Archives for December 2016

Coming year looks better for oil and gas sector following terrible 2016

December 30, 2016 by Justin Williams

The Wichita Eagle | December 28, 2016 | Dan Voorhis

The coming year has to be better for the state’s oil and gas industry than 2016.

And, at this point, it looks as if it will be.

Saudi Arabia and other global oil producers flooded the market in 2015 and early 2016 to drive U.S. shale oil companies out of business. It worked.

Kansas Common crude oil fell below $20 a barrel in January. That pushed most of the state’s drilling and drilling-services companies into inactivity or out of business.

The story of natural gas was similar, with overproduction by the country’s shale gas producers.

Prices for oil and gas have risen somewhat since, encouraging some U.S. producers – including many in Kansas – to drill again, said Nick Powell, chairman of the Kansas Independent Oil & Gas Association.

In December, OPEC and Russia agreed to cut oil production in order to boost prices.

“We are definitely looking for the better year, with the OPEC agreement,” Powell said. “If they will abide by it.”

Powell said he expects the benchmark West Texas Intermediate crude prices to stay in the $50 to $60 per barrel range. If it goes over that, it will spark a major surge in U.S. shale drilling. OPEC doesn’t want to provoke a shale drilling revival and will work to keep prices in a medium range.

“It’s still not going to be the bonanza we had at $100 oil, but you will see some increase in activity in eastern and western Kansas,” Powell said.

Obama’s Last-Minute Offshore Drilling Ban Could Be Illegal

December 30, 2016 by Justin Williams

Daily Caller | December 22, 2016 | Andrew Follett

Outgoing President Barack Obama used his executive authority to “permanently” ban oil drilling in parts of the Arctic and Atlantic oceans, but this move may be illegal, according to an industry group.

Obama’s administration used a legal strategy crafted by environmental activists to remove sections of the Arctic and Atlantic oceans from future offshore drilling lease sales, which they claim will be “permanent.”

“It is pretty clear that this is a hollow 11th hour action,” Christopher Guith, a senior vice president at the U.S. Chamber of Commerce, told The Daily Caller News Foundation. “In spite of the narrative that extreme interest groups who pushed the White House to do this, there’s nothing about this that’s permanent. The White House itself didn’t use the phrase permanent, they said it was ‘indefinite.'”

The administration and its environmental allies used Section 12(a) of the Outer Continental Shelf Lands Act, a 1953 law governing offshore drilling, in an unprecedented way to block offshore drilling leases in the Atlantic Ocean and the Chukchi and Beaufort seas.

“This flies in the face of how we do offshore leasing,” Guith continued. “Every 5 years, we have to do a new offshore leasing plan. There’s already precedent for a new President rescinding his predecessors withdrawal. George W. Bush rescinded Clinton’s offshore drilling ruling already when gas prices were high.”

Environmentalists hope it will take Trump or Congress years to repeal an Obama decision to permanently keep Arctic and Atlantic areas off limits to drilling, but a simple lawsuit could overturn all of that.

“I’d be very suprised if somebody like the State of Alaska or an industry group didn’t sue President Obama immediately,” Guith told TheDCNF.” There are a lot of questions about whether Obama’s ruling followed the law. By the time it gets to court, the Obama administration is now the Trump administration. That will be a huge policy difference.”

Read the full story here.

Obama Bans New Oil Drilling on Millions of Acres of U.S. Waters

December 20, 2016 by Justin Williams

Bloomberg | December 20, 2016 | Jennifer A. Dlouhy & Josh Wingrove

President Barack Obama banned new offshore oil and gas development in more than 100 million acres of the U.S. Arctic and undersea canyons in the Atlantic Ocean, an announcement certain to provoke a fight with the Republican-led Congress and his successor in the White House.

In a announcement coordinated between two of the world’s biggest oil producers, Canada committed to freeze new offshore leasing in its waters and review the matter every five years.

"These actions, and Canada’s parallel actions, protect a sensitive and unique ecosystem that is unlike any other region on Earth," Obama said in a written statement. "They reflect the scientific assessment that even with the high safety standards that both our countries have put in place, the risks of an oil spill in this region are significant and our ability to clean up from a spill in the region’s harsh conditions is limited."

The move -- announced a month before Obama leaves the White House -- is sure to draw a legal challenge, and there is scant legal precedent on the matter. President-elect Donald Trump may rescind Obama’s order, but the 1953 statute Obama is invoking doesn’t include an explicit provision for reversal and that question could be tied up in court for years.

