Collaboration, Not Confrontation with EPA

EPA’s big study of the impact of hydraulic fracturing on drinking water is due in 2014, but an interim report might surface as early as the end of the year. Needed is focused, scientifically solid research that that will advance public discussion of shale energy development that has so much potential for our economy and future energy security.

Unfortunately, EPA’s study plan has deficiencies that ultimately could sap the integrity of the study’s findings. That’s one of the conclusions in a new analysis by the Battelle Memorial Institute. Stephanie Meadows, API upstream senior policy advisor, shared some of the study findings in a conference call with reporters:

“Battelle’s analysis of the plan, which we are releasing today, reinforces many of our previously stated concerns and raises some new ones. It finds deficiencies in the rigor, funding, focus and stakeholder inclusiveness of EPA’s plan. … We’re not calling on EPA to stop its study. We’re calling on them to do it right.”

API and America’s Natural Gas Alliance (ANGA) commissioned the Battelle study after EPA declined to engage with industry in a collaborative review of hydraulic fracturing. Battelle’s Bernard Metzger said his broad-based multidisciplinary team of engineers, oil and natural gas experts, toxicologists and others examined EPA’s study plan to determine its soundness. The findings include:

EPA is reaching beyond the relationship between hydraulic fracturing and drinking water resources, which was its charge from Congress, to broader oil and natural gas industry production activities.The expanded scope suggests there will be added complexity, risk, and uncertainty in EPA’s study, raising the level of difficulty in ensuring a scientifically rigorous result.Site data collected from companies comes from the years 2006-2010, making it likely some data in the final 2014 report could be nearly 10 years old. Changes at company sites in the intervening years likely will “render the data obsolete for the purposes of the study.”Case studies were selected from a limited and statistically biased pool and lack necessary baseline information which may result in incorrect and flawed conclusions. The plan suffers from a lack of “significant” industry collaboration, given industry’s extensive experience and expertise in hydraulic fracturing and associated technologies.

Metzger said gaps in EPA’s study planning can impact data quality:

“Quality cannot be built into the back end of a project through rigorous review; it must be built into each step of a scientifically rigorous process to ensure that the end product is high quality data that is defensible and achieves the study goals.”

ANGA’s Amy Farrell:

“We continue to believe a well-designed, scientifically rigorous study of hydraulic fracturing will confirm our industry’s ongoing commitment to safe and responsible development and that communities don’t have to trade the protection of the environment for the many economic, energy security and clean air benefits natural gas offers. We hope (EPA) will not only consider additional efforts to collaborate with the industry and other key stakeholders moving forward, but that they will carefully review the (Battelle) report and consider the critiques and recommendations for improvement and make adjustments as appropriate.”

View the original article here

Innovation: Chevron’s ‘i-field’ Links Performance, Savings

USNews.com has a good read on Chevron’s digital investments, which the company says will save up to a billion dollars a year in operating costs in 2016. The linchpin is Chevron’s digital oil field, the “i-field,” which is short for “intelligent field.” USNews explains:

“Chevron's i-field harnesses advanced technology and communications to improve performance at 40 strategic assets throughout the world, including some of its biggest and most productive oil and gas fields. The company is rolling out six to eight mission-control centers focused on separate business areas, ranging from machinery to drilling to wells and reservoirs, that monitor those assets in real-time and rely on sophisticated computer algorithms for early detection of problems. From Chevron's perspective, the i-field is now essential to its global operations, which span six continents.”

Chevron isn’t the only company doing these things (USNews notes that Shell and ConocoPhillips have their own versions), but it is recognized as one of the oil and natural gas industry’s leaders. Basically, to overcome the global and labor-intensive characteristics of oil and gas development, Chevron has digitized a number of its operations. USNews:

“Chevron has deployed thousands of tiny sensors, only millimeters or centimeters in size, that monitor field operations and transmit data, both wired and wirelessly, back to central locations. The sensors instantaneously track pressure, temperature, and other readouts and aid with the mapping of underground fuel deposits, allowing the company to maximize production. Chevron also employs analytics to evaluate data streams in real-time from oil wells, drill rigs, ships, and elsewhere.”

