General
News
Editorial:
An American Success Story. According
to the Pittsburgh Post-Gazette Editorial Board, “The coronavirus has thrown the shale gas industry into flux. Worldwide oil prices have collapsed, and America’s shale sector has lost 50% of its value since January. The pandemic has exacerbated years of lackluster
profits for producers, causing investors to shy away from financing new drilling projects. Last year, however, saw more natural gas extracted from Pennsylvania’s vast Marcellus Shale than in any other year. With this achievement in mind, let’s consider what
a benefit the shale gas boom has been to America and to this region. Shale industry jobs in Pennsylvania increased from 9,143 in 2007 to 20,146 in 2016, according to analysis by the federal Bureau of Labor Statistics, and this does not include the ancillary
economic activity indirectly connected with drilling. Researchers at Carnegie Mellon University found that between 2004 and 2016, the shale gas boom may have contributed $21 billion to the economies of Pennsylvania, Ohio and West Virginia. In a recent essay
published in The Wall Street Journal, author Daniel Yergin wrote that ‘The shale revolution has stimulated over $200 billion of investment in new factories, reduced the trade deficit by several hundred billion dollars, generated millions of jobs and contributed
significantly to federal and state revenues.’ Since 2010, America’s oil output has more than doubled and gas production has increased by over 50%. The United States now leads the world in the production of both fuels, while also doing more to reduce its energy-based
carbon emissions than any other country. According to the International Energy Agency, the United States saw the largest carbon-dioxide emissions decline from electricity generation in 2019 among nations.” [Pittsburgh Post-Gazette,
10/21/20
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140
Finance Firms Have Fled Coal. Oil, Gas Are Next — Report. According
to E&E News, “Dozens of major financial firms have begun to limit their investments in the oil and gas sector — a signal that the world has started to retreat from businesses that drive climate change, according to one advocacy group. The findings by the Institute
for Energy Economics and Financial Analysis, a sustainable energy proponent, is derived from a new tool, released Monday, that tracks which financial institutions have committed to reducing their exposure to oil and gas companies. Per the group, 50 firms,
banks, insurers, pension plans and asset managers have unveiled policies that restrict them from funneling dollars into oil sands exploration and Arctic drilling. That’s a significant figure, IEEFA argued in an accompanying analysis, given that the World Bank,
BNP Paribas SA, Crédit Agricole Group and Axa SA in 2017 became the first firms to say they would limit their investments in the planet-warming sectors. Further, 23 of those policies were adopted in 2020 alone. It’s a pattern that mirrors previous moves by
more than 140 financial institutions to cut some ties with thermal coal companies, said Tim Buckley, IEEFA’s director of energy finance studies. Among them is wealth mammoth BlackRock Inc. — which manages more than $7 trillion in assets — and Citigroup Inc.,
which has pledged to halve its coal credit exposure by 2025. ‘[W]e are now seeing a similar accelerating shift of capital away from oil and gas exploration, starting with high risk oil sands development and drilling in the Arctic,’ Buckley said in a statement.
‘This momentum in fossil fuel divestment globally means we expect a continuation of new announcements from other financial institutions seeking to better manage increasing climate risk.’” [E&E News,
10/21/20
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Belching
Cows And Endless Feedlots: Fixing Cattle’s Climate Issues. According
to the New York Times, “Randy Shields looked out at a sea of cattle at the sprawling Wrangler Feedyard — 46,000 animals milling about in the dry Panhandle air as a feed truck swept by on its way to their pens. Mr. Shields, who manages the yard for Cactus Feeders,
knows that at its most basic, the business simply takes something that people can’t eat, and converts it into something they can: beef. That’s possible because cattle have a multichambered stomach where microbes ferment grass and other tough fibrous vegetation,
making it digestible. ‘The way I look at it, I’ve got 46,000 fermentation vats going out there,’ Mr. Shields said. But this process, called enteric fermentation, also produces methane, a potent planet-warming gas that the cattle mostly belch into the air.
