural gas storage facility to be sited in Simpson County, MS. The Lafayette, LA-based company said its facility would service the Southeast, Mid-Atlantic and Northeast markets. Prospective customers would be bidding on firm storage service in the facility's first cavern, which is expected to go into service in July 2015 with 8 million Dth of working gas capacity. Two additional caverns of the same size are expected to come online in June 2016 and January 2018. Each cavern also would have an injection capacity of 196,667 Dth/d and a withdrawal capacity of 400,000 Dth/d. The storage facility is to have interconnections with five pipelines -- Boardwalk Southeast Expansion (Zone 5), Kinder Morgan Midcontinent Express (Zone 2), Southern Natural Gas Co. (Zone 1), Gulf South (Zone 3, Area 1) and Southcross Energy (intrastate). The nonbinding open season ends at 5 p.m. CDT on May 7. A bid form may be sent by fax to (337) 261-1457, or email email@example.com.
The Interior Department's Bureau of Ocean Energy Management (BOEM) has opened a comment period and is holding a series of public scoping meetings to prepare an environmental impact statement (EIS) for two proposed lease sales in the Gulf of Mexico's (GOM) Eastern Planning Area. The Nos. 225 and 226 lease sales were proposed as part of the 2012-2017 leasing program. Planning for an EIS relating to these potential lease sales does not constitute a final decision about whether they will be included in the five-year leasing program, according to BOEM. The area for the proposed sales includes 657,905 acres that are more than 120 miles off the coasts of Alabama and Florida, where there are currently active leases and known or anticipated hydrocarbon potential. Some areas in the eastern GOM -- such as the Straits of Florida -- are not included in the 2012-2017 leasing program because they are under a congressionally mandated leasing moratorium until June 30, 2022. The agency has scheduled several meetings -- Tallahassee, FL (April 3); Panama City Beach, FL (April 4); Spanish Fort, AL (April 5); and at the BOEM's regional office in New Orleans (April 9) -- for comments from the public. Comments also may be submitted via e-mail to boemegomeis@BOEM.gov, or in writing to Gary D. Goeke, chief regional assessment section, Office of Environment (MS 5410), BOEM, GOM OCS Region, 1201 Elmwood Park Blvd., New Orleans, LA, 70123-2394.
A majority of recently surveyed U.S. voters believe that increasing taxes on oil and natural gas producers, as well as restricting access to energy resources, will only contribute to the escalation in the price of gasoline, according to a new poll by the American Petroleum Institute (API). In the poll, which was conducted March 9-13, 76% of the 1,009 registered voters responded that higher energy taxes would increase costs of a variety of consumer products and services, including gasoline, and 64% believed that "some in Washington are delaying the development of domestic oil and natural gas resources." Three-quarters of those surveyed ranked as "important" the need for the United States to be more energy independent by producing more domestic energy. Nearly half of the voters said they backed an "all-of-the-above" energy strategy. And 73% signaled that they supported increased access to domestic oil and gas resources. The surveyed voters were split evenly between male and female, and young and older persons. More Republicans (31%) participated in the poll than Democrats (29%) and Independents (25%). More than half (56%) of the voters referred to themselves as conservatives, while 32% said they were liberal. The results of the poll have a margin of error of +/-3% at 95% confidence, according to API.
Oilfield services provider Baker Hughes Inc. said "rapidly changing market conditions," primarily in the pressure pumping business in North America as drillers move rigs out of natural gas fields, likely will impact profits in the first quarter. The Houston-based company continues to be stressed by "the continued shift in U.S. rig activity from natural gas to oil and liquids-rich basins and other market forces," it said. The "pressure pumping product line is currently experiencing decreased fleet utilization, lower pricing, higher than expected personnel and logistics costs, and shortages of and higher costs for critical raw materials, such as gel." In Canada, "despite higher sequential rig count levels, the lower natural gas-directed pressure pumping activity and an early spring break-up are also negatively impacting first quarter operating profit before tax." North America operating profit before tax margin for 1Q2012 is expected to be between 13.2% and 14.2%, compared to 18.7% in 4Q2011.
