BPs Outlook Released Today: You Read It Here First
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State and Private Parties Sign LNG Project Commercial Agreements (Anchorage, AK) – Natural
“This agreement is essential to establishing the commercial structure of this project and will allow the project’s investors to move this project, so important to the future of all Alaskans and our broader economy, on a clear path forward,” said Commissioner Rodell. “As an equity partner, the state will play a critical role in setting the terms for decades-worth of gas production from the North Slope. In setting these terms, our goal will be to maximize the royalty value of the state’s gas on behalf of all Alaskans,” said Commissioner Balash. “Today’s agreement reaffirms AGDC’s central role as Alaska’s gas pipeline company and further enables the corporation to explore every option for delivering gas to Alaskans at the lowest possible cost. We’re moving full-steam ahead with our own Alaska Stand Alone Pipeline (ASAP) project and on-track for an open season in 2015,” Fauske said. In addition to the HOA, the two commissioners have also signed a Memorandum of Understanding (MOU) with TransCanada defining the pipeline company’s role in developing the midstream (pipeline) portion of the project. Both documents were made public today and will serve as guidance to the Alaska Legislature during its review of legislation Governor Sean Parnell will propose during the session beginning Tuesday, Jan. 21. The HOA provides a roadmap for the Alaska LNG Project to ramp up the Pre-Front End Engineering Design (Pre-FEED) stage and establishes a framework for negotiating multiple project-enabling agreements. The HOA includes the state as an equity partner, provides gas to Alaskans, lays out proposed fiscal terms, and includes pro-expansion principles that will allow third-party access to all of the project components, including possible construction of a new LNG train at the liquefaction plant. It outlines significant participation by AGDC, including a new subsidiary to carry the state’s interest in the project, and specifically recognizes that AGDC will continue to pursue the ASAP instate gasline project. The MOU with TransCanada is part of an amicable wind-down of its Alaska Gasline Inducement Act (AGIA) license and describes an arrangement for the company to provide the State of Alaska with transportation services for the state’s royalty and tax share of gas flowing through the pipeline, including offtake points for instate gas deliveries. TransCanada would fund midstream development work and provide the state with an option to purchase up to 40 percent of the equity in the midstream component of the state’s portion of the overall project before it moves to Front End Engineering Design (FEED). The MOU also provides that TransCanada will work with the state to expand the Gas Treatment Plant and pipeline to additional, third-party gas producers on the North Slope. Various aspects of the MOU provide terms that are more attractive than what exists under AGIA, such as the debt structure for future pipeline expansions. Governor Parnell announced in his Friday, Jan. 10 speech to the Alaska Support Industry Alliance that he will ask the Alaska Legislature to take up bills that authorize DNR to modify leases, allow the state to enter gas shipping agreements, revise the production tax for natural gas, authorize AGDC to participate in liquefaction and make other changes. This legislation will pave the way for the LNG project partners to spend hundreds of millions during the pre-FEED stage. During the subsequent FEED stage (prior to construction), billions must be committed to complete the project engineering and design. “We will be asking for some new powers that will allow us to fully participate in the LNG project, but in working through the legislative process, we intend to maintain transparency in our decision-making process. While the series of steps needed to execute an LNG project are more complicated than a traditional pipeline project, it remains important to include the public at each major decision point,” Balash said. Following approval of the legislation, the state and the companies expect to complete their pre-FEED work in roughly 18 months. The FEED stage lasts two to three years, after which a final decision is made to proceed to construction. The HOA and MOU are public documents and are available for review at www.dor.alaska.gov. |
Resources Commissioner Joe Balash (NGP Photo), Revenue Commissioner Angela Rodell and Alaska Gasline Development Corporation (AGDC) President Dan Fauske (NGP Photo) announced today that they have signed a Heads of Agreement (HOA) with ExxonMobil, BP, 
ConocoPhillips, and TransCanada Corp., regarding the proposed Alaska LNG project, which would provide gas to Alaskans and be one of the largest export projects of its kind in the world. (See NGP Photos)Today, BP provided us with its annual Energy Outlook. According to the 2035 outlook, "…global energy consumption is expected to rise by 41 per cent from 2012 to 2035 – compared to 55 per cent over the last 23 years (52 per cent over the last twenty) and 30% over the last ten. Ninety five per cent of that growth in demand is expected to come from the emerging economies, while energy use in the advanced economies of North America, Europe and Asia as a group is expected to grow only very slowly – and begin to decline in the later years of the forecast period.
