Tag: "oil"

States vs Local Hydraulic Fracturing Bans

In the past few years, hydraulic fracturing/frac bans have become increasingly common in communities opposed to the drilling practice that extracts oil and natural gas from shale rock by injecting sand, water and chemicals into the ground. Such bans focus on either the actual drilling methods or the transportation of waste from the hydraulic fracturing process.

State legislatures are now finding themselves in a fight against local authorities for control of hydraulic fracturing regulations in their own states. While Vermont and New York have already implemented state wide bans on hydraulic fracturing, Texas has banned local bans and Oklahoma is considering banning local bans on the practice as well.

Current hydraulic fracturing ban legislation:

  • Over 470 local measures have passed in towns, cities, and counties.
  • 24 states and Washington D.C. have seen at least one such local measure passed.
  • Oklahoma introduced legislation imposing a ban on local frac bans.

The debate has sparked questions over who has the right to regulate oil and gas activity in the state, state agencies or individual communities. For New York, the state-wide ban followed a court decision that town zoning laws allowed the banning of hydraulic fracturing. In an attempt to achieve a compromise between state and local control, state legislation banning cities and counties from outlawing hydraulic fracturing opens the door for local oil and gas regulations, specifically where it concerns health and safety. Texas House Bill 40, signed into law this week by Governor Greg Abbott, includes a four-part test for determining city drilling regulations while prohibiting hydraulic fracturing bans throughout the state.

Lauren Aragon is a research associate at the National Center for Policy Analysis.

May 20, 2015 | 1 comment | by

New Opportunities for U.S. Oil?

In a surprising Monday move, the U.S. government approved Royal Dutch Shell PLC’s plans to drill in the Arctic Ocean this summer. The company has been pursuing drilling in the Arctic since 2007 and was set back by bad weather and mechanical failures in 2012. While the new drilling project will face tight restrictions, Royal Dutch Shell will be the first energy company to drill in the U.S. portion of the Arctic Ocean.

Opening up the Arctic Ocean is a big step for the oil and gas industry, but it still leaves 87 percent of the Outer Continental Shelf off-limits to the industry. While it’s a good sign of progress, this “big step” isn’t enough for some members of Congress. Three bills were introduced to the Senate on Tuesday that aim to open up parts of the Atlantic Ocean, Gulf of Mexico and the Arctic to offshore drilling.

With the Interior Department considering drilling in the Atlantic for the first time in decades and Alaskan legislators calling for more ― not less ― oil and gas activity in the area, now is a great time to push the Obama administration to reconsider its restrictive drilling regulations and proposals.

May 13, 2015 | Leave a Comment | by

Offshore Access Critical to U.S. Energy Security

The Department of the Interior granted conditional approval to a plan by Shell Gulf of Mexico to begin exploratory drilling in the Chukchi Sea in the Arctic Ocean. Federally owned offshore oil and natural gas reserves of the United States are estimated to hold over 50 billion barrels of crude oil 200 trillion cubic feet of natural gas. However, close to 87 percent of federal offshore acreage is off limits to energy exploration and development. Without energy exploration to give a more accurate estimation of energy reserves, the closed off area could hold far more oil and natural gas reserves.

The Bureau of Ocean Energy Management’s offshore oil and natural gas leasing plan for 2017-2022 excludes promising areas in the Atlantic, Pacific, and Arctic and in the Gulf of Mexico.

Expanding offshore access would:

  • Create nearly 840,000 new American jobs.
  • Increase oil production by 3.5 million barrels per day.
  • Generate $200 billion cumulative revenue for the U.S. government.
  • Add $450 billion in private sector spending.
  • Add $70 billion per year to the U.S. economy.

The United States is now producing the most oil in the world and can continue to do so if more pro-energy policies, such as opening all federally owned offshore areas, are adopted by the federal government.

May 13, 2015 | Leave a Comment | by

Feeling the Heat — Oil Export Stalemate in Venezuela

Typically when a currency falls in value, investors flock to purchase that country’s assets and exports under the new exchange rate. The Venezuelan government however, is stuck producing nearly the same output. Why? Simply put, because of the South American country’s involvement in the Organization of the Petroleum Exporting Countries (OPEC) and its incredible reliance on oil, which is estimated by Reuters to be responsible for 96 percent of government revenue. Venezuela is in a position where it cannot produce more oil — to take advantage of break-even costs as low as $40 per barrel — or less, due to burgeoning global supply’s effect on prices.

