NewsWatch: Energy

February 23, 2010

EPA spells out carbon rules timeline

EPA Administrator Lisa Jackson issued a letter Monday in response to one from eight U.S. senators asking about here agency's plans for 2010 regarding regulating greenhouse gas emissions.

The effort was in part to ease concerns from those Democratic members of Congress in coal states that enforcement was to begin this year, notes E2 Wire, since legislation to block EPA enforcement has been floated around.

In a press release the EPA summarized the letter's high points:

No facility will be required to address greenhouse gas emissions in Clean Air Act permitting of new construction or modifications before 2011.

For the first half of 2011, only facilities that already must apply for Clean Air Act permits as a result of their non-greenhouse gas emissions will need to address their greenhouse gas emissions in their permit applications.

EPA is also considering a modification to the rule announced in September requiring large facilities emitting more than 25,000 tons of greenhouse gases a year to obtain permits demonstrating they are using the best practices and technologies to minimize GHG emissions. EPA is considering raising that threshold substantially to reflect input provided during the public comment process.

EPA does not intend to subject smaller facilities to Clean Air Act permitting for greenhouse gas emissions any sooner than 2016.

The full text of the letter is here.

Of course the timeline is very much contingent upon the many legal challenges the EPA now faces to its plans to regulate CO2, including a challenge from the State of Texas.

Posted by Tom Fowler at 08:30 AM in Climate Change, Politics and Policy, Pollution/Emissions | Comments (0)
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Chron Energy Newslinks | 02.23.10 | Schlumberger deal and the jobs/shale equation; belief in the Bloom.

• Schlumberger deal, NASA changes add to city's job woes.

• Schlumberger/Smith could also mean a firmer foothold in shale gas projects.

• Demand for drilling, engineers may undercut Big Oil cost-cutting efforts.

• Oil traders go long for the first time since January

• Price changes, not absolute price, should be bigger concern for consumers, says Chu.

• Florida leaders consider lifting offshore drilling ban.

• Virginia weighs indexing gas tax to fuel efficiency.

• British rig due to start Falklands drilling.

• Shell halts fuel imports amid Philippines tax dispute.

• French refinery strike spreads to Exxon units in Europe.

• Reliance ups bid for Lyondell, another example of Indian firms getting more aggressive seeking overseas assets.

• Energy Star label on appliance doesn't always mean it's the most efficient.

• Enter the Bloom Box: distributed power breakthrough or Silicon Valley hype?

Posted by Tom Fowler at 07:00 AM in Links | Comments (0)
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Mayor Tillman does the Marcellus

Calvin Tillman, the Mayor of Dish, Texas is a hero to some, a royal pain in the side to others.

His small town smack in the middle of the Barnett Shale has been at the center of much dispute over air quality related to drilling and natural gas production in the area.

Tillman travelled to the East Coast in recent days to tour communities in another major natural gas play, the Marcellus Shale. He's been followed by a number of television stations in Pennsylvania and New York and has spoken to a number of communities, including Binghamton, NY:

At first, Tillman said, Texas residents had grand visions of becoming rich. Those in Dish, however, ended up mostly with high-pressure pipelines, compressor stations and wells that exploited regulatory loopholes and created excessive levels of air pollution.

"I would like it to be a win/win situation here (in New York)," he said. "In Texas, it's win-lose."

[snip]

Skeptics have criticized his motives, suggesting he is funded by organizations with political agendas that oppose drilling. It's a charge he denies.

"I have paid my own way here. I am not getting compensated for any of this," he said. He is aligned with the Oil & Gas Accountability Project, a watchdog group aimed at the industry, he said. That's because they share the same goals of protecting the air, land and water.

The Oil & Gas Accountability Project has been around since the late 1990s as an effort by the environmental group Earthworks. They will be formally launching a Texas Oil & Gas Accountability Project branch this week (although they've been working with Tillman and others around the Barnett for a while).

On Wednesday they will release their campaign platform, "DRILL-RIGHT TEXAS: Best Oil & Gas Development Practices for Texas". The document is under embargo right now but I'll post it and a summary on Wednesday.

The group has created a number of other publications over the years, including a 2005 guide for landowners called "Oil and Gas at Your Door? A Landowner's Guide to Oil and Gas Development."

Posted by Tom Fowler at 06:00 AM in E&P, Industry's image, Natural Gas, Pollution/Emissions | Comments (0)
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February 22, 2010

Industry reps unfazed by hydraulic fracturing probe

A new report from Greenwire says that the House Energy and Commerce Committee's investigation into hydraulic fracturing, a method used by natural gas drillers, isn't causing too much concern among energy industry folk.