"BP Chief Economist Christof Rühl said: “This process shows the power of economic forces and competition. Put simply, people are finding ways to use energy more efficiently because it saves them money. This is also good for the environment – the less energy we use the less carbon we emit. For example CO2 emissions in the US are back at 1990s’ levels.”
Bob Dudley, BP Group Chief Executive said that the Outlook “highlights the power of competition and market forces in unlocking technology and innovation to meet the world’s energy needs. These factors make us optimistic for the world’s energy future.”
Dudley added: “The Outlook leads us to three big questions: Is there enough energy to meet growing demand? Can we meet demand reliably? And what are the consequences of meeting demand? In other words, is the supply sufficient, secure and sustainable?”
“On the first question, our answer is a resounding ‘yes’.The growth rate for global demand is slower than what we have seen in previous decades, largely as a result of increasing energy efficiency. Trends in global technology, investment and policy leave us confident that production will be able to keep pace. New energy forms such as shale gas, tight oil, and renewables will account for a significant share of the growth in global supply.”
"On the question of security, the Outlook offers a mixed, though broadly positive, view. Among today’s energy importers, the United States is on a path to achieve energy self-sufficiency, while import dependence in Europe, China and India will increase. Asia is expected to become the dominant energy importing region. Dudley noted: “This need not be a cause for concern if the market is allowed to do its work, with new supply chains opening up to these big consuming regions.”
On the question of sustainability, global carbon dioxide emissions are projected to rise by 29%, with all of the growth coming from the emerging economies."
The Outlook notes some positive signs: emissions growth is expected to slow as natural gas and renewables gain market share from coal and oil; and emissions are expected to decline in Europe and the US. Indeed towards the end of the period covered by the Outlook we expect many advanced countries will be seeing their economies grow while their energy use falls.
(The BP Energy Outlook 2035 is available online at www.bp.com/energyoutlook; Readers may join the conversation on BP’s social media channels using #BPstats)
Sen. Murkowski Comments TODAY on Final Bristol Bay Watershed Assessment: You Read It Here First!
Latest EPA Report Suggests Additional Overreach on the Way in Alaska WASHINGTON, D.C. – U.S. Sen. Lisa Murkowski (NGP Photo) today responded to the Environmental Protection Agency’s release of the final watershed assessment of state-owned lands in Alaska’s Bristol Bay region:
“EPA’s assessment stops short of prohibiting responsible development in the Bristol Bay watershed, but the agency has strongly implied that this report will be a basis to preemptively veto economic opportunities in the region in the future,” Murkowski said. “I remain convinced that a preemptive veto of a mine or any other project, which the agency claims it can do under the Clean Water Act, would set a terrible precedent for development in our state and across the nation.”
Murkowski has continually criticized EPA for conducting the assessment based on a hypothetical mine, before any plan or permit application has been filed with the agency.
“If the EPA has concerns about the impact of a project there is an appropriate time to raise them – after a permit application has been made, not before. It is clear that a preemptive veto is still being considered by EPA. Such a veto is quite simply outside the legal authority that Congress intended to provide EPA,” Murkowski said.
Murkowski has twice written to EPA (Feb. 16, 2011 and April 18, 2012) about her concerns with the agency’s Bristol Bay watershed assessment, including whether a decision by the agency to block a large-scale mining operation could set a legal precedent that would prevent other development proposals. EPA responded on Mar. 21, 2011, and May 17, 2012.
Peninsula Clarion/News Miner Editorial. Alaska’s leaders have been talking up a natural gas pipeline for decades. We all need to hope that Gov. Parnell’s burial of the Alaska Gasline Inducement Act and his ideas for how to proceed ultimately bring to fruition the pipeline we dearly need.
Today's 'Energy In Depth' headlines and links:
NATIONAL
Natural gas boom makes Penna. an energy keystone. Meadville Tribune. A push for a new natural gas infrastructure comes as the state’s existing lines are near capacity, and as demand for Pennsylvania’s gas grows. Historically, most lines were built to move gas in, rather than out, said Nicole Jacobs, spokeswoman with Energy In Depth.
