U.S. Shale Sector Shrinking To Survive.
According to the Houston Chronicle, “The U.S. shale industry is finally learning to live
within its financial means, shrinking to survive amid an environment of depressed crude prices and Wall Street animosity toward nearly all things oil and gas. The third quarter’s wave of earnings showed that companies are staying within budgets and planning
to slice spending levels substantially more next year. Shale oil and gas production continues to rise — but at much slower rates — while drilling activity, as measured by the Baker Hughes rig count, has plunged by 25 percent in 12 months. This newfound restraint
by an energy sector known for overspending may lead to better long-term viability, but in the shorter term, it will mean weaker economic growth in Texas and more layoffs throughout the industry — from the Houston skyscrapers to West Texas oilfields. In a rarity
for analysts and investors, energy executives were quizzed more about their plans to pay down heavy debt loads than the quality of their oil and gas acreage. The answers suggested more cutbacks in costs, projects and workers. Already, the retreat in spending
by oil and gas companies has cost Texas more the 5,000 energy jobs since May, according to government statistics.
‘The shale industry is clearly going through a reset,’ said James West, an energy analyst with Evercore ISI in New York. ‘It’s ugly out there.’ The Houston company Occidental Petroleum, the top producer in West Texas’ Permian Basin oil field in West Texas,
plans to cut its 2020 capital spending by a whopping 40 percent from the combined 2019 spending of Oxy and Anadarko Petroleum, which Oxy recently acquired in a deal that boosted its debt to $40 billion.” [Houston Chronicle,
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Op-Ed: Banning Fracking Would Disrupt Global Economy.
According to an op-ed by Gary Wolfram in the Detroit News, “Democratic Presidential candidates
Kamala Harris, Elizabeth Warren and Bernie Sanders have all declared that if elected they would institute a ban on fracking. This remarkably effective method of extracting fossil fuels which, combined with horizontal drilling, opened up shale deposits as a
huge energy resource, which led to the United States becoming the world’s largest producer of oil and natural gas. The economic and environmental benefits from fracking are substantial. Recall that in 2003, Time Magazine claimed that the U.S. was running out
of domestically-produced natural gas and oil. Within five years, oil prices rose to almost $150 per barrel. But the price dropped dramatically after fracking came along. Today, fracking accounts for more than half of U.S. crude oil production, and prices are
less than $60 per barrel, compared to 2006, when its use supplied provided only 6% of the crude oil. This reduction in the price of oil has resulted in lower costs of production across many industries and substantial savings for consumers. The same is also
true of natural gas. Fracking now accounts for about 70% of the natural gas produced in the U.S., whereas in 2006 it provided 37%. This has resulted in natural gas prices falling from the $6 to $13 per million BTU range to the current $2.25 to $3 range. The
decline in price has resulted in natural gas plants replacing coal-fired power plants, with a resulting decline in carbon dioxide emissions.” [The Detroit News,
11/13/19
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Canadian Drillers Zero In On Plan For Floating LNG Project.
According to E&E News, “Rockies LNG Partners, a group of Canadian natural gas drillers
seeking new markets for their production, is considering building an export project on barges floating off the coast of British Columbia. While no decisions have been made, the group sees a floating liquefied natural gas facility as a less-expensive option
that also would have a ‘significantly’ smaller environmental footprint, Rockies LNG Chief Executive Officer Greg Kist said in an interview. The group is considering projects that could produce roughly 12 million tons per year, which would require three barges,
he said. ‘In Northern British Columbia, there are limited flat pieces of land, so if you could remove significant cost and impact associated with trying to flatten a piece of land, we think that that’s a much better outcome than land-based facilities,’ Kist
said. With the liquefaction equipment on barges, the only land-based facilities that would be required are jetty infrastructure, a control room, and living quarters, he said. Rockies LNG represents producers including Advantage Oil & Gas Ltd. and Peyto Exploration
& Development Corp., which banded together to pursue new outlets for their gas as pipeline bottlenecks in Canada and an abundance of supplies from U.S. shale have pushed down local prices for years. A potential LNG project would take advantage of Canada’s
prolific gas supplies and proximity to Asian markets that are using more of the fuel. The facility would follow the $30 billion Royal Dutch Shell PLC-led LNG Canada project on British Columbia’s coast.” [E&E News,
11/14/19
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BLM Halts Leases After Sage Grouse, Climate Legal Brawl.
According to E&E News, “Federal officials have withdrawn thousands of acres of land slated
for sale to the oil and gas industry after courts demanded that the government take a closer look at greater sage grouse habitat protections and climate change impacts. Conservation groups opposing the Bureau of Land Management’s actions say a recent slate
of deferred lease sales in Colorado, Nevada and Utah illustrate the problems with the Trump administration’s aggressive push to encourage energy development on public lands. ‘The broader pattern we’ve seen from this administration has been a headlong rush
to get as much remaining sage grouse habitat under lease as possible,’ said Michael Saul, a senior attorney at the Center for Biological Diversity’s public lands program. He said the Trump administration’s ‘energy dominance’ approach has led BLM to violate
federal laws like the National Environmental Policy Act. ‘That needs to stop,’ Saul said. ‘They are not simply a real estate sales agency. Under congressional statute, they have multiple obligations, which include duties to conserve wildlife habitat.’ BLM
yesterday added to its growing list of delayed leases when it deferred its Dec. 19 Colorado sale in response to a federal court order temporarily blocking implementation of the Trump administration’s greater sage grouse plan (Greenwire, Oct. 17). Judge B.
