Energy Exchange

TCEQ Buckles On Oil & Gas Rules Under Pressure From Industry

By Ramon Alvarez, Ph.D. / Published: January 28, 2011

After a 10-month process, the TCEQ finally ended the suspense regarding what emissions safeguards the oil and gas industry will have to follow in order to protect the citizens of Texas.   On Wednesday, the TCEQ adopted a much, much weaker rule than the one it proposed in July (see details at the bottom of this post).  The rule was dramatically scaled back to apply only to those living near the Barnett Shale near Dallas-Fort Worth and, miraculously, the process will begin anew to decide what protections will apply elsewhere. 

If you are reading this, you are probably wondering what I think about the outcome.   I’ll answer by telling you what I am going to tell my boss, who will surely ask how my efforts – scores of hours attending meetings, writing comments, coordinating and consulting with experts on this topic (as well as having to watch industry unrelentingly bully TCEQ staff) – translated into results.   

It is a fair question given that I truly threw myself into this one.  I convinced myself (and my boss) that – this time – it was going to be different.  With all of the attention focused on the emissions from natural gas operations, including reports showing how the emissions from the oil and gas industry were much higher than everyone assumed, I thought this time we actually had a chance to help TCEQ do the right thing.   

The most favorable answer I can give is that “it could have been worse.”  Maybe, just maybe, had we not made the effort, the final rule might have been even worse.  What issues went in favor of public health?  The TCEQ did expand the proposed definition of “receptors” that must be protected to include hospitals, day cares, and certain businesses (although this definition is still less protective than many other agency rules).  Oh, and in response to our expert modeler’s numerous examples showing that the agency’s modeling did not represent “worst-case” conditions as claimed, the TCEQ changed their description to “reasonable worst case” (while making numerous other changes that allowed far greater emissions of harmful pollutants than originally proposed).  Sadly, that’s all I can say went in a positive direction. 

The TCEQ’s initial proposal in July would have established a basic framework that provided greater assurances of protectiveness to the public.  But industry firepower overwhelmed the TCEQ staff, which had little, if any, apparent support from their Commissioners.  The final rule was gutted with so many exceptions and loopholes (see below) that it almost makes me wonder if there is sufficient environmental benefit left to justify the regulatory burden.  Especially troubling was the number of sweeping changes made to the rule during a 6-week continuance, out of the public eye, during which time staff was asked to attempt to resolve industry concerns.  

In the end, I have no choice but to admit that my time would have been better spent on something else.  This story is yet one more example of why the legislature’s required sunset review of the TCEQ is so timely.  It is time for the TCEQ to put the protection of public health and the environment first.

On this last point, State Representative Rafael Anchia (D-Dallas) who serves on the state’s Sunset Advisory Commission, ably captured the situation in an interview on KUT’s feature “Letters to the Lege” this morning:

“In hearings we’ve held, we’ve heard complaints from all over the state … and there’s definitely an issue at the TCEQ when it comes to the response to citizen complaints. There’s no doubt about it. The EPA is seriously put out with the TCEQ and there’s a real standoff going on right now between the Perry administration and the federal government on how the TCEQ regulates pollutants in Texas. And in my opinion, we need to shake the agency up and make it more responsive to the public.”

At EDF, we completely agree.     

Key Examples Of How The July 2010 Oil & Gas Permit by Rule Proposal Was Weakened:

  • Applies only to Barnett Shale. A new rule will have to be developed by January 2012 to apply to the rest of Texas
  • Allowable hourly emissions of benzene increased by up to a factor of 20X
  • Eliminated formaldehyde emissions limits and protectiveness review
  • Increased VOC and other pollution limits, and removed limits for others
  • Created an exception for “small operations,” specifically projects with a maximum engine horsepower (450 hp or less depending on fuel), or five defined combinations of emissions sources and components.  These only have to maintain equipment in good working order and maintain a minimum 50-foot setback with no notification to TCEQ required
  • Protectiveness review only required for new or modified sites within ¼- or 1/2- mile from a receptor (depending on size of facility), and excludes consideration of existing emissions at modified sites if the off-site concentrations are less than 10%-25% of an Effects Screening Level
  • Removed prohibition against increasing emissions of applicable pollutants in an Air Pollutant Watch List Area (where pollution levels already exceed the TCEQ’s own acceptable risk levels)
  • Replaced Executive Director’s right to deny a permit for good cause with limited additional pre-conditions for a permit
Also posted in Climate, Natural Gas / Read 4 Responses

Texas Energy And The Reality Of Energy In Texas

By Jim Marston / Published: January 25, 2011

Steven F. Hayward and Kenneth P. Green’s report “Texas Energy and the Energy of Texas” written for the Texas Public Policy Foundation and published last week is pseudo-economics underwritten by the Koch brothers (some of the world’s biggest polluters).  The report simply ignores the health and economic costs of the pollution caused by coal production.