Greenwire cites one industry rep calling the probe a "fear-mongering" tactic and reports that the House action is unlikely to affect development of new shale gas plays or stall the merger between Exxon Mobil Corp and indie gas producer XTO Energy Inc. -- a deal that rests on the industry's ability to use the technique.

In contract language filed by Exxon with the Securities and Exchange Commission, the proposed all-stock deal is contingent on Congress' not passing laws that would make hydraulic fracturing "illegal or commercially impracticable."

And a recent congressional hearing on the economic ramifications of the deal on oil and gas markets quickly turned into a debate over hydraulic fracturing's risks and benefits (E&E Daily, Jan. 21).

"I suspect that if the Exxon Mobil-XTO deal were not in the process, the fact that EPA said what they said or the chairman asked for this information would not be headline stories," said William Hederman, senior vice president for energy policy at Concept Capital, a research firm advising institutional investors.

In Hederman's view, the Waxman-Markey inquiry is not likely to lead to passage of any legislation that would hinder development of shale plays that require the use of hydraulic fracturing.

"While there may be legislation proposed after the information is submitted, we think that the Republicans on the committee would view this as a gift for them to attack the Democrats for harming job growth and a clean domestic energy supply option," he wrote in a briefing paper last week. "We do not think this action will lead to any measure that would materially harm shale gas development through hydraulic fracturing nor harm the Exxon-XTO deal."

Posted by Sharon Hong at 04:31 PM in Politics and Policy | Comments (3)
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India's Reliance ups bid for LyondellBassell to $14.5B

News reports today say Indian company Reliance Industries has raised its bid for LyondellBasell Industries to $14.5 billion.

The reports, from Bloomberg and the Wall Street Journal, both cite people familiar with the matter. This is Reliance's third offer for chemicals maker Lyondell. According to the WSJ, the initial bid was made in November and valued Lyondell around $12 billion. The second offer, which was rejected, raised the bid to $13.5 billion.

This latest bid will allow Lyondell's creditors to receive cash or equity, Bloomberg said. But the Indian operator of one of the world's largest oil refineries may have its work cut out for it.

Bloomberg reports:

Houston-based Lyondell Chemical Co. filed a plan to reorganize in December while evaluating the offer from Reliance, pitting India's biggest company against lenders. Lyondell has said it plans to reorganize by repaying its $8 billion bankruptcy loan in full and giving an equity stake in the new company to lenders, including sponsors of a $2.8 billion rights offering.

Access and Apollo Management LP have affiliates that were backers of the company's rights offering. Ares Corporate Opportunities Fund III was a third sponsor of the rights offering, according to court documents.

"There's still a lot of unknowns about this, but assuming that Reliance gets close to 100 percent control of the company and on the level of debt at LyondellBasell, then I think this is at the top end of our valuations for the deal," said Sanford Bernstein's (Neil) Beveridge.

LyondellBassell filed for Chapter 11 bankruptcy protection in January of 2009, just one year after a merger between Dutch chemical and plastics maker Bassell and Houston's Lyondell Chemical Co. made it one of the world's biggest chemical makers.

Posted by Sharon Hong at 02:15 PM in Refining | Comments (0)
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Schlumberger/Smith merger: Analysts' reactions

Oil field services giant Schlumberger formally announced its plans to takeover Smith on Sunday, a move that will likely mean big changes for the companies' Houston employees, the Chronicle reported today.

Here are some analysts' thoughts on the deal.

The market's response to the deal on Friday "following the somewhat bizarre leak to the WSJ" seemed to indicate an expectation of a 20-25 percent premium- not the 37.5 percent premium, Simmons & Co. notes.

The rationale for the deal is "increased importance of drilling optimization given the growing complexity (longer laterals, more complex drilling profiles) of drilling." That means the companies think they'll get more work if they can offer everything from drill bits to drilling fluids to all the other parts of the process.

On the surface, while the strategic impetus for this transaction is sound, SLB is paying a very robust premium for SII, especially considering that SII is encumbered by businesses that are likely "non-strategic" to SLB (supply store, tubular/heavy-weights, for example).

Further, SII has most-in-class exposure to [North America] of close to 50% of total revenues (BHI will soon have this distinction following the consummation of the BJS acquisition) and given SLB's increasing cautious statements regarding the outlook for NAM nat gas related drilling activity, the premium SLB is paying is all the more arresting.