Lynn Winmill, a Clinton appointee to the U.S. District Court for the District of Idaho, required BLM to revert to evaluating leases under sage grouse plans the Obama administration finalized in 2015.” [E&E News,
11/14/19
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Trump Administration Suspends Oil And Gas Production On 130 Plots In Utah After Challenge.
According to The Hill, “The Trump administration has suspended the production of oil
and gas on 130 plots in Utah following a legal challenge by environmentalists. The Bureau of Land Management (BLM) quietly issued suspensions of operation and production on all 130 plots due to the ongoing litigation, which alleges that officials did not consider
greenhouse gas emissions when granting the oil lease sales, on Sept. 27. ‘The BLM has concluded that it is necessary to suspend the referenced leases and complete further environmental analysis,’ the 130 individual notices read. The decision came after environmental
groups legally challenged several lease sales, alleging that the agency failed to satisfy federal environmental laws by not considering the effects of climate change on federal land prior to leasing them for fossil fuel exploration. In March, a federal judge
in Washington, D.C., ruled in favor of one such argument by environmentalists, finding that the environmental considerations behind Obama-era lease sales in Wyoming were inadequate. The temporary halt on roughly 300,000 acres was the first time the Trump administration’s
energy agenda had been blocked for not considering climate change. The BLM in its September letter said a separate, similar case filed by environmentalists criticizing lease sales in Utah showed clear ‘parallels’ with the Wyoming ruling. Therefore, the administration
was suspending production to complete more environmental analysis.” [The Hill,
11/13/19
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As Warren, Sanders Urge Fracking Ban, Fed Chief Warns Of Consequences.
According to Politico, “Federal Reserve Chair Jerome Powell on Wednesday said it would
likely hurt the U.S. economy if the federal government were to ban fracking, an idea proposed by Sens. Elizabeth Warren, Bernie Sanders and several other 2020 Democratic presidential contenders. ‘To shut down the shale industry, yeah, that would probably not
be a good thing for the economy,’ Powell said in testimony before lawmakers on the Joint Economic Committee. The Fed chief, who has worked to remain apolitical in the face of constant attacks from President Donald Trump, tried to steer clear of the election
in his testimony. Sen. Ted Cruz (R-Texas) asked him about the potential effect of a ‘massive tax increase’ on the economy, including a wealth tax specifically. ‘I’m pretty reluctant to be pulled into the 2020 election, if you will forgive me,’ Powell responded.
‘I honestly don’t want to get into that business.’ Cruz then switched gears, pointing to a previous statement by former Fed Chairman Ben Bernanke that had underlined the benefit of the shale revolution for the U.S. economy and asked Powell if he agreed, as
well as what the effect of a ban on hydraulic fracturing might have on growth. ‘I would certainly agree,’ he said. ‘The energy independence of the United States is something that people have been talking about for 50 years and I never thought it would happen,
and here it is. … It’s a great thing.’ ‘That’s not to say there aren’t issues to manage — environmental issues, all kinds of other issues — but it’s been a great thing for the country,’ he said.” [Politico,
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Lawsuit Aims To Kill Stalled $2B Methanol Refinery Project.
According to E&E News, “A federal lawsuit filed yesterday aims to keep one of the world’s biggest methanol refineries from being built along the Columbia River in Washington state.
Plans for the $2 billion refinery, shipping terminal and pipeline project in the small city of Kalama are already stalled after a state board required further environmental review. Conservation and public health groups, including Columbia Riverkeeper, the
Sierra Club and Washington Physicians for Social Responsibility, sued in U.S. District Court in Tacoma to invalidate key federal permits, as well. The Army Corps of Engineers, which issued the permits, did not immediately respond to an email seeking comment.
‘The urgency of our climate crisis demands the highest level of scrutiny, and we cannot allow massive new fracked gas projects to move forward based on outdated science and flawed evaluation,’ Joan Crooks, chief executive of Washington Environmental Council,
said in a news release announcing the lawsuit. The refinery is billed as a facility that would turn fracked natural gas from Canada into methanol for shipment to China to make plastics. But a report by Oregon Public Broadcasting earlier this year revealed
that the company behind the project had suggested to investors that the methanol could be burned as fuel. That would make for a worse impact on the planet, environmental groups say. The project is backed by Northwest Innovation Works, a U.S. company owned
by the Chinese government. It has argued that its facility would provide a cleaner source of methanol for plastics than coal.” [E&E News,
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Chad Ellwood
Climate Action Campaign
202.448.2877 ext. 119