Although Obama’s decision was cast primarily as safeguarding 31 ecologically precious Atlantic canyons and "fragile Arctic waters," it was a major victory for environmental activists who have been arguing that even broader climate change concerns should drive the White House to rule out drilling in mostly untouched U.S. waters. Environmentalists said the decision sends a message to the world that the U.S. knows the warming Earth can’t afford to burn "extreme oil" locked under now-protected Arctic and Atlantic waters.

"This is a gift to the public and to our kids that will rank with any in the history of American conservation," said Niel Lawrence, Alaska director of the Natural Resources Defense Council.

The decision builds on Obama’s earlier decision to rule out selling new leases in the Arctic, Atlantic and Pacific from 2017 to 2022. But Tuesday’s announcement, based on the so-called 12(a) provision of Outer Continental Shelf Lands Act, is different because it explicitly puts certain areas permanently off limits for oil exploration and production.

Read the full story here.

NOIA Decries Obama Withdrawal of Offshore Areas, Looks Forward to Trump Administration

December 20, 2016 by Justin Williams

For Immediate Release: Tuesday, December 20, 2016
Contact: Nicolette Nye, (202) 465-8463, nnye@nullnoia.org

NOIA Decries Obama Withdrawal of Offshore Areas, Looks Forward to Trump Administration

Washington, D.C. – National Ocean Industries Association President Randall Luthi today issued the following statement on the withdrawal of portions of the Atlantic and Arctic Oceans from future oil and natural gas leasing:

“President Obama’s short sighted, unilateral withdrawal of Atlantic and Arctic Ocean areas from future oil and gas leasing not only risks the long-term energy security and energy leadership position of the United States, it violates the letter and spirit of the law. Such an expansive withdrawal, particularly when argued as being ’permanent’, is clearly inconsistent with the Outer Continental Shelf Land Act’s steadfast declaration that ‘... the Outer Continental Shelf is a vital national resource reserve held by the Federal Government for the public, which should be made available for expeditious and orderly development, subject to environmental safeguards, in a manner which is consistent with the maintenance of competition and other national needs ...’

“Furthermore, today’s decision puts the United States at a competitive disadvantage and sacrifices thousands of potential jobs and billions of dollars in government revenue. While other countries are ramping up offshore oil and natural gas exploration in the Arctic and in the Atlantic basin, President Obama has benched the United States, dismissing his own advisors who have argued that energy development, particularly in the Arctic, is imperative to our national security.

“Today’s decision also ignores that global energy demand is projected to increase by as much as 48% by 2040, and that fossil fuels are projected to meet about 80% of that demand. A robust offshore leasing program is crucial not only to meeting America’s domestic energy needs, but to providing an affordable, reliable and safe source of oil and natural gas to developing nations.

“We are hopeful that the incoming Trump administration can repair some of the damage done to the offshore energy industry and America’s energy security over the past eight years by putting policies in place that increase, rather than decrease, access to federal offshore areas.”

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ABOUT NOIA

NOIA is the only national trade association representing all segments of the offshore industry with an interest in the exploration and production of both traditional and renewable energy resources on the nation’s outer continental shelf. NOIA’s mission is to secure reliable access and a fair regulatory and economic environment for the companies that develop the nation’s valuable offshore energy resources in an environmentally responsible manner. The NOIA membership comprises about 300 companies engaged in business activities ranging from producing to drilling, engineering to marine and air transport, offshore construction to equipment manufacture and supply, telecommunications to finance and insurance, and renewable energy.

California Officials Sue Feds Over Offshore Fracking

December 20, 2016 by Justin Williams

KPBS | December 20, 2016 | AP

State Attorney General Kamala Harris and the California Coastal Commission on Monday filed a lawsuit challenging the federal government's recent finding that fracking off the state's coast has no significant environmental impact.

The lawsuit filed in federal court in Los Angeles says the Department of Interior failed to take a hard look at the potential environmental effects of the 22 offshore oil platforms that have used techniques including acid and hydraulic fracturing, better known as fracking, to stimulate production. The lawsuit says that failure is a violation of the National Environmental Policy Act.

"We must take every possible step to protect our precious coastline and ocean," said Harris, who is in her last weeks as attorney general before heading to the U.S. Senate.

Department of Interior spokeswoman Leah Duran said in an email that the agency cannot comment on pending litigation.

Oil drillers have used the methods for years in federal waters on the Pacific Outer Continental Shelf, which begins about three miles off the coast of California.

But last year a pair of environmental groups learned about them through a federal records request and sued, reaching a settlement in January with the federal government, which agreed to suspend fracking and do a new environmental assessment.

The government returned in late May with a report that found "no significant impact" to the safety of water or marine life from the drilling methods. Monday's lawsuit challenges that assessment, and it demands a more extensive evaluation.

Read the full story here.