Insiders ENERGY REPORT: Oil & Gas Industry Facing Attacks Challenges
By Alex Mills
AUSTIN Texas (Texas Insider Report) President Obamas administration has become legendary in bureaucratic circles by adopting more than 600 major rules since he took office in 2009 according to a study conducted by the American Action Forum. That computes to an average of one rule every three days government offices are open.
Some of the most controversial regulations have come under the administrations attempts to battle climate change.
Kathleen Hartnett White Distinguished Senior Fellow-in-Residence and Director of the Armstrong Center for Energy & the Environment at the Texas Public Policy Foundation and former chairman of the Texas Commission on Environmental Quality recently issued a paper stating that step-by-step these climate actions" are dismantling the energy systems on which modern
economic growth and improving human welfare is utterly dependent."
Hartnett White (right) pointed out that the administrations dismantling of the energy industry has come through Environmental Protection Agency (EPA) regulation of carbon dioxide under the Clean Air Act;
- Regulatory initiatives to kill coal leading to closure of over 244 coal plants and bankruptcies of the major coal companies;
- A mandatory plan to re-engineer the national electric system known as the Clean Power Plan (CPP);
- Acrackdown on methane the primary component of natural gas;
- The first global Paris agreement to decarbonize; and
- An overlooked but extremely broad trilateral effort known as the Three Amigos (U.S. Canada and Mexico) a climate plan to include a perplexing gender responsive approach" to climate action
Some of the more radical climate policies currently being discussed mirror the Three Amigos agreement including generation of 50 of electricity from renewables within ten years; meeting one-hundred percent of residential energy needs with clean sources by 2030 and installation of 500 million solar panels within four years she said.
However serious questions exist about the ability of exotic fuels such as wind and solar to provide the amount of electricity needed by American consumers. The Energy Information Administration (EIA) notes that wind power generated only 4.7 percent
of total U.S. electricity in 2015. Solar power accounted for only 0.6 percent. Globally wind produced only 2.6 percent of generation.
Wind and solar hardware may be rapidly growing on the ground but as a share of total power actual generation increases at a snails pace" Hartnett White said.
The installed generating capacity of wind and solar is only 88.6 gigawatts (GW) of total U.S. capacity (1065 GW). If actual generation is calculated according to EIAs average capacity factor wind only contributed 26 GW of actual generation" she noted.
Installing 500 million solar panels within a few years with a goal to meet all residential demand with zero-carbon energy by 2030 is an exorbitant pipe dream" Hartnett White said. The cost of fabricating and installing that many solar panels could approach one trillion dollars. How many voters would support such a public investment with a national debt of almost $18 trillion declining middle-class incomes and the weakest economic recovery since 1949?"
The Obama administration is reluctant to even discuss the economic costs to implement such a radical overhaul of our energy sources while continuing attempts to scare the public into believing mans future existence depends on drastic changes in energy consumption.
Secretary of State John Kerry recently stated that air-conditioning is a greater threat to civilization than ISIS." Such absurd climate hype at the highest levels of government is offensive to a wide swath of the electorate" she said.
Current renewable technologies cannot replace the goods and services now delivered by the concentrated abundant cheap reliable versatile and controllable energy in fossil fuels without major damage to economies major reduction of the global food supply major decline in basic human welfare and major disruption of global geopolitics. The climate crusade is no longer a peripheral aspirational matter. Executive action without popular consent has enlisted our country in this mad battle against climate change. Its time to be upfront and engage in a battle against deluded energy policies" Hartnett White concluded.
Oil & Gas Industry Faces Many Challenges
The relentless attack on oil natural gas and coal by the Obama administration continues while regulators in Texas conducted a study that resulted in developing 12 ideas to reduce regulatory costs.
The White House announced recently that it has instructed all U.S. federal agencies to analyze their policies and directives as for their impact on climate change. Already agencies such as the Environmental Protection Agency Department of Interior and others have implemented new regulations impacting fossil fuels.
Numerous lawsuits have been filed by industry and states regarding federal over regulation. Just last week the state of Texas filed suit against EPA regarding the new methane emission regulations.
Meanwhile Texas Railroad Commissioner Christi Craddick (left) announced 12 initiatives that would reduce regulatory costs.
Some of the ideas include deferring agency reports and filings that will have no negative environmental impact and save operating costs. Other ideas would reduce requirements for reporting gas well deliverability revise active oil and gas well" definitions to keep more wells in active status and review RRC forms in an effort to consolidate and prevent waste.
The oil and gas industrys pain continues. The law firm Haynes and Boone announced that it has tracked 90 North American oil and gas producers that have filed for bankruptcy since the beginning of 2015 involving approximately $66.5 billion in cumulative secured and unsecured debt.
The firm stated that 48 producers have filed bankruptcy from January to August 1 this year with approximately $49.3 billion in cumulative secured and unsecured debt.
Another example of the desperate times in the oil and gas industry is the recent announcement that one of the leaders in the development of oil and gas production from shale Chesapeake Energy has transferred some 2800 wells on 215000 acres in the Barnett Shale to Saddle Barnett Resources LLC a Dallas company backed by a global private equity firm.
The Barnett Shale includes primarily 13 counties surrounding Fort Worth which became Texas headquarters for Chesapeake. From 2004 until the price collapse in 2008 Chesapeake was a competitor for acreage in the Barnett Shale including acquiring drilling rights at DFW Airport and near downtown Fort Worth.
Former CEO Aubrey McClendon who died in a traffic accident earlier this year became a leading advocate for natural gas as a clean burning energy source. However McClendon was forced out of the company when prices failed to recover and Chesapeakes bottom line grew thinner.
Chesapeake CEO Doug Lawler said he hoped the 170 employees working in the Barnett Shale will transition to Saddle Barnet Shale.
The Texas Alliance of Energy Producers is an oil & gas trade association that represents some 3000 members. It has offices in Austin Houston Fort Worth & Wichita Falls. Alex Mills is President of the Texas Alliance of Energy Producers. The opinions expressed are solely those of the author.