More Americans continue to view alternative energy development as a higher priority than increased production of natural gas, oil and coal, but the gap has narrowed "considerably" over the past year, according to a poll by the Pew Research Center. In addition, support for more offshore drilling in U.S. waters, which plunged after the 2010 Gulf of Mexico oil spill, has recovered to pre-Macondo well blowout levels, the poll found. Nearly two-thirds (65%) favor allowing more offshore drilling, which is up from 57% a year ago and 44% in June 2010, two months after the BP plc spill. The latest national survey by the Pew Research Center for the People & the Press was conducted March 7-11 among 1,503 adults. More than half (52%) of those surveyed said the "more important priority" to address the nation's energy supply was to develop alternative energy resources, while 39% said expanding exploration and production (E&P) was a bigger priority.
The Ohio Environmental Protection Agency (OEPA) has issued separate permits to Patriot Water Treatment LLC and the City of Warren, barring the latter from accepting pre-treated wastewater from oil and natural gas drilling starting April 1. Patriot's new permit will allow it immediately to accept and pre-treat up to 300,000 gallons/day (gpd) of wastewater from other sources before it goes to the city's wastewater treatment plant. The city's permit, which is renewable every five years, allows it to accept wastewater without any limits for total dissolved solids (TDS), or salts. The OEPA plans to monitor TDS levels twice a week from a site along the Mahoning River before the waterway enters Pennsylvania. Patriot will still be allowed to accept and pre-treat brine from oil and gas drilling, but after April 1 can no longer pass it down to the city's municipal treatment plant. Patriot and Warren have filed complaints over the permitting decision to the Ohio Environmental Review Appeals Commission. A three-day de novo hearing is scheduled to begin on Monday (March 25).
The Maryland House of Delegates has passed two Marcellus Shale regulatory bills, adding clarity to how lawmakers expect the Maryland Department of the Environment to regulate oil and natural gas operators, as well as several aspects of their drilling activities. The bills -- HB 1123 and HB 1204 -- were both sponsored by Del. Heather Mizeur (D-Montgomery) and passed the House by votes of 94-41 and 88-49, respectively on March 17. Both bills had their first reading in the state Senate Committee on Education, Health and Environmental Affairs on March 18.
Ohio Gov. John Kasich said he is prepared to fight his fellow Republicans in the General Assembly who are unenthusiastic about his plans to restructure taxes and regulations on the oil and natural gas industry. Rep. Ron Amstutz (R-Wooster), chairman of the House Finance and Appropriations Committee, said he was tabling Kasich's plans from consideration as part of HB 487, the state's mid-biennium budget review bill. A spokesman for the Ohio House of Representatives Republican Caucus hinted that Kasich might have trouble getting his proposal passed if were to call for higher taxes (see NGI, March 12). Kasich's plan would tax unconventional wells producing oil and natural gas liquids (NGL) at a rate of 1.5% of gross receipts for the first year. Producers that don't recoup their investment in the first year could apply to extend the 1.5% rate for a second year, but otherwise they would pay a standard rate of 4% of gross receipts annually for the remainder of the life of the well (see NGI, March 19).
The Pennsylvania Department of Environmental Protection (DEP) is consolidating three of its wastewater permits to encourage liquid waste recycling from oil and natural gas drilling, and to reduce water withdrawals. The revised Residual Waste Beneficial Use general permit combines general permits WMGR119 and WMGR121 with WMGR123, which is the number for the new permit, which establishes water quality criteria allowing processed water to be managed, stored and transported as freshwater. DEP also plans to regularly test treatment facilities for 39 elements -- including strontium, barium, total dissolved solids and radiation -- to ensure compliance. The permit also specifies that processed wastewater only may be used for hydraulic fracturing a well. The changes were to take effect Saturday (March 24).
Backers of the Jordan Cove liquefied natural gas (LNG) import-export project at Coos Bay, OR, have moved ahead with necessary federal regulatory filings while monitoring the decline in U.S. natural gas prices. Backed by a group headed by Fort Chicago Energy Partners, which has a conditioned approval for an LNG import facility and connecting 230-mile transmission pipeline, Jordan Cove received an OK from the Federal Energy Regulatory Commission to start the pre-filing process for a permit to build an LNG liquefaction facility to export U.S. gas to Asian markets and has filed for export authority to non-free trade nations. It is seeking authorization to export up to 438 Bcfe of LNG annually.
