Below is a summary of publicly available activities currently underway at the federal, state and international levels that could impact the use of hydraulic fracturing for oil and gas extraction. With numerous state legislatures now in session, HBW Resources is monitoring these activities to ensure that responsible and feasible policies based on sound science are advanced.
State Legislative Update: Please see linked spreadsheet for an updated listing of state legislation dealing with hydraulic fracturing.
The U.S. oil and gas industry added new jobs faster than the total private sector during the year that ended in June, jumping 2.6 percent over the previous year and pushing the industry’s roster past 1 million jobs nationwide, according to a new report, “TIPRO Energy Report: A Look at Employment Trends for the Oil & Gas Industry in 2013.” During the first half of 2013, the industry netted 23,700 jobs, driven mostly by extraction, drilling and support sectors, according to the Texas Independent Producers & Royalty Owners Association’s report. Overall, the industry grew 2.4 percent in that six-month period. Eight out of nine oil and gas sectors measured by the Bureau of Labor Statistics expanded this year. Only jobs in the oil and gas field machinery and equipment sector have appeared sluggish so far in 2013, according to TIPRO.
The increasing production of shale oil and gas should benefit the U.S. economy by raising the nation’s gross domestic product by an average of 3.5 percent annually through 2035, according to a report by Purdue University energy economists. “The economic impact of shale oil and gas is clear: It is a game changer for the U.S. economy,” said Wally Tyner, the James and Lois Ackerman Professor of Agricultural Economics and one of the researchers. “Our results indicate that the shale oil and gas boom should have a major impact on the U.S. economy,” the researchers say, with the nation’s gross domestic product from 2008 to 2035 averaging 2.2 percent higher than its 2007 level. Without the expansion in production from shale, the GDP – the value of all of the nation’s goods and services – would average 1.3 percent lower. “That means that U.S. GDP over the entire period of 2008-2035 on average would be 3.5 percent higher each year than it would have been without the shale boom.” That amounts to an average of $473 billion per year added to the economy during the period. For more information, please contact us.
The Energy Information Administration’s most recent Short-Term Energy Outlook, projections for total US natural gas supply show growth of .49 bcf/d this year, to 70.5 bcf/d, and a drop of .36 bcf/d in 2014, to 70.14 bcf/d. This year’s figure represents a modest increase over last month’s forecasts: 70.44 bcf/d for 2013 and a 70.08 bcf/d for 2014. Meanwhile, the EIA has also upped its consumption forecasts for 2013, to 70 bcf/d from 69.91 bcf/d, and for 2014, to 69.42 bcf/d from 69.31 bcf/d. It anticipates increases coming from the residential and commercial sectors. For more information, please contact us.
In the next 10 years, natural gas demand in the U.S. will rise 27 percent and supply will increase by 38 percent, according to a study, “Son of a Beast, Utica Triggers Regional Role Reversal,” by Bentek Energy. The liquids-rich shale plays of Texas and the Midcontinent, including the Williston Basin, will contribute roughly 44 percent of the expected natural gas supply growth during that 10 year time period, the report also noted. Between 2013 and 2023, the U.S. will increase natural gas production to 9.1 billion cubic feet per day, the report said, one-third of which will come from the Utica and Marcellus shale formations. Over the same period, the Southeast will be responsible for roughly half of all demand growth, a number that could reach 9.4 billion cubic feet per day.
API launched a new web-based map tracking liquefied natural gas (LNG) export projects, including those waiting for approval from the federal government. According to Erik Milito, director of upstream and industry operations, approval of the multi-billion dollar export terminals could create thousands of American jobs, strengthen the U.S. geopolitical position, reduce global emissions, and help the Obama administration to meet its promise to double American exports. The online API LNG export map displays a summary of investments, exports, and jobs associated with each application to sell LNG to countries that do not have free trade agreements with the United States. Terminals are listed in the order that the DOE expects to review the projects, along with how long each has waited for approval. Also listed are the four U.S. export sites approved since 2011, as well as 63 competing sites planned or under construction in foreign nations. For more information, please contact HBW Resources. Surging oil and gas production in new areas across the United States creates fresh opportunities and challenges for companies operating a labyrinth of North American pipelines built decades before the current drilling boom. The country needs a “rationalizing of the pipeline grid” to reflect the new energy development, said David Devine, the new chairman of the Interstate Natural Gas Association of America and the president of central regional natural gas pipelines of Kinder Morgan. Pipeline companies will play “a vital role” providing “the critical infrastructure that’s needed to link these new gas resources to new consumption markets.” The current pipeline network was constructed around former oil and gas hotbeds, with much of the grid flowing to the north and east. But oil drilling in North Dakota, natural gas production in the Northeast and the zeal for natural gas liquids on the Gulf Coast have dramatically changed the dynamic. Dozens of such pipeline realignment and conversion projects are underway: · Tallgrass Energy is converting the Pony Express gas pipeline — purchased from Kinder Morgan in 2012 — so it can transport Bakken formation oil to market. With the conversion and an additional 260-mile pipeline extension, Pony Express eventually will be able to send as much as 302,000 barrels of light sweet crude per day from North Dakota to the oil hub in Cushing, Okla.
Enterprise Product Partners and Enbridge Inc. are expanding the Seaway Pipeline that connects Cushing and Freeport, Texas. The pipeline used to send oil north, but the two companies spent $300 million to reverse its flow and boost capacity, so as to capitalize on a bottleneck of crude in Cushing. so it will flow from Cushing to Houston. A new, parallel pipeline would further boost capacity.
