Vol. 5, No. 1
Topics discussed in this week’s Report include:
- Non-governmental organizations (NGOs) move to enjoin hydraulic fracturing in Chaco Canyon.
- NGO urges states not to follow Pennsylvania study on drilling wastes.
- Sinopec commits to doubling shale gas from Fuling gas field.
- Dallas Fed: At least 70,000 fewer oil jobs in 2015.
- Study: Pits and tanks both have roles in wastewater storage.
- Crude oil exports involve trade-offs for Corpus Christi.
Non-governmental organizations (NGOs) move to enjoin hydraulic fracturing in Chaco Canyon. Several environmental and tribal groups sought a preliminary injunction from the Tenth Circuit to stop the U.S. Bureau of Land Management (BLM) from issuing permits to conduct hydraulic fracturing in New Mexico’s Chaco Canyon. The groups argue that BLM is issuing the permits based on a 2003 resource management plan that did not examine the environmental impacts of hydraulic fracturing in its environmental impact statement. BLM’s position is that the environmental impacts are largely the same as those of conventional drilling, a position accepted by the U.S. District Court for the District of New Mexico in August 2015 when it denied a similar motion for preliminary injunction. BLM is currently updating its resource management plan while issuing drilling permits based on individual environmental reviews. The groups claim that these reviews do not consider cumulative impacts on the environment and tribal artifacts in the area, violating the National Environmental Policy Act.
NGO urges states not to follow Pennsylvania study on drilling wastes. The Delaware Riverkeeper Network released a white paper urging state agencies to ignore a Pennsylvania Department of Environmental Protection (PADEP) study of potential risks from technologically enhanced naturally occurring radioactive materials (TENORM). TENORM can be present in drilling wastes and flowback fluids associated with oil and gas development, and PADEP found that TENORM levels from hydraulic fracturing drilling wastes could likely be handled as solid wastes instead of as hazardous wastes. Some state agencies have been considering the PADEP study in crafting their own regulations on TENORM handling, storage and disposal, but the Delaware Riverkeeper Network claims that PADEP’s findings of relatively low radon concentrations in drilling wastes are invalid. The Delaware Riverkeeper Network claims that the radon levels were closer to those found in conventional drilling wastes and that levels in wastes from much deeper strata should be higher. It also claims that PADEP failed to consider the potential impacts of TENORM disposal that could occur more than 100 years in the future, after landfills are closed.
Sinopec commits to doubling shale gas from Fuling gas field. China’s only large-scale commercial shale gas field will double its annual capacity to 10 billion cubic meters by 2017, according to Sinopec, a state-owned oil and gas producer. If this goal is reached, it would double the Fuling gas field’s current capacity. The Fuling shale gas field in southwest China is believed to have 380.6 billion cubic meters in proven gas reserve, making it the second largest shale gas field outside of North America. China is expected to produce approximately 5.1 billion cubic meters of natural gas this year, 3.9 billion of that from Fuling. This figure is below a 6.5 billion cubic meter total production target established by the government.
Dallas Fed: At least 70,000 fewer oil jobs in 2015. The Federal Reserve Bank of Dallas’ quarterly economic update for the energy sector estimated that the United States lost 70,000 oil industry jobs since October 2014. The update also noted that the oil industry saw nine Chapter 11 bankruptcies in the fourth quarter of 2015 alone, more than any quarter since the 2008 recession. According to the Dallas Fed, despite the job losses, bankruptcies and idling of over 1,200 drilling rigs, U.S. crude production has not leveled off enough to clear the global excess supply of crude oil. The update estimated that the global supply of crude oil is likely to exceed demand by approximately 600,000 barrels per day in 2016 given the resiliency of U.S. production, new output from Iran, and expectations that the Organization of the Petroleum Exporting Countries will maintain or increase output this year.
Study: Pits and tanks both have roles in wastewater storage. A study of wastewater spills at shale gas and tight oil well sites by the nonpartisan think tank Resources for the Future (RFF) concluded that storage pits can be used effectively while storage tanks can still cause wastewater releases when not properly controlled. After reviewing available literature and state databases on releases, the study found that tanks are still subject to frequent overflows and leaks, contrary to assumptions in BLM regulations, which favor the use of storage tanks on the assumption that they better protect the environment. Pits also overflow and can release wastewater from liner defects. Therefore, RFF recommended that regulations focus on the factors that contribute to releases from both storage mediums. Guidelines aimed at reducing overflows and liner failures would allow drillers flexibility to use the least-cost storage option while reducing wastewater releases.
Crude oil exports involve trade-offs for Corpus Christi. The lifting of the ban on crude oil exports will make Corpus Christi, Texas, a crude oil trader but will diminish the city’s condensate business, according to a report by RBN Energy. Corpus Christi will likely be the major trading port for the Eagle Ford and Permian Basin crude oil that previously could not be exported. Oil condensates, which are light crude fractions, were not limited by the prior ban, and Corpus Christi is the site for several planned condensate splitter and stabilizer facilities that would accommodate condensate exports. One splitter was already constructed and another was scheduled to come online late this year, but with crude oil exports, midstream companies may not proceed with other planned condensate projects, according to the report. The likely cancellation of other planned condensate projects is expected to be offset by crude oil exports, but the gap between low-priced U.S. crude and international crude has narrowed in the past few months due to an excess supply of global crude oil. According to RBN Energy, this makes near-term oil export investment in Corpus Christi less likely.
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