Thus, there are two ways to look at this transaction: 1) SLB, notwithstanding the strategic rationale for the transaction, is paying too much or 2) SLB knows something the rest of the market is failing to appreciate with respect to a looming cyclical inflection, the likely duration of the expansionary phase of the current/next cycle (if so, why 100% stock consideration?), and the critical strategic imperative for owning fluids and drill bits along with MWD and LWD in order to provide an integrated drilling solution to the client."

UBS Investment Research notes "Overall the companies have few areas of significant overlap, but we believe Pathfinder (worth potentially $600-700 mil) could be divested."

Tudor Pickering & Holt said the price is slightly higher than the $40 they expected and not including any cash component:

We don't see any topping bidder as M-I SWACO arrangement puts SLB in driver seat of any deal. With $5B cash on hand, we'd have liked some cash component to deal, but likely had to do all equity deal (and big premium) to get SII board/shareholders over finish line. Maybe post-deal share repo (would be positive).

Does the deal make any other big winners or loser in the industry?

Evolutionary, not revolutionary so no big winners / losers around industry. Behemoth SLB becomes even stronger over time (takes awhile to get non-cost synergies working). Near-term, HAL/WFT benefit marginally from competing against SLB/BHI (which are integrating mergers)... but this only a marginal leg-up. Buyer(s) of likely divested businesses (SII's directional/coil tubing/wireline) potentially wins but depends on price paid. NOV will lose some bits revenue (think SLB was largest bit customer).

FBR Capital markets is much more positive about the deal:

We believe this merger is a very sound strategic move for Schlumberger as it positions them solidly as the leader in engineered drilling systems that integrate every aspect of drilling into one package. This acquisition will mainly add drill bits and fluids to Schlumberger's portfolio and allow for the optimization of the Bottom Hole Assembly (BHA) and increase performance in down hole drilling. We view Smith International's Distribution business as non-core to Schlumberger and believe it will likely be divested.

Smith management likely to run Schlumberger's Drilling & Measurement segment. We understand that Schlumberger recently completed a reorganization that left the former Drilling & Measurement segment "empty." Our expectation is that Smith will be merged into Schlumberger under that segment, and that complementary Schlumberger product lines will subsequently be merged into that entity.

We believe it is possible that Smith International's CEO John Yearwood will head this unit. Mr. Yearwood initiated the vision to optimize the BHA at Smith International through the former acquisition of W-H Energy and could continue this initiative at Schlumberger.

Schlumberger still has cash for expansion, perhaps subsea or deepwater completion technology. This acquisition is a stock transaction and still leaves Schlumberger in a good position to continue to expand their portfolio. The company still has over $4.5 billion of cash and a conservative balance sheet. We believe subsea technology and/or deepwater completion technology could further enhance Schlumberger's portfolio for leading growth in this upcycle.

Does this deal unleash a spate of consolidation going forward?

Simmons & Co. doubts it. Weatherford "remains as the only consolidation target amongst the diversified companies but FCPA needs to be resolved before anyone would make a move and even then valuation would be a struggle. We still think the most coveted arena for the likely consolidators is subsea capital equipment (FTI, CAM and even DRQ) but valuation is a struggle."

Posted by Tom Fowler at 10:40 AM in M&A, Oil Field Services | Comments (0)
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Texas energy = more jobs but less money?

Last week I reported on a study by The Texas Public Policy Foundation on the potential costs to the Texas economy of climate change laws kicking around Congress (short answer: a lot).

In the report (which you can see at the bottom of the above link or right here) there was some data about federal jobs and gross domestic product that I wondered about:

"On page 6 of the report ... there's a table showing how much different industries contribute to Texas' Gross Domestic Product. Oil and gas extraction's contribution actually dropped 16.7 percent from 1998 to 2007, according to the data.

On page 8 another table lists total employment in Texas by industry, and shows that oil and gas extraction jobs increased 11.6 percent from 1998 to 2007.

Does it strike anyone else as odd that the industry added jobs over that time, but it's contribution to the economy declined?

Kathleen Hartnett White -- director of the Armstrong Center for Energy & the Environment responded with this explanation:

"It is unusual but neither impossible nor unprecedented to have a discrepancy between growth in industrial output (measured as a portion of Gross State Product) and employment when calculated over 10 years. Note that the data in question do not derive from original study calculations or its modeled analysis but are official federal data from the Bureau of Economic Analysis of the U.S. Department of Commerce. See Table 4, p. 8 in the study.