Venezuelan oil production has not risen substantially in almost two decades:

Venezuelan Oil Production

This is not the byproduct of a lack of private interest in the country: exploration and extraction companies such as Chevron already operate within Venezuela and the Bolivarian government even claims grievances against ExxonMobil for resource theft by its international waters with Guyana. This is not because the country is attempting to use its reserves more sustainably — Venezuela has the largest deposit of proven oil reserves, and owns over 17 percent of the world’s oil, compared to the rest of Latin America, which collectively owns less than 5 percent. The combined lack of productivity and revenue is due to OPEC quotas, which have become a thorn in President Maduro’s side. This has effectively stunted Venezuela’s production capacity compared to its neighbors:

Proven Oil Reserves

Oil Production

Venezuela’s recent attempts to counter economic collapse and civil unrest have come in the form of two new deals:

  • Much like Nicaragua and Venezuela’s accord to trade coffee beans for crude oil, and Cuba and Venezuela’s deal to trade oil for teachers and doctors, Uruguay has now agreed to begin trading food for oil
  • India has joined China in becoming a key consumer of Venezuelan oil, with a long-term investment plan of $143.7 billion being put in place to develop infrastructure for oil production in Venezuela

Even if OPEC were to scale back production tomorrow, all of these attempts to harness and expand on the country’s competitive advantage are likely futile for Venezuela itself, as it has a fixed supply quota it cannot surpass. Additionally, because of that quota, strengthening oil trade with Asian countries has meant neglecting and making cutbacks with the rest of Central and South America. Supply shocks are already being felt in Petrocaribe, a trade bloc of Caribbean nations which rely heavily on Venezuelan crude.

Apart from simply diversifying their economy and liberalizing the market, it is becoming increasingly urgent that Venezuela corresponds with the needs of its people rather than the whims of OPEC. The ailing nation should reduce these regulatory barriers such that its production more accurately reflects growth in global oil demand, it is after all one of the few oil-rich nations that has yet to do so.

 

Apr 22, 2015 | 1 comment | by

Local Support for Keystone XL, Despite Political Affiliation

The Keystone XL Pipeline continues to remain in a locked up battle mainly between political parties. However, a recent study suggests that while politics prevents the pipeline from completion, local support shows a different picture. Those that live close to the proposed pipeline route are in favor of the project despite their political party affiliation. A possible reason for this is the greater media attention in localized areas that focus on jobs and economic benefits.

TransCanada has run into a new problem while working on alternative to the Keystone XL pipeline. Native groups in Canada are blocking most development in their territory, at least without consent and benefits directly to those nations. Until they are on board with developments like the proposed pipeline to the Pacific coast, these local groups will stall an alternative to the Keystone XL.

 

Apr 20, 2015 | Leave a Comment | by

Crowdfunding Oil and Gas

Crowdfunding energy and agriculture initiatives is nothing new. Yet new federal legislation has opened the gates to allow crowdfunding for for-profit companies — and the oil industry is jumping at the opportunity.

Two Texas companies, EnergyFunders and CrudeFunders, are reaching out to investors to fund smaller projects big banks would toss back. While crowdfunding efforts could open up the oil and gas industry to new investors, some experts warn those inexperienced with the industry to proceed with caution.

“I don’t want to pour cold water on what might be a valid new source of funding, but from the investor’s point of view I would say a very strong caveat emptor (buyer beware),” cautioned Christopher Ross, a former BP Plc executive and current finance professor at the University of Houston.

For those without an understanding of drilling technology, mineral leases and royalties, and geology, directly investing in the oil and gas industry could get tricky, he warns.

So far, EnergyFunders is doing its part to remain transparent by posting data on all of its projects, including lease information and seismic data, on its website for investors.

With prices expected to continue at record lows, now could be a great time to get in on the ground floor of an oil project. Potential investors should do their homework before jumping into any project they don’t fully understand.

 

Apr 15, 2015 | Leave a Comment | by

The Obsolete Crude Oil Export Ban

In the 1970s, during the Arab oil embargo, gasoline prices soared in the United States. Shortages created long lines of cars at the few gas stations that had fuel. In response, the U.S. began a series of policies that focused on its limited supply and high demand for oil. Policies included efforts to build up the oil reserves, reduction of oil imports and stabilization of the fuel prices. However, by the 1980s and 90s, oil imports to the U.S. were the highest ever and gas prices remained very volatile.

One particular policy was the Energy Policy and Conservation Act by President Ford in 1975. The act established a Strategic Petroleum Reserve, supporting an emergency storage of oil up to 727 million barrels and would last close to 160 days at a maximum withdrawal of 4.4 million barrels a day. The act also permitted the President to restrict exports of energy resources, such as crude oil:

Permits the President to restrict exports of coal, petroleum products, natural gas, or petrochemical feedstocks, and supplies of materials or equipment for exploration, production, refining, or transportation of energy supplies. Authorizes the President to exempt crude oil and natural gas exports from such restriction where he deems such exemption to be in the national interest, such as in recognition of the historic trading relations with Mexico and Canada.