The significance of Oklahoma's oil industry returns to 1982-like levels. The Oklahoman. Oil and natural gas employment has doubled over the past decade to 57,500, and average compensation per worker ballooned to $110,000 in 2012, the report stated. The industry now hires 5 percent of the state's wage and salary workers and pays 7.2 percent of all employee compensation in the state.
S&P sees stable year driven by cheap, abundant gas. E&E News (sub. req’d). "Hydraulic fracturing and horizontal drilling have unlocked huge deposits of natural gas from shale formations, bringing natural gas access to a level that could meet U.S. projected energy demand for more than 100 years at current consumption rates," credit analyst Jeff Panger wrote.
Andrew Cuomo’s HF ‘cone’ job. New York Post, Op-Ed. Blocking traffic on toll-plaza lanes of the George Washington Bridge for four days under cover of a bogus traffic study turned out to be a very bad idea. So why is it acceptable to block drilling across an entire state for three years under cover of a series of supposed studies?
US shale still thriving. Petroleum Economist. The industry seems in better shape than it has in a long time. Henry Hub natural gas prices over $3.60 per million British thermal units (Btu) are well above the $2/million Btu mark hit at the low point in 2012
Everyone profits when N.D. grows the ‘pie’. Grand Forks Herald, Op-Ed. Few states are blessed with a Bakken shale formation. So, where significant energy resources exist, it seems a no-brainer to take advantage of them. Sadly, that is not universally the case. Ironically, some who most fervently thwart access to the resources are equally fervent about doing something to help the poor. Here’s a suggestion for a first step in helping the poor: At least give them a chance to bake the bread.
Natural Gas Continues to Climb. Wall Street Journal. Natural gas rallied for a third straight session as forecasts for a return to colder weather boosted expectations for substantial gas-powered indoor-heating demand. Natural gas for February delivery settled up 9.5 cents, or 2.2%, at $4.369 a million British thermal units on the New York Mercantile Exchange.
Is HF Shaking Up the Severance Tax World? Bloomberg BNA. Across the country, severance tax collections have increased in previous years as states tap natural resources that were previously unavailable. According to the U.S. Census Bureau’s 2012 Annual Survey of State Government Tax Collections (the most recent yearly data available), severance taxes were up $4.2 billion nationwide.
Obama admin writes to greens on drilling oversight. E&E News (sub. req’d). The Obama administration is seeking to reassure the environmental community that U.S. EPA is on top of the shale drilling boom. NOTE: Click here to read EPA’s letter to NRDC.
INTERNATIONAL
UK Cameron attacks critics of fracking as ‘irrational’. Financial Times. David Cameron has struck out at opponents of fracking, suggesting their opposition is based on a “religious” and “irrational” hostility to fossil fuels.
'Enormous binge' of energy in U.S. benefits Asia – experts. E&E News (sub. req’d). The U.S. oil and gas boom has been "enormously important" for Asian energy security and could open conversations on how the United States shares its Persian Gulf security costs with buyers in that region, foreign policy experts say.
Power to the people: we have to back HF. London Times, Column. Local communities must see that shale gas is worth their while and can be used to everyone’s benefit
Cameron Favors Payments to Householders Near Shale Wells. Bloomberg. Prime Minister David Cameron said he favors making payments to U.K. households to compensate them for any inconvenience involved in being near shale gas wells, a possible new measure to give the industry momentum.
Why Shale Won't Conquer Britain. New York Times, Op-Ed. This zeal stems from the belief that an increased domestic gas supply will drive down national prices, at once enhancing export competitiveness while addressing growing public concern over rising domestic energy bills. But this strategy is misguided: Unlike in the United States, a shale gas revolution will not bring down prices in Britain.
Russia taps into Siberian shale. UPI. The head of a Russian joint venture between Shell and Gazprom Neft said a pilot hydraulic fracturing program in Siberia could lead to full-scale development.
Shell looks to sell North Sea fields in $15bn disposal program. The Telegraph. Royal Dutch Shell is looking at selling some of its North Sea oilfields as new chief executive Ben van Beurden embarks on a two-year, $15bn (£9.1bn) divestment programme in a bid to boost returns.