Also note that the 52.1% increase in mining employment includes oil and gas extraction (at 11.6% increase), mining employment other than oil and gas (at 15.2% increase) and support activities for mining (at 97.7% increase). When these three different rates of increased employment are averaged over the three categories, the figure is 52.1%. (See Table 4, page 8)

But yes, there is still a discrepancy between the 11.6% increase in employment in the oil and gas sector and a 16.7% decline in oil and gas extraction. (See Table 1, page 6) Likely explanation: the Texas oil and gas sector saw a huge production boom in the last few years of the decade. When oil prices reached $60 a barrel and kept climbing, there was a surge in enhanced oil recovery, a drilling technology too costly to use when oil prices were lower. Similarly, the boom in shale gas production in the Barnett formation gained speed only in the last part of the decade. A good portion of the increases in "support activities for mining" employment are likely attributable to all the exploratory engineering and start up activities prior to the actual production surge made possible by enhanced oil recovery and Barnett Shale "fracking."

Oil and gas extraction has declined for more than 20 years in Texas. So a surge in production in the last few years of the decade 1998-2008 in both oil and gas would not necessarily lead to positive growth when averaged over the entire decade.

Posted by Tom Fowler at 09:00 AM in Climate Change, Workforce | Comments (1)
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More questions about the true scale of shale gas

Last week I highlighted a report from Bernstein Research that raised concerns about the economics of the Haynesville Shale, saying the core production areas were proving to be smaller than expected and the cost of maintaining production is staying quite high.

Allen Brooks, one of our guest bloggers, also noted that report as well as another by well-known shale skeptic Arthur Berman.

We've written about Berman's views (and the price he's paid for them) in the past. Brooks goes into a recent review Berman did of Haynesville data pretty in depth, however:

Mr. Berman plotted the daily production from the Haynesville Shale wells owned by Petrohawk (HK-NYSE), which appear to be primarily in the core (most prolific) area of the basin. As the chart shows, the IP starts high but then declines rapidly. The average daily production line he calculates, which admittedly may be influenced by the natural distortion arising from mathematical averaging, shows a rapid decline before stabilizing within one year of life. If accurate, these wells are reaching stable production much faster than wells in the Barnett, the oldest producing gas shale basin. That may mean lower volumes of gas recovered from these wells.

Based on the well production data, both analysts conclude the core of the Haynesville Shale will be smaller than for the Barnett Shale and with worse well economics. They question whether wells located outside of the core area will be economic at today's natural gas prices. They also question whether wells will produce the volume of gas initially predicted. If so, the Haynesville Shale will not be as large a gas field as suggested by early entrant explorers.

A conclusion that comes from examining the well locations and their IP's is that there appear to be faults in the basin defining the core and non-core areas. The production data from wells in the core is better than from non-core wells. This structural definition within the basin suggests that the development of the Haynesville Shale will not be a "manufacturing process" where the key to growing the basin's production is merely drilling more wells and using the optimal number of fracture stages.

Few in the industry like to hear these kinds of reports, and many have said they're just plain wrong. But Brooks asks the question what if Berman (and now the Bernstein analysts) are right and the Haynesville doesn't hold as much as previously thought?

Last year, when the Potential Gas Committee reported that the nation had 1,836 Tcf of technically recoverable gas resources, it also estimated that 616 Tcf of this total was contained in gas shale formations. Based on the early estimates, the Haynesville Shale would account for roughly 40% of this estimated total.

If the Haynesville Shale does not contain as much gas, does it call into question the Potential Gas Committee's total resource estimate? Would that shortfall potentially undercut the universal belief that natural gas, especially given the contribution from the gas shales, will be the bridge fuel from an economy relying on dirty hydrocarbon fuels to one powered by clean fuels?

It may be early to draw definitive conclusions, but one at least needs to ask the question: What if?

Posted by Tom Fowler at 08:00 AM in E&P, Natural Gas | Comments (0)
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Chron Energy Newslinks | 02.22.10 | Shale wastewater plan delayed, Pacific's plastic waste dump

• Schlumberger and Smith in an $11 billion merger deal, and the class action lawyers are ready.

• Big Oil ready to recover by going small.

• Chesapeake abandons plans for Penn. disposal well.

• Williams Partners announces Marcellus gathering project with Cabot.

• Barnett Shale issues at center of EPA chief's concerns.

• Rig reports from the Barnett, Haynesville (on La. side) and East Texas.

• Denver company spends heavily to get rig exempt from Calif. law.

• Shtokman may happen without LNG.

• Chu says Congress' renewable plans too weak.