The company has two mission-control facilities in Houston that oversee drilling and machinery support and two others in Lagos, Nigeria, and Covington, La., that monitor deepwater drilling. USNews:

“High above Houston in an office tower, a tech-savvy team at Chevron's machinery support hub monitors thousands of pieces of equipment, in real-time, across every continent except Antarctica. Using software to analyze data transmitted by sensors, it conducts ‘predictive intelligence’ to pinpoint when equipment, such as rotating devices called compressors, needs maintenance ‘so we can change out parts before they break down,’ [Chevron Energy Technology President Paul] Siegele says.”

USNews includes some examples where the technology came into play. The machinery support center sensed that a compressor in one of Chevron’s Asian business units was experiencing valve failure. On-site inspection confirmed the problem and the valve got fixed. Another time, equipment at Chevron’s Sanha oil and natural gas field off the coast of Angola was showing an irregularity, which the team in Houston detected. A repair was made, and the company saved millions of dollars in potential damage and lost production.

Again, Chevron figures it already is saving in the millions of dollars and says that will become billions when the “i-field” and a general operational overhaul are fully implemented in four years. Efficiencies and savings, of course, mean innovating companies, like Chevron, can invest more in energy exploration and development, which is a good thing.

View the original article here

The New York Times, Shale and Editorial Oblivion

News that New York Gov. Andrew Cuomo has settled on a plan to allow hydraulic fracturing in five counties along the state’s border with Pennsylvania is obviously great news for those counties, many of them starved for the kind of well-paying jobs that come with shale development.

As for New York’s other counties that sit on top of energy-rich shale deposits, Cuomo’s plan raises questions – like this one from Anschutz Exploration’s Tom West, in an interview with Bloomberg:

“As a first step, this may be a way to get past all the hysteria. But if this is a permanent line in the sand, how do you compensate the people on the wrong side of the line?”

Great question. Stay tuned.

Meanwhile, though hardly hysterical, a New York Times editorial on the Cuomo plan is oblivious to some key facts about hydraulic fracturing (following Sunday’s pattern). Which makes you wonder whether the two pieces constitute a kind of passive-aggressive contribution to the news columns’ “war on shale gas.” Thursday’s editorial:

“More than a dozen states have encouraged extensive hydraulic fracturing. But the natural gas industry is poorly regulated, and the environmental risks are real. Reports of air and water pollution elsewhere have raised fear and opposition among many residents who live in New York’s portion of the gas-rich Marcellus Shale formation.”

“Poorly regulated” industry? How about a poorly researched editorial that misses – or worse, leaves out – EPA Administrator Lisa Jackson’s endorsements of the work states are doing to regulate hydraulic fracturing. We’ve practically got Jackson’s words memorized, but for the Times’ benefit (again), here she is last fall:

“We have no data right now that lead us to believe one way or the other that there needs to be specific federal regulation of the fracking process. … So it's not to say that there isn't a federal role, but you can't start to talk about a federal role without acknowledging the very strong state role.”

Here’s Jackson a couple of days later on MSNBC:

“States are stepping up and doing a good job. It doesn’t have to be EPA that regulates the 10,000 wells that might go in.”

Frankly, if there’s fear bubbling up over hydraulic fracturing in New York, if local questions have morphed into opposition, the Times has had a big hand in it with coverage that’s rife with inaccurate reporting and misrepresentations, collected here. And now two editorials that read like some folks just haven’t been paying attention.

View the original article here

American Energy Works: Chris

Chris’ story is one of opportunity – extended and accepted. The oil and natural gas company he works for as a liquid mud coordinator saw work ethic and rewarded it:

“My training is not in energy, engineering or science, but because I was willing to learn, was willing to work, they took me from having no skills to being someone who they’re not afraid to have train the new employees – people who are the future of this company.”

Chris is one of 9.2 million Americans working a job supported by the oil and natural gas industry. Check out his video:

Visit American Energy Works.org for more videos and information about the people who’re at work for America’s energy future.

View the original article here

Made in America: For a Sustainable Energy Future

Access, common-sense regulation and a governmental approach that encourages energy investments: Each one is integral to an American-made, more secure energy future. Getting there will require continued improvements in efficiency and investments in renewable energy – two areas where the oil and natural gas industry has been a leader. This is the fourth recommendation in API’s recent report to the two political parties’ platform committees.