· In April, Magellan Midstream Partners began shipping crude oil through its Longhorn pipeline, after reversing its flow. The pipeline had carried refined products from Houston to El Paso. · Earlier this month, Pennant Midstream announced it planned to build a 38-mile pipeline to connect processing plants with natural gas liquids extracted from Ohio’s Utica Shale.
Rep. David McKinley (R, WV 1) introduced H.R. 3208 (To clarify that certain natural gas facilities are not subject to the Natural Gas Act). The proposed legislation is intended to eliminate barriers to greater domestic use of Liquefied Natural Gas (LNG) in transportation and other end-use applications. To do so, the proposed legislation clarifies the scope of Federal Energy Regulatory Commission (FERC) jurisdiction over facilities used to liquefy, store, and deliver natural gas. The proposed legislation would add a new subsection (e) to Section 1 of the Natural Gas Act (“NGA”) to exempt from NGA regulation any person who constructs or operates “a facility not otherwise subject to [the NGA] that liquefies, stores, processes, or delivers natural gas for vehicular natural gas or other end use purposes,” even if such person re-injects natural gas into an interstate natural gas pipeline, if that re-injection is incidental to the facility’s provision of natural gas for vehicular or other end-use purposes. Such incidental re-injection might involve certain natural gas constituents, such as ethane, rejected from the liquefaction process as byproducts, but which the facility operator cannot consume or reprocess on site. Representatives Mike Doyle (D, PA 14), Bill Johnson (R, OH 6), and Tim Ryan (D, OH 13) co-sponsored the bill, which was referred to the House Committee on Energy and Commerce. For more information, please contact HBW Resources.
The Midwest Independent System Operator’s (MISO) Trading Hub Task Force (THTF) recentlyannounced the formation of three new trading hubs in MISO’s newly formed South Region as part of its move toward integration. The Texas Trading Hub, Arkansas Trading Hub and Louisiana Trading Hub will add to MISO’s four existing Midwest hubs and create common points for commercial energy trading in order to foster more liquid trading activity and efficient commercial transactions between all market participants. The new hubs will be operational and begin trading on December 19, when joining entities from the South Region officially integrate with MISO’s market. At this time, the newly defined hubs will appear on MISO’s Locational Marginal Price (LMP) Contour Map. The THTF conducted extensive study and research to identify a number of potential trading hubs in the new South Region. Each then underwent rigorous stress testing. In the end, the task force recommended five potential hub definitions, which were voted on by MISO members and narrowed down to the final three. For more information, please contact us.
The United States may soon claim the throne as the world’s top crude and gas producer, but America’s dependence on oil leaves the nation at risk, according to a global energy security assessment. According to the analysis by Roubini Global Economics and Securing America’s Future Energy, the nation’s heavy reliance on petroleum fuels threatens to undo U.S. gains in efficiency and oil and gas production. “Heavy oil dependence still renders the country highly vulnerable to price fluctuations in the short-to-medium term, particularly as economic growth — and fuel demand — recovers,” according to the report. While physical supplies of oil may be more dependable in the United States — particularly with hydraulic fracturing allowing production of newly recoverable crude and gas resources — the nation’s overall dependence on oil and inefficient use of it leaves the economy “exposed to high and volatile oil prices.”
A new study released today shows the harmful impacts that would result from repealing the tax deduction for intangible drilling costs (IDCs), API Director of Tax and Accounting Policy Stephen Comstock told reporters this morning. “The analysis shows an additional 190,000 Americans would be unemployed next year if the IDC deduction is repealed. That is equivalent to taking away an entire month of job creation at current growth rates. Projected industry investment in the U.S. falls by $407 billion over the ten year period, driven by a 15 to 20 percent annual reduction in future domestic drilling. The result is a significant decline in future U.S. energy supply with oil and natural gas production in 2023 coming in 14 percent below current expectations.”
The Council on Foreign Relations has a paper out today, “The Shale Gas and Tight Oil Boom: US States’ Economic Gains and Vulnerabilities” that looks at concerns about U.S. energy imports in light of the huge increases in shale oil and gas production in recent years, and how increased domestic production can affect the economies of shale-centric states. “Reduced energy use has lessened the vulnerability of the U.S. economy to oil price shocks. A similar phenomenon is seen at the state level, with many state economies having diversified away from energy-using industries,” write Stephen Brown of the University of Nevada at Las Vegas and Mine Yücel of the Federal Reserve Bank of Dallas. “At the same time, the growing prominence of energy production can make states with small, undiversified economies more susceptible to an economic downturn during an energy price decline.” For more information, please contact HBW Resources.
Dealing a potential blow to the Obama administration and environmentalists, the Supreme Court agreed to consider limiting the Environmental Protection Agency’s power to regulate greenhouse gases. The court accepted six separate petitions that sought to roll back EPA’s clout over carbon dioxide emissions from power plants. That could signal the court’s dissatisfaction with a 2012 ruling by the nation’s second most powerful court – the federal appeals court for the District of Columbia Circuit – affirming the agency’s authority. The decision to accept cases brought by Texas, the U.S. Chamber of Commerce, energy producers and others represented a potential victory for groups that customarily enjoy considerable sway at the conservative-leaning court. The justices limited their consideration of the new case to one question: whether EPA’s regulation of motor vehicle emissions triggers new permitting requirements for stationary sources as well, such as power plants.
For additional information, please contact Bo Ollison with HBW Resources. His contact information is below.
If you have any general questions, please contact us anytime. Previous versions of the HBW Ollison Hydraulic Fracturing Report, the HBW Greenfield Offshore Energy Report, the Forsgren Environmental Report, and daily updates and new Member profiles can be viewed at the new Intelligence Tab on the HBW Resources website at: https://hbwresources.com/intelligence/. Hope you all have a great day!