• Don't think big, think small when it comes to biofuels use, says Rice prof.

• A video visit to the Pacific's giant plastic waste dump (with annoying swearing co-host).

• Price tag for environmental damage would take one-third of corporate profits.

• The cheapest way for the U.S. to stop climate change? Save the Amazon.

Posted by Tom Fowler at 07:00 AM in Links | Comments (0)
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Wanna go offshore? Meet 'Ms. Edith'

Eric Kayne for The Chronicle Charlie Brittan learns how to escape from a sinking helicopter in a training chair. This is much less scary than the actual helicopter crash simulator.

Is this your idea of fun?

Wait till the cabin is filled with water and the violent motion stops. Lean hard on your forearm to push out the window. Grab a fixed reference point. Undo the seat harness and swim out through the opening.

Then do it again. And again. Until nearly every scenario has been tested, and enough water has been thrust up your nose to make your eyes feel like they're floating.

No? Well if you want to visit an offshore oil platform or ship it's likely what you'll need to do.

The Chronicle's Brett Clanton wrote about the training course that most companies now require for anyone flying to an offshore oil platform. The training has been around for years but it wasn't until recently that so many companies made it mandatory. Fellow reporters who headed offshore in 2008 didn't have to go through the drill but Brett does for two upcoming trips.

The helicopter simulator that dunks you in the pool is known as Ms. Edith -- which instructors jokingly said, stood for "Everybody dies in this helicopter." It may seem a bit extreme but it's all part of the industry trying to improve it's safety record. You get a bit of an idea from the video here.

And a lot of folks have gone through it. A friend from high school I just reconnected with this week said her one time in Houston was for the training. I posted the story link online and a public relations person I know forwarded it to colleagues with a "remember taking that class."

One member of the class was vomiting before he ever got to the pool. He didn't make it the full day. Even some veterans of the program admitted to a tinge of panic about the simulator.

"Being dunked underwater and being strapped in, it gets everybody a little bit," said Jason Wilson, 37, a subsea engineer with Frontier Drilling, who was taking the class for the second time.

Posted by Tom Fowler at 06:20 AM in Accidents, E&P | Comments (0)
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LNG industry now OK with ship-to-ship transfer

For many years oil tankers and other fuel carriers have used ship-to-ship transfer -- moving flexible pipes to move a commodity from one ship to another while still at sea. Much of the oil that comes into the Houston Ship Channel gets here that way since the port is too shallow for the largest tankers that ply the seas, and they typically offload to smaller vessels off the coast, a practice called lightering.

Liquefied natural gas tankers have been loath to do such ship-to-ship transfers, however, despite many decades of the ships being at sea. That is until now, notes Waterborne Energy in a report last week:

Part of what has made operations at Excelerate Energy's Northeast Gateway go so smoothly is the ability of the company to conduct ship-to-ship transfers (STS). In point of fact, however, it is not so much an ability but rather an acceptance of the tanker industry to deem safe the practice - a practice which frankly has been commonplace in other industries such as crude oil and LPG for many years. As the LNG market matures and becomes more liquid and flexibility becomes more crucial we are seeing more companies soften their stance on this practice.

Recently it was rumored that oil and gas giant Shell Oil will now allow its tankers to conduct STS transfer operations with Excelerate Energy vessels. This opens up a wide range of trading opportunities for Shell in the spot market, especially in areas such as Argentina.

This is important because it puts more pressure on the various firms which up to now have been resisting STS transfer operations. Companies such as StatoilHydro, Dynagas and Kline have (under certain circumstances) already approved the procedure. BP and BG are among companies that have yet to approve and adopt this practice into their systems, respectively. The most recent STS operation was conducted near Arubu a few weeks ago between the Excelerate Energy tankers "Excalibur" and "Excelerate" marking the 34th STS transfer, the cumulative volume for which totals 4.5 million cubic meters.

Posted by Tom Fowler at 06:00 AM in LNG, Tankers | Comments (0)
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February 19, 2010

U.S. rig count flat this week

U.S. drilling rig activity was essentially flat this week, down by 1 unit to 1,345 rotary rigs working, compared with 1,300 units drilling during the same period last year, according to the weekly data from Baker Hughes Inc.

There were 1,288 land rigs online, and 45 offshore rigs, including 43 in the Gulf of Mexico.

Of the U.S. rigs working, 893 were drilling for natural gas, up 2 from the previous week. There were 440 rotary rigs drilling for oil, 3 fewer than the prior week, and 12 rigs unclassified.