The recent hydraulic fracturing boom, along with the discovery of vast amounts of oil deposits, has changed our domestic energy situation. For the first time since the 1960s, the United States is close to becoming energy independent. Therefore, many of the current policies of the 1970s are now obsolete.

Apr 13, 2015 | Leave a Comment | by

Gas Savings Conundrum

Families planning road trips this summer, rejoice: According to a new estimate from the U.S. Energy Department, drivers can expect to see the lowest summer gasoline prices in about six years.

Before you head out to buy a gas-guzzling SUV, be forewarned: falling gas prices might not be as good for your pocketbooks — or the economy — as you might think. Low oil prices have slowed job growth, shut down drilling operations, and taken money out of the markets.

Texas, which produces 11 percent of all goods made in the United States, saw its slowest job growth since 2011 and lost 9,500 manufacturing jobs. Across the nation, the U.S. oil rig count, which is commonly used as a barometer for the oil industry, has lost 164 rigs over the past four weeks, adding onto the 276 rigs closed in February. In Texas alone, the oil industry lost 3,500 jobs in February and 4,300 in January. This 7,800 job loss is the sector’s biggest job loss since 2009.

While the industry struggles, many citizens have been celebrating. A poll run by the Iowa-based Principle Financial Group reports that while forty percent of U.S. residents are using the gas-induced savings to pay routine expenses, 54 percent are using the money to pay off debt or grow their savings accounts.

Fifty-four percent of the money consumers are no longer spending on gasoline is vanishing from the markets, along with manufacturing and oil industry jobs. These troubling conditions raise troubling questions: How can we encourage people to invest their gas savings back in the market? What can companies do to adapt to these continuing, low oil prices? How long can these low oil prices keep up, particularly if the Obama administration lifts oil-related sanctions against Iran?

Apr 08, 2015 | Leave a Comment | by

U.S. Energy Infrastructure Still Lacking

Energy booms, whether from oil or gas, will continue as both technology develops and more resources are discovered. However, each energy boom puts a strain on our existing energy infrastructure. For instance, oil can be transported by truck, ship, rail and pipeline. Pipeline is the safest and most reliable way to transport oil. Even with 185,000 miles of liquid petroleum pipeline across the United States, there is just not enough to transport the huge volume in the current boom. The lack of pipeline has increased transportation by rail and rail accidents during this time.oil_by_rail

  • The recent increase in transportation of oil by rail has increased the number of rail accidents.
  • In 2014, 70 percent of petroleum products and crude oil were shipped by pipeline, while 3 percent was shipped by rail.
  • A recent study by Fraser affirms their safety by reporting transporting oil by pipeline is 30 times less harmful than by train.

More and more oil is extracted every day and our storage capacity is overflowing. Two things need to happen that will greatly alleviate this situation. First, more pipelines are needed to transport all of this new oil. Second, all of this oil needs a place to go. Building more storage capacity only temporarily alleviates the problem. The crude oil export ban needs to be lifted so that the oil can get out of the over capacity storage units and enter the energy market.

Apr 06, 2015 | 1 comment | by

Energy Giants Mull Over a Huge Discovery in Russia

In late September 2014, ExxonMobil and Rosneft — Russia’s largest state-owned oil company — announced the find of a huge oil and gas reserve in the Kara Sea between Russia and the Arctic. So large in fact, International Business Times says, “deposits are estimated to be worth $900 billion and comparable in size to Saudi Arabia’s vast onshore deposits.” The operation was headed by the Arctic Research and Design Center for Offshore Developments, an organization created jointly by ExxonMobil and Rosneft to handle the logistical steps for specialized ice-platform drilling, adherence to environmental regulations and further research on yields for Arctic exploration.

Apart from throwing another wrench into the peak oil argument, the claim is a sign that controversial Arctic exploration and drilling could be immensely profitable.

In the wake of immense possible gain, the two energy titans’ hands have been tied by politics and conflict. ExxonMobil was forced to abandon a $700 billion exploration project — of which they own 33 percent — due to the escalating tension amid the U.S. and Russian administrations. As a result, the Exxon-led project has come to a standstill, depriving Russia of possible buffer against its rapidly shrinking oil and gas fields. Is if this weren’t enough of a damper on public-private relations, ExxonMobil’s CEO, Rex Tillerson, returned to Russia to personally address the future of the wells and the company’s grievances against the Russian government, which include over-taxing Exxon during its discovery and drilling operations.

Rosneft had hoped to continue exploration activities and begin expanding into other sectors of the Arctic Ocean, as the potential to find reserves of unprecedented scale still remains very high. Sadly, it is becoming more and more apparent that for years to come, American participation and the profitability of these ventures, will remain largely dependent on Washington and Moscow’s relationship.

Mar 23, 2015 | Leave a Comment | by
« Previous Page — Next Page »