Two-thirds of Americans (66%) in a recent poll said they believe the benefits of natural gas outweigh the risks of fracking while 17% said the risks outweigh the benefits, according to The Harris Poll, which queried 2,056 adults online during early February. There are significant generational differences, however. "Echo boomers" (ages 18-35) are less likely to believe the benefits outweigh the risks than "matures" (those 67 and older) are (53% versus 84%). And people living in the East are less likely than those in the West to agree that the benefits outweigh the risks (60% versus 71%). There is also a political difference when it comes to feelings on natural gas. Three out of four Republicans (74%) believe the benefits of gas outweigh the risks compared to just over three in five Democrats (62%) and more than two-thirds of Independents (69%) who believe that the benefits outweigh the risks. Looking at the reverse, the partisan differences are significant, with larger portions of Democrats (21%) and Independents (19%) believing that the risks outweigh the benefits than Republicans (10%).
BP plc's Atlantis project in the deepwater Gulf of Mexico (GOM) is "presently not fit for service under normal engineering standards," a lawyer for a former BP contractor -- and now whistle-blower -- said recently at a pretrial hearing in Houston. The Atlantis subsea structure, one of the biggest platforms in the GOM, should be shuttered until it is proven to comply with U.S. safety and environmental laws, said David Perry, who is lead attorney for Kenneth W. Abbott, a former BP contractor. However, BP attorney Lynne Liberator noted that the Department of Interior (DOI) last year said the platform was safe "after an extensive investigation," which included assessing Abbott's allegations (see NGI, March 14, 2011). According to a court filing by BP in January, the DOI "affirmatively determined that Atlantis is safe, that BP is in compliance, and that there is no basis to shut it in...The court should not substitute its judgment for the judgment of DOI's engineers, inspectors and regulatory experts."
The California Public Utilities Commission (CPUC) by a 4-1 vote has given the green light to Sempra Energy's Southern California Gas Co. (SoCalGas) to embark on a proposed $1 billion, multi-year transition to an advanced metering system. Former consumer advocate on the CPUC, Mike Florio, continued to oppose the measure. That caused CPUC President Michael Peevey and CPUC's other veteran commissioner, Timothy Alan Simon, to reiterate their criticism of the CPUC's independent consumer unit, the Division of Ratepayer Advocates, and outside utility consumer watchdog The Utility Reform Network, for continuing to oppose the shift to smart gas meters.
Alberta's government claims that its oil and natural gas royalty system maximizes benefits for the province, but research shows otherwise -- C$55 billion in potential revenue may be lost over the next three years because of "overly generous" royalty cuts and the failure to meet even "modest targets" set by previous provincial administrations. The University of Alberta's Parkland Institute issued an update to its 2010 report, "Misplaced Generosity: Extraordinary Profits in Alberta's Oil and Gas Industry," reviewing the most recent data on profits in the oil and gas industry versus provincial share. Despite huge growth in the energy industry, the review found that the share of profits going to Albertans continues to shrink. "We've gone from capturing close to 40% in 1979 to only 10% in 2009 and 13% in 2010," said author David Campanella, public policy research manager for Parkland Institute. "That is all money that has gone directly from serving the public interest to serving the bottom lines of huge oil and gas corporations."
With 2,220 MW of nuclear power still out of service and snow pack levels at historic lows, California's electric grid operator unveiled what it hopes is a stable summer electricity supply-demand assessment for review by the California Independent System Operator (CAISO) Board of Governors. However, the board added what it called "an important and urgent update" to the summer outlook. It warned of possible "reliability challenges" for San Diego and portions of the Los Angeles Basin if the San Onofre Nuclear Generating Station's (SONGS) two units remain offline this summer. CAISO's focus has shifted to contingency planning related to SONGS, said CAISO CEO Steve Berberich. With or without the return of SONGS two units, natural gas-fired generation is expected to be called on significantly during the peak-demand summer season. Gas plants account for about two-thirds (67.5%) of the state's 50,341 MW of available capacity, CAISO noted in its assessment.
Poland's Ministry of the Environment estimates that technically recoverable shale gas resources in the country total 346-768 billion cubic meters (12.2-27.1 Tcf), a fraction of the 5.3 trillion cubic meters (187 Tcf) the U.S. Energy Information Administration (EIA) had estimated in 2011 (see NGI, April 11, 2011). The ministry also said geologists believe shale formations in Poland contain a maximum of 535 million metric tons of oil, but it was more likely that 215-268 million metric tons were recoverable. In April the ministry plans to present draft legislation for new taxes on hydrocarbon extraction and also plans to call for accelerating exploration by drilling more test wells.
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