Horizontal drilling decreased by 5 rigs to 658. Directional drilling declined 4 to 228.

If you really love rig counts you should look at Baker Hughes' online interactive rig count tool. It's essentially a map of the U.S. showing all the rigs, which you can view by what they're drilling for (gas/oil/thermal), well depth, type and trajectory.

Posted by Tom Fowler at 03:49 PM in E&P | Comments (0)
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Texas' wind power potential five times larger than we thought

Chicago (and the entire state of Illinois for that matter) has nothing on us.

Sure, we know Texas is the windiest state in the U.S. in terms of potential electricity generation from wind. But estimates for how much potential Texas has is much larger than previously thought, a new report found.

An assessment by the National Renewable Energy Laboratory estimated that Texas' generation potential is at 6,527,850 gigawatt-hours per year, up from the previously estimated 1,190,000 GWh.

The report estimates that the state could install 1,901,530 MW of wind turbines.

This new analysis is the first update of wind energy potential in the state since 1993 and reflects improvements in wind turbine technology, such as taller turbines to catch better wind and refined wind measurements, the study said. The estimates are based on a 30 percent or higher gross capacity factor and turbines 80 meters above the ground.

Nationwide, wind potential is estimated to be at nearly 37 million GWh per year, up from the 10.7 million GWh a previous national survey estimated. That's more than nine times current total electricity consumption in the U.S., the American Wind Energy Association said.

Numbers for all the states are here (click on the link to the Excel table to view).

According to the study, the top 10 windiest states are:

1. Texas
2. Kansas
3. Montana
4. Nebraska
5. South Dakota
6. North Dakota
7. Iowa
8. Wyoming
9. Oklahoma
10. New Mexico

Mississippi came in last with zero wind energy potential. Florida was found to have an installation capacity of 0.4 MW, reflecting production of only 1 gigawatt-hour per year. Delaware and Connecticut also showed low wind energy potential.

Posted by Sharon Hong at 10:55 AM in Wind power | Comments (5)
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Google gets to be an electric utility (sort of)

Just when you thought Google couldn't get more entrenched in daily life, the online search giant decides it wants to be an electric company, reports ITWorld:

Google has received federal approval to buy and sell energy on the open market, giving it more options for the way it powers its data centers and opening the door to a potential move into the energy-trading business.

Google applied for the authorization last December through a wholly owned subsidiary called Google Energy. The U.S. Federal Energy Regulatory Commission (FERC) approved its application Thursday, granting Google "market-based rate authorization," or the authority to buy and sell energy on a wholesale basis.

"We made this filing so we can have more flexibility in procuring power for Google's own operations, including our data centers," Google spokeswoman Niki Fenwick said via e-mail.

This doesn't mean Google Energy will become another option on the Power To Choose Web site here in Texas. It's really all about letting Google better hedge the costs of providing power for its massive server farms.

Posted by Tom Fowler at 10:15 AM in Electricity | Comments (0)
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Matagorda power plant could mess with Houston air

A proposed coal-fired power plant 90 miles from Houston in rural Matagorda County could threaten the city's efforts to comply with federal clean air rules, reports the Chronicle's Matt Tresaugue:

Some federal regulators, Houston lawmakers, and environmentalists say the proposed White Stallion Energy Center would only exacerbate the city's stubborn smog problem as tougher nationwide limits for the widespread pollutant come into play.

The U.S. Environmental Protection Agency, for one, wants Texas regulators to prove that pollution from the coal plant would not make Houston's smog worse before issuing permits. Critics also want the state to require the power company to consider new technology that might slash emissions of smog-forming pollution.

The push comes amid a review of the proposal by the State Office of Administrative Hearings, which will soon recommend whether the Texas Commission on Environmental Quality should grant the plant's air permit.

The plant is about 20 miles from the boundary of the eight-county Houston region that has long been in violation of federal limits for smog or ozone. It will use pet coke -- a byproduct of refining -- as a fuel, as well as coal, and use a number of technologies to reduce emissions, but apparently it will still have a worse emissions profile than other coal plants in the state.

The plant owners didn't call Tresaugue back. Sometimes companies choose not to comment on an issue thinking there's nothing to be gained by talking. Sometimes they're right, but often they're wrong.

Posted by Tom Fowler at 09:30 AM in Electricity, Legal/Enforcement, Pollution/Emissions | Comments (0)
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Haynesville: Another Houston screening

The natural gas shale documentary Haynesville will have another screening in Houston, this time on Thursday, March 4 at 7 p.m. at the Angelika Theater downtown.