GAIL mulls time-swap deal to advance import. Business Standard. State-run GAIL India Ltd plans to strike a “time-swap” deal with US shale gas suppliers so that it can import shale gas by 2015-16, ahead of 2017-18 for which contracts are in place.
U.K. Lobbied in Brussels to Halt EU Legislation on Shale Gas. Bloomberg. The U.K. lobbied European Union policy makers to stop plans for a new law on shale gas exploration, according to an official letter.
ARKANSAS
Study: Fayetteville gas reserves recoverable through 2050. Penn Energy. A new study from the University of Texas at Austin’s Bureau of Economic Geology says the Fayetteville Shale will continue its viability as a source for U.S. natural gas for years to come. The study finds the shale play holds economically recoverable reserves totaling 18 trillion cubic feet, enough for recovery through 2050.
CALIFORNIA
Activists press governor to ban HF. E&E News (sub. req’d). Rock Zierman, CEO of the California Independent Petroleum Association, last week noted that when moratorium legislation was considered last year, it "only garnered 24 votes out of 80 assembly members." "The only thing that has changed since then is that (1) the author of the moratorium has left the Assembly for the Senate (one less vote) and (2) the governor and
Central Coast residents voice concerns over HF. Santa Maria Times. The fracking debate has intensified over the last few years as oil companies continue to make moves that they say would spur a production boom, create thousands of jobs and generate billions of dollars in revenue.
Water Commission tackles topic of HF Wednesday. Chico Enterprise-Record. Fracking will be the hot topic at the meeting of the Water Commission Wednesday.
COLORADO
Colo. town's HF ban changes company's relocation plans. E&E News (sub. req’d). A Colorado company has decided not to expand into one of the towns that last year sought to ban hydraulic fracturing and to instead go elsewhere out of fear of legal liabilities for doing business with fracking companies.
Longmont council hears about HF at public comment session. Longmont Daily Times-Call. Coombs had suggested last week that he might change his vote. But in responses Tuesday, he defended the decision, saying that Longmont would get a number of benefits, including a requirement that Synergy conduct water monitoring at the well sites and a guarantee that the company would not challenge Longmont's fracking ban.
FLORIDA
Florida House subcommittee approves HF disclosure bill. Naples News. Legislation that would require the state to put disclosure requirements in place before hydraulic fracturing, a type of oil and gas drilling commonly known as fracking, is one step closer to the state House floor. NOTE: News-Press, Orlando Sentinel, Florida Current also report.
NORTH CAROLINA
NC HF panel passes chemical disclosure rule. News & Observer. Fracking companies won the right to keep secret the chemical cocktails they pump underground during shale gas drilling in North Carolina under a chemical disclosure rule approved Tuesday by the N.C. Mining and Energy Commission.
NORTH DAKOTA
Oil production nears 1 million barrel mark. The Bismarck Tribune. Oil production spiked in North Dakota in November by nearly 28,000 barrels per day, inching the state’s production closer to but still shy of the 1 million barrels per day mark.
Dems call for shakeup of state regulator. E&E News (sub. req’d). North Dakota's Democratic legislators called for an overhaul of the state's main oil regulator in the wake of a string of high-profile accidents, saying the Department of Mineral Resources too often blurs the line between policing and promoting the energy business.
NORTHEAST
Shallow well producers decry DEP’s proposed new rules. Williamsport Sun-Gazette. The independent drillers of shallow, conventional wells are asking to be excluded from DEP's new regulations, which they believe not only will put them out of business but also hurt the environment.
Shell's $4B Pa. ethane project more likely as rival works cancelled: report. Philadelphia Inquirer. Plans for a taxpayer-backed $4 billion Shell Corp. ethane fuel plant near Pittsburgh are advancing as Shell cancels other projects, including a $10 billion gas-to-liquids plant in Louisiana, that are potential competitors for capital investment, reports McGraw Hill-Platt's The Barrel, a fuel industry newsletter.
Mayor David: Binghamton will never frack. WBNG 12 News. In a phone interview, Mayor David said it didn't make sense to pursue the law that was invalidated in 2012 by the State Appellate Court because it expired at the end of the year. "Even if the state does approve it in the future, there will never be fracking in the city," said David.