And with about 95 million cattle in the United States, including more than 25 million that are fattened for slaughter each year at feedlots, the methane adds up. Researchers within and outside the industry are working on ways to reduce emissions from fermentation,
through feed supplements or dietary changes. Other efforts aim to lower emissions from the animals’ waste — a source of methane as well as another powerful greenhouse gas, nitrous oxide — through improved manure storage and handling. In the United States,
cattle are far from the largest source of greenhouse gases, which include carbon dioxide, methane and others. Their total contribution is dwarfed by the burning of fossil fuels for electricity, transportation and industry. But livestock are among the largest
sources of methane, which can have 80 times the heat-trapping power of carbon dioxide although it persists for less time. Estimates vary, in part because animal emissions are more difficult to quantify than, say, flue gases at a power plant.” [New York Times,
10/21/20
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These
Pa. Voters Want To End Fracking, But Not With A Ban. According
to E&E News, “Ray Kemble is pretty sure the cancer will kill him first, but just in case someone else tries to, his lawyer installed security cameras around his home. A former truck driver for the fracking industry, with a long white beard and a pin on his
motorcycle jacket from President Reagan, Kemble has been making trouble for oil companies since before he got sick. He found two bullet holes beneath his window after he pushed Pennsylvania to impose a local hydraulic fracturing moratorium here — an escalation,
Kemble thinks, from when his car windows got shot out. In the battle over fracking, Kemble is on the frontlines. Susquehanna County, perched in the northeast corner of the state and in the midst of gas fields, voted overwhelmingly for President Trump in 2016.
Its population is about 40,000 people and shrinking. But ask Kemble what he’s fighting for, and instead of calling for more regulations or an outright ban — the loudest demands of fracking opponents — he gives a simpler answer: enforcement. ‘What would help
is if they did their [expletive] job,’ he said of state and federal officials who oversee industry. As Trump and Democratic nominee Joe Biden trade blows over fracking, many of its opponents in Pennsylvania say the national campaign bears little resemblance
to their experience on the ground. Yes, they want fracking to end. Most would welcome new restrictions. But Pennsylvania activists say the state already has some strong safeguards — including an environmental rights amendment in the state constitution — that
have been rendered toothless by weak oversight.” [E&E News, 10/21/20
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Permian
Pair-Up.
According to Politico, “As sure as night follows day, a downturn in the oil cycle sends hard-hit oil producers clamoring for partners. Tuesday’s match-up has Irving, Texas-based Pioneer Natural Resources setting a deal to buy Parsley Energy in an all-stock
transaction valued at roughly $4.5 billion, paying a thin premium that values Parsley at a level seen only a few weeks ago. The deal — which needed some special arms-length accommodations since Pioneer CEO Scott Sheffield is the father of Parsley co-founder
and Chairman Bryan Sheffield — is the latest in what looks like a mad dash to lock up the premium Permian Basin acreage while prices are low. Those fields remain the prize in U.S. oil patch, and ME is certain that ambitious investment bankers and cash-strapped
West Texas companies are looking to strike deals — which may be harder and harder to come by as the best companies get snapped up. Adding in Parsley’s debt brings the deal total to $7.6 billion, and the companies are eyeing $325 million in annual savings as
they manage an asset base of 930,000 acres in the Permian Basin, where production has started to rebound after the price shock that hit the industry this spring. The deal follows a reconfiguration of the shale industry that’s seen ConocoPhillips buy Concho
Resources Inc. earlier this week valued for $9.7 billion, a deal that came on the heels of Devon Energy’s link up with WPX Energy. ‘There’s really going to be three or four players left in the U.S. independent sector,’ Sheffield told The Wall Street Journal
on Tuesday. While companies with stable finances may be kicking the tires on potential targets, it will get tougher to find acreage that can produce oil at the prices it’s fetching now.” [Politico,
10/21/20
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AP
| Methanol Plant To Be Built In W.Va., Governor Says. According
to E&E News, ‘A former industrial site in West Virginia has been selected for a $350 million methanol facility, Gov. Jim Justice (R) announced Monday. West Virginia Methanol Inc. will build a plant in Pleasants County that will produce 900 metric tons of methanol
daily from natural gas. Once finished, the plant will employ 30 full-time workers, Justice said at a news conference. The company is working on permitting and design details. Operations are expected to begin as soon as mid-2023, the governor’s office said
in a statement. The plant site has access to roads, railroad and river transportation and is near a major natural gas pipeline. Other required utilities are on site or nearby, the statement said. Methanol is used in chemical industry production and is a mainstay
in the automotive industry as a fuel blend. Its diverse use also includes the making of plastics and plywood.” [E&E News,
10/21/20
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Biden’s
‘Murky’ Stance On Natural Gas Exports.