To reserve tickets (which are free) sign up here.

Sponsors of this screening include Akin Gump Strauss Hauer & Feld LLP, Citi Energy Group and George Alcorn.

I will be moderating a panel discussion after the film, which will include the director Gregory Kallenberg, Jim Rice of Akin Gump and others to follow.

There are only around 250 tickets so be sure to sign up quickly. The showing the Chronicle put together at Rice University in January sold out.

Undecided? Take a look at the trailer:

Posted by Tom Fowler at 09:00 AM in Industry's image, Natural Gas | Comments (1)
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Chron Energy Newslinks | 02.19.10 | Schlumberger/Smith merger? Gore skewers Exxon.

• Schlumberger in talks to acquire Smith Intl.

• Indian firm to hike bid for LyondellBasell.

• Anadarko discovers east African nat gas bounty

• Halliburton to move 150 jobs from Ok. to Houston.

• Mayor of Dish,Tx. visits New York Marcellus Shale region.

• Russia looks to take gas field back from BP.

• KBR wins contract for India ammonia plant.

• Petrobras imports gasoline for the first time in 40 years.

• Argentine tightens shipping rules over Falklands oil dispute.

• BP, Statoil eye Greenland.

• Small reactors generate big hopes.

• Gore calls Exxon liars on climate funding.

Posted by Tom Fowler at 07:00 AM in Links | Comments (1)
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More on the Nissan LEAF

A few weeks ago I got to take a test drive of the Nissan LEAF, the all-electric compact sedan the company will be rolling out in select cities (including Houston) late this year.

As I wrote then I had mixed feelings about the driving experience, namely that it didn't include actual highway driving. I go into it a bit more in an podcast I did with Joel Greenberg over at Tech2Energy.com.

Coincidentally (really, I didn't know this was being done) Tim Spell, the Chronicle's car guy, has an entry on the LEAF this morning but it doesn't sound like he did the test drive.

Joel's site features a series of podcasts where to talks to people about a variety of energy and technology topics, like nanotech and energy and the basics of the electric power grid.

Posted by Tom Fowler at 06:45 AM in Automobiles, Electricity | Comments (0)
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Devon Energy to divest Brazilian assets in 2010

First the Gulf of Mexico, now Brazil.

Devon Energy Corp. will continue its plans to become a purely North American onshore company by divesting its Brazilian and other international assets in 2010.

The exploration and production company announced its plans to sell off its international business back in November. It plans to use money from the sales toward North American projects and to retire debt

And Devon's been pretty lucky on the oil front. A test in the Kaskida field in the Gulf found oil right before the company made its November announcement. And in December and January, Devon and partner Anadarko found oil off the coast of Brazil.

This week Devon reported that its oil and gas production for 2009 reached an all-time high.

"2009 was a pivotal year for Devon as we began repositioning the company to focus entirely on our high-return, North American onshore natural gas and oil portfolio," commented J. Larry Nichols, chairman and chief executive officer.

"We grew North American onshore production by more than six percent in 2009 and replaced more than twice our production with the drill bit at very attractive costs. We expect to receive after-tax proceeds of $4.5 billion to $7.5 billion as we divest our offshore and international properties this year."

Posted by Sharon Hong at 06:00 AM in E&P, Oil, South America | Comments (0)
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February 18, 2010

Texas' big bill for carbon

Sharon Hong/Chronicle Sen. John Cornyn speaks at press conference to release TPPF study findings at Mach Industrial Group

As we reported this morning, a new study being released today tries to quantify the negative impacts of proposed U.S. climate change laws on the U.S. economy. The complete study is at the bottom of this post.

The possible outcomes from a climate change law (the paper takes the Waxman-Markey bill as the standard) sound pretty scary for Texas.

But as critics of the study (and others that have preceded it) point out, it doesn't even try to identify positives that might come out of the effort.

My colleague Sharon Hong was at the press conference today where the findings were released. At the news conference, Margo Thorning, co-author of the study, said the report does take into account a potential rise in "green" jobs in the state.

Page 18 of the study notes:

"Even though Waxman-Markey will create new 'green' jobs due to the shift toward less carbon-intensive fuels, more renewable energy, and increased expenditures for energy efficiency across all sectors of the economy, the overall result will be fewer jobs than under the baseline forecast. Since electricity produced by wind and solar power has to be backed up with conventional generating capacity, the impact of the Waxman-Markey bill is to force the substitution of more expensive energy for cheaper fossil fuel energy. As a result, growth in productivity, GDP and employment is slowed."