Today, the U.S. uses about half as much energy for every dollar of GDP as it did in 1980, according to the Energy Information Administration:

Efficiency helps energy companies manage costs, which in turn makes them more competitive and allows them to bring more affordable energy products to consumers.  Efficiency also helps reduce greenhouse gas emissions.

Industry is committed to technologies that help the environment, investing $71 billion in developments that reduce greenhouse gas emissions between 2000 and 2010 – far more than the federal government ($43 billion) and nearly as much as the rest of domestic private industry combined ($74 billion).

This is what energy companies do. They produce the oil and natural gas that run our economy now and which will continue to fuel it in the future. They work on efficiencies that will make our energy go further. They look to the future for additional resource options that will be necessary to complete the energy picture.

The question is whether governmental policies will or hinder these efforts. Some think the path to our energy future should be selected by Washington, using the tax code to preordain winners and losers. They think an industry sector that contributed nearly a half-trillion dollars to the economy in 2010, which already sends $86 million a day to the U.S. Treasury, should be taxed more.

The wrongheadedness of this path was detailed in a Wood Mackenzie study last fall, which compared the likely results of pro-energy development policies with policies leading to higher energy taxes:

With a pro-development approach, America’s oil and natural gas companies can add jobs, increase energy supply and generate more tax revenue for government. Higher taxes on our industry will likely lose jobs, decrease tax revenue and result in less energy production.

The United States has tremendous energy resources to support and grow our economy and meet the challenges of the future. With the right vision and leadership we can stride into the future confidently – as befits an energy-rich nation.

View the original article here

Philadelphia Story: Energy From Shale and Jobs

Energy produced from shale deposits by hydraulic fracturing continues to create jobs far from the drill site.  The latest example: Improved economics have allowed for a deal to keep a Philadelphia refinery open, which means 850 workers will keep their jobs – and the facility’s new majority partner says hundreds more could be added if plans to expand production come to pass. Philly.com had the story last week.

Those refinery employees – and the local/regional economy that is supported by the installation, as many as 10,000 indirect jobs by one estimate – can thank the Carlyle Group, and they can also thank the Marcellus Shale. Philly.com:

"Carlyle officials say they are 'reimagining' the business to exploit new, cheaper domestic sources of crude oil to replace expensive imported petroleum, a major reason the refinery was uncompetitive. …  Carlyle, which will have a majority interest in the venture and operate the refinery, also plans to increase dramatically the use of low-priced natural gas from Pennsylvania's booming Marcellus Shale region to reduce refining costs and emissions. 'We believe the changing nature of the energy paradigm in the U.S., coupled with a redefined operating model, can truly benefit this refinery,' Carlyle managing director Rodney S. Cohen said."

The Philadelphia story illustrates what some have been talking about when they laud the game-changing nature of energy from shale. It’s creating jobs (and saving them), reducing costs to manufacturers and helping them create jobs, reinvigorating the chemicals industry and more. It’s abundant and affordable energy that’s also helping out consumers.

We’ve seen the shale energy stimulus rippling through states like North Dakota, Texas and Pennsylvania. Ohio is gearing up for its own economic wave from shale. As for the Philadelphia refinery, studies, analyses and projections about shale energy are to become reality – real jobs, held by real people, saved.

Because of energy from shale.

View the original article here

Philadelphia Story: Energy From Shale and Jobs

Energy produced from shale deposits by hydraulic fracturing continues to create jobs far from the drill site.  The latest example: Improved economics have allowed for a deal to keep a Philadelphia refinery open, which means 850 workers will keep their jobs – and the facility’s new majority partner says hundreds more could be added if plans to expand production come to pass. Philly.com had the story last week.

Those refinery employees – and the local/regional economy that is supported by the installation, as many as 10,000 indirect jobs by one estimate – can thank the Carlyle Group, and they can also thank the Marcellus Shale. Philly.com:

"Carlyle officials say they are 'reimagining' the business to exploit new, cheaper domestic sources of crude oil to replace expensive imported petroleum, a major reason the refinery was uncompetitive. …  Carlyle, which will have a majority interest in the venture and operate the refinery, also plans to increase dramatically the use of low-priced natural gas from Pennsylvania's booming Marcellus Shale region to reduce refining costs and emissions. 'We believe the changing nature of the energy paradigm in the U.S., coupled with a redefined operating model, can truly benefit this refinery,' Carlyle managing director Rodney S. Cohen said."