According to the Washington Examiner, “Biden’s aggressive plans to address climate change are largely silent on if would promote natural gas use overseas, a key question since 85% of the world’s emissions come outside the U.S. and many developing countries
are turning to gas as a cleaner alternative to coal. In his only public comments as a presidential candidate, Biden said in a CNN town hall that he’d support banning exports depending on what ‘they’re replacing,’ seemingly leaving open the possibility of exporting
to countries switching from coal to gas. Collin Rees, a senior campaigner with Oil Change U.S., a liberal environmental group, said Biden’s ‘murky’ stance on natural gas exports means he isn’t serious about reducing global use of fossil fuels. Oil Change International
produced a report last year that showed the carbon emissions just from burning gas are enough to overshoot climate goals. ‘The absence of a discussion on constraining LNG exports tells me they aren’t planning to do much here,’ Rees told Josh for a story running
in our magazine this week. Silence means acceptance? Industry groups are interpreting Biden’s reluctance to campaign against fossil fuel exports as a sign he’d follow the mold of the Obama administration, which supported shipping natural gas overseas when
he was vice president and approved an initial batch of export terminals. ‘I am hard-pressed to see how his policies shift that dramatically,’ said Charlie Riedl, executive director for the Center for Liquefied Natural Gas, who said he has spoken with outside
advisers to the Biden campaign.” [Washington Examiner, 10/20/20
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The Big Shale Shake-Up Is Here.
According to Axios, “It’s really on now. Last night, the Wall Street Journal reported that Pioneer Natural Resources is in talks to buy Parsley Energy, and the Financial Times followed
with a similar story about the big independents. Why it matters: A wave of shale patch consolidation, predicted since the pandemic started hammering the industry’s already difficult finances, now seems to be happening. State of play: Reports of a Pioneer-Parsley
deal arrived the same day that ConocoPhillips announced a $9.7 billion all-stock deal to acquire Concho Resources. Devon Energy and WPX Energy announced a merger in late September. And, don’t forget Chevron’s deal to buy the big independent Noble Energy announced
in July.” [Axios, 10/20/20 (=)]
Bonus Chart: The Shale Players.
According to Axios, “This chart could soon look pretty different at this pace, but right now that’s the 10 largest U.S. shale oil producers based on Wood Mackenzie data. Why it matters:
It shows how the ConocoPhillips’ planned acquisition of Concho Resources announced yesterday would put the combined company in third place, per WoodMac’s tally. What they’re saying: Robert Clarke, a top WoodMac analyst, says the deal makes sense. He notes
that Concho’s history gives them a lot of ‘incumbent’ knowledge about the prolific Permian Basin, while Conoco is a ‘proven leader’ in shale tech overall. ‘This can be seen in how its Bakken and Eagle Ford projects have progressed down the cost curve as well
as how successfully it manages later-life shale declines,’ he adds. Of note: The chart looks at data from this year, which has seen lower production due to the pandemic. The figures don’t reflect Chevron’s just-completed acquisition of Noble Energy, nor Devon
Energy’s proposed merger with WPX Energy, which would put them on the list.” [Axios,
10/20/20 (=)]
Chad Ellwood
Senior Research Associate
Climate Action Campaign
202.448.2877 ext. 119