Continue reading "Texas' big bill for carbon"

Posted by Tom Fowler at 05:40 PM in Climate Change | Comments (1)
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House asks for hydraulic fracturing data *update*

The House Energy and Commerce Committee is launching an investigation of hydraulic fracturing, the practice used by natural gas drillers to unlock prolific shale formations.

The committee sent letters to eight oil and gas companies that use the technique, asking for information on the chemicals used in the process and the potential impact of the practice on the environment and human health.

"Hydraulic fracturing could help us unlock vast domestic natural gas reserves once thought unattainable, strengthening America's energy independence and reducing carbon emissions," said [Committee Chairman Henry] Waxman. "As we use this technology in more parts of the country on a much larger scale, we must ensure that we are not creating new environmental and public health problems. This investigation will help us better understand the potential risks this technology poses to drinking water supplies and the environment, and whether Congress needs to act to minimize those risks."

Last year Waxman requested and received information from Halliburton, BJ Services and Schlumberger about the chemicals used in fracturing fluids. Waxman said the data showed that Halliburton and BJ Services used diesel fuel in their fracturing fluids between 2005 and 2007, potentially violating a voluntary agreement with the EPA to stop using diesel.

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*updates*

Jeff Smith, CFO of BJ Services, said the the company does have an agreement with the EPA to stop using diesel in coal bed methane frac jobs, which was communicated to all of its operations in the field. Despite that effort some of the business units "inadvertently performed a few jobs" Smith said, with the last one occuring in 2007.

The company self-reported the incidents to the EPA and took measures to stop it from happening in the future. The company's technology center in Tomball also figured out a way to replace diesel in frac jobs with mineral oil-based products instead, to improve the ecological footprint of the fracking fluids.

Halliburton takes a different view of the allegation. According to a spokeswoman:

"The Company's use of diesel-based fluids since signing the MOA has been in compliance with that agreement. The terms of the MOA specifically cover coalbed methane gas development activities occurring in association with Underground Sources of Drinking Water, and not HF projects in other unconventional gas development activities or conventional formations. Halliburton is firmly committed to full compliance with the MOA and has, in fact, voluntarily gone further to cease the use of diesel in its liquid gel concentrates regardless of the type of HF job in which they are used.

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The new data request went to the three companies as well as smaller firms, including Frac Tech Services, Superior Well Services, Universal Well Services, Sanjel Corporation, and Calfrac Well Services.

The American Petroleum Institute put out a statement saying fracking is a long-used, safe technology that has been used "in more than one million U.S. wells without a single confirmed instance of groundwater contamination."

"The director of EPA's Drinking Water Protection Division recently stated that he hadn't seen any documented cases of contamination as a result of hydraulic fracturing. States have regulated the technology for decades with every incentive to ensure it is employed safely."

Environmental Defense Fund Senior Policy Advisor Scott Anderson praised the planned study:

"Because the problem of global warming is so severe and the time for action so short, all low and lower carbon energy options, including natural gas, should be considered as part of the nation's energy mix, but only if such options can be accomplished without significant adverse health or environmental impacts."

Below the jump is a copy of the letter the committee sent to Halliburton Chairman and CEO Dave Lesar (addressed to the Houston office, although Lesar is actually based in Dubai):

Continue reading "House asks for hydraulic fracturing data *update*"

Posted by Tom Fowler at 01:04 PM in Natural Gas, Oil Field Services, Politics and Policy, Pollution/Emissions | Comments (0)
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Another Anadarko strike off Africa

Anadarko's having a nice bit of success off the African coast of late. The latest comes with the successful Windjammer well off Mozambique, which struck more than 480 net feet of natural gas pay over a gross column of more than 1,200 feet, according to Upstream Online:

The well is now at a casing point at a depth of 14,000 feet, Anadarko said. It said the well would be sunk a further 4100 feet to test underlying objectives.

The well is being sunk in about 4800 feet of water about 30 miles (50 kilometres) off the Mozambique coast by the drillship Belford Dolphin.

"This is true rank wildcat exploration, and to have our first deep-water exploration well result in a discovery with more than 480 net feet of pay, thus far, is a strong indication of the potential of this basin," Anadarko senior vice president for worldwide exploration Bob Daniels said in a company statement.

The discovery also "de-risks" some of the other prospects Anadarko has in the area, where it holds 2.6 million acres of leases. The question is at what level the market decides to price in all that potential with this new wildcat success.

Posted by Tom Fowler at 10:03 AM in Africa, E&P | Comments (0)
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