The Philadelphia story illustrates what some have been talking about when they laud the game-changing nature of energy from shale. It’s creating jobs (and saving them), reducing costs to manufacturers and helping them create jobs, reinvigorating the chemicals industry and more. It’s abundant and affordable energy that’s also helping out consumers.

We’ve seen the shale energy stimulus rippling through states like North Dakota, Texas and Pennsylvania. Ohio is gearing up for its own economic wave from shale. As for the Philadelphia refinery, studies, analyses and projections about shale energy are to become reality – real jobs, held by real people, saved.

Because of energy from shale.

View the original article here

Fix the Renewable Fuels Standard

There was good discussion of the Renewable Fuels Standard (RFS) during a Hill hearing this week. API supports the appropriate use of ethanol, biodiesel and other biofuels in transportation fuels, but, unfortunately, in some ways the standard is bearing out the law of unintended consequences.

API President and CEO Jack Gerard addressed the House energy and power subcommittee, noting that U.S. refiners have primary responsibility for meeting the RFS requirements, blending nearly 15 billion gallons of ethanol in gasoline. But the RFS’ requirements are producing some bad policy, Gerard said:

“EPA has allowed the RFS law’s volume requirements to drive decisions that are inappropriate and unwise.  The law has become increasingly unrealistic, unworkable, and a threat to consumers.  It needs an overhaul, especially with respect to the volume requirements.” 

Gerard detailed ill effects stemming from the RFS’s volume mandates:

E10 “Blend Wall” – 10 percent ethanol content in fuel is safe for U.S. vehicle engines, service station pumps and storage tanks. But under the law, the ethanol volume in the overall fuel supply is required to increase and could exceed 10 percent as early as 2013. That’s the so-called “blend wall.” At that point refiners will have only two options: produce E15 (15 percent ethanol) and flexfuel or E85 – a blend of between 51 percent and 83 percent ethanol by volume that can be used only in flexfuel vehicles, which make up about 5 percent of the U.S. vehicle fleet today. More on E15 below. The problem with E85 is that it has a lower fuel economy than gasoline, and less than 2 percent of retail stations offer it.

E15 – EPA has approved the use of E15 for part of the vehicle fleet to help accommodate increases in the RFS volume requirement. But a recent study showed that E15 could damage engines that weren’t designed to use it, as well as gasoline station pump equipment. The risk can be measured in the billions of dollars. The Auto Alliance weighed in on E15, here. U.S. Rep. James Sensenbrenner shared the concerns of auto makers in a letter to EPA Administrator Lisa Jackson last summer. Gerard:

“EPA should not have proceeded with E15, especially before a thorough evaluation was conducted to assess the full range of short- and long-term impacts of increasing the amount of ethanol in gasoline on the environment, on engine and vehicle performance, and on consumer safety.”

Cellulosic ethanol – A 2007 law requires increasing use of this advanced form of ethanol that theoretically can be made from a broader range of feedstocks. But it isn’t available, because no one is making it commercially. The Competitive Enterprise Institute’s Brian McGraw has more details, here. Even so, EPA continues to assert that aggressive mandates, not based on actual production, will somehow stimulate production. EPA could waive the provision but instead is insisting that refiners buy credits for a non-existent fuel, which will drive up costs and might harm consumers.

RINS – This stands for renewable identification numbers, which are used with renewable fuel credits that some refiners have purchased under a program created by EPA. Some refiners became fraud victims after buying invalid credits in good faith. EPA’s initial response was that the bad credits were the refiners’ problem, and that they’d have to buy more. This adds more costs to making gasoline. Industry currently is trying to work out the problem with EPA.

Again, industry supports renewable fuels. But the RFS as written threatens to become counterproductive. Gerard:

“The RFS law needs to be altered to fix what isn’t working and take into account the ability of the vehicle fleet and fueling infrastructure to safely use renewable blends. Mandates must have periodic technology/feasibility reviews to allow for appropriate adjustments. Biofuels are an important part of the nation’s energy mix.  But current law and how it is implemented have become increasingly problematic.  This could eventually hurt consumers and erode support for the RFS program.”  

The answer is commonsense problem-solving, including positive collaboration between government and industry. While the goals of the RFS are well-intentioned, the marketplace realities are concerning, with potentially negative effects on companies and consumers that should be fixed.

View the original article here