Public comment sought in Mechanicsburg on oil and gas regulations. Patriot-News. Anyone interested in commenting on proposed revisions to the state's environmental performance standards for oil and gas operations can attend a public hearing on Thursday, Jan. 16.
Heinz Endowments president goes to Rice Energy. Pittsburgh Post-Gazette. Vagt plans to become chairman of the board of and will be a stockholder in Rice Energy Inc. after the Cecil-based drilling company completes an initial public offering later this year, according to documents Rice filed with the Securities and Exchange Commission.
Contest offers $100K for shale innovators. Penn State News. The Ben Franklin Shale Gas Innovation and Commercialization Center is seeking innovators developing the next breakthrough technology for the shale energy play. The 2014 Shale Gas Innovation Contest will award a total of $100,000 to the four best shale energy-oriented innovations, new product ideas or service concepts.
Seismic testing is set to begin in Murrysville. Tribune Live. A Colorado-based company, Tesla Exploration, soon will begin conducting seismic testing in Murrysville as a precursor to Marcellus shale drilling.
OHIO
Lawmakers want standardized royalty statements. Columbus Business First. Unlike many states, Ohio doesn’t require oil and gas companies to provide standardized royalty statements to landowners. That has led to confusion and second-guessing among some landowners in eastern Ohio’s Utica shale play, says state Rep. John Carney, D-Columbus.
University hoping to fill oil/gas job needs. Coshocton Tribune. The new petroleum geology bachelor of science degree program, to be offered beginning the 2014-15 academic year, is intended to serve as a complement to majors in geology, environmental science, conservation science and earth science.
District enters agreement for community school. Alliance Review. The Southern Local Board of Education moved forward with plans to establish and operate a gas- and oil-oriented community school by approving a preliminary agreement with Jefferson County Educational Service Center (ESC) .
Policy Matters Ohio, Hagan take aim at GOP severance tax bill. Youngstown Vindicator. Policy Matters Ohio released an analysis of a Republican-backed severance-tax bill, criticizing it for imposing too-low rates on oil and natural gas extracted from horizontal wells and for directing revenues toward tax breaks.
Pipe mill considers $81.5M expansion. Warren Tribune Chronicle. Youngstown City Council today will consider passage of an enterprise zone agreement that could lead to an $81.5 million expansion to Youngstown's growing pipe mill industry.
Village of Caldwell asked to participate in oil and gas curriculum via OSU extension grant. The Daily and Jeffersonian. Mike Lloyd, OSU Extension Educator for Community Development in Noble County, invited Caldwell council members to participate in a state project about the impact of oil and gas development in the village.
TEXAS
Rising ozone levels point to tangled web of Texas permitting. E&E News (sub. req’d). The South Texas Energy and Economic Roundtable, a trade group, said other oil and gas companies are also taking voluntary steps to reduce air pollution. "Safety is top priority on our sites and in the communities where we work and live," Omar Garcia, the group's CEO, said in an emailed statement.
Texas Comptroller: HF-Like "Game-Changer" Could Avert Looming Water Crisis. Dallas Observer. "In many ways, the outlook concerning fresh water could mirror what has happend [sic] for oil, another finite resource," the report says. "Oil markets have been upended in the last few years by vast new supplies brought to market by the application of new technologies…It's possible — though not certain — that similar game-changers will effect the outlook for water." NOTE: Fort Worth Star-Telegram also reports.
Southcross Energy says it’s considering Eagle Ford expansion. San Antonio Business Journal. Natural gas processor Southcross Energy Partners says its growing volumes in the Eagle Ford Shale have it eyeing expansion opportunities.
Crosstex Energy, Devon Energy to be known as EnLink Midstream. Dallas Morning News. Three months after Crosstex Energy announced it had cut a deal with Devon Energy to form a new oil and gas pipeline company, they finally settled on a name. The new company, to be based in Dallas, will be called EnLink Midstream.
Baker Hughes’ well count drops. Houston Business Journal. The number of inland oil wells in the United States dropped in the fourth quarter, even though the Eagle Ford Shale added wells, according to oilfield services firm Baker Hughes Inc.
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