Most egregiously, the report claims that “only modest Nitrogen Oxides (NOx) reductions – if any – [will] be achieved by switching from coal to natural gas” (page 11).  The fact is that in 2009, using data from the EPA’s public emissions database, natural gas power plants in Texas emitted 73% less NOx than did coal-fired power plants per unit of electricity produced.  In addition, reducing Texas’ use of coal by switching to natural gas would reduce emissions of Sulfur Dioxide (SO2) by 99.9% and eliminate 100% of power plant mercury emissions.   These estimated environmental benefits say nothing of the economic benefits of new jobs related to natural gas exploration and production as well as increased royalties and taxes for the state.

Every year of delay in a switch to natural gas means Texas sends another $1.91 billion to out of state to coal companies in faraway places like Wyoming.  It protracts the challenge to cities like Dallas-Ft. Worth, San Antonio, Houston and Austin to comply with federal clean air standards, making it harder for them to attract new businesses and increasing the cleanup burden for businesses already located in Texas.  

I have one thing to say in response to Hayward and Green’s “If It Ain’t Broke, Don’t Fix It” conclusion:  Come down and tell that to the children losing funding for health, education and wellness programs, their mothers and fathers who fear losing their state jobs or the almost 4 million living with lifetime asthma in Texas.

Also posted in Natural Gas / Read 1 Response

Homegrown Energy Solutions

By Jim Marston / Published: January 21, 2011

We want to commend  Lt. Governor David Dewhurst who announced his interest last week  in increasing Texas’ use of its abundant natural gas resources by using market-based incentives to shift power plants from burning coal to natural gas.

This move would have a tremendous impact on the Texas economy when we need it most.  We can finally stop the one way train filled with the $2 billion Texas sends to other states every year in exchange for coal that provides no real benefit to our economy and pollutes our air.  Natural gas will help create jobs through exploration, construction and maintenance of new facilities.  It is homegrown and could help solidify Texas’ continued energy dominance as we reduce our dependence on imported fossil fuels and focus on Texas’ domestic energy resources, including renewable energy.  

Texas could maximize the economic benefits of natural gas if the Legislature would adopt proposals to reduce the unnecessary waste of natural gas.  An October 2010 report by the US Government Accountability Office says that 4.2% of gas produced on federal leases is lost through venting or flaring.  And at least 40% could be captured with available technologies that pay for themselves with the additional revenue from selling the captured gas.  As noted in the Comptroller’s recent “No Regrets” report, changing state policy to require the economic capture of vented and flared gas – meaning that 40% of the 4.2% now vented or flared would be captured — could enable the state to collect an additional 1.7% in income from royalties and severance taxes.   We estimate that this would translate to a range of $50 million to as much as $100 million for the state over the biennial budget period.  As the 82nd Legislature scours the budget, program by program, those millions of dollars mean more teachers in classrooms or more doctors in our hospitals.

Also posted in Natural Gas / Read 1 Response

A Texas Sized Solution for a Texas Sized Problem

By / Published: January 10, 2011

It’s true what they say: everything is bigger in Texas, even the hole in our budget.  Today the Comptroller’s office released their estimated revenue projections, and according to most calculations, given state budget needs for the next cycle our deficit weighs in at a hefty $27 billion dollars.  Compare that big budget deficit to another number from the Texas Comptroller’s office (that’s right, the same office):$19 billion dollars.  That’s how much they estimate in a new report Texas could save annually through energy efficiency, smart building standards and other strategies that have environmental benefits and save money at the same time.

The report is the result of legislation passed in 2009 by Sen. Kirk Watson called the “No Regrets” bill, which asked the Comptroller to look at strategies for the state that would save money in Texas, and also reduce CO2 emissions.  The final report is the product of exhaustive work on the part of the Comptroller’s and Senator Watson’s offices, along with the PUC, Railroad Commission, TCEQ, the General Land Office and a broad set of stakeholders including oil and gas companies, manufacturers, businesses, electric companies, environmentalists, Texas A&M, and UT Austin to name a few.

With a set of stakeholders that broad it’s never easy to come to an agreement on even a single strategy.  To Comptroller Combs and Senator Watson’s credit, they shepherded a process that lead to full stakeholder agreement that 20 of the 44 proposed strategies would both save the state money and reduce carbon dioxide.  According to an analysis from the final report, the total annual savings of enacting these strategies would be almost $20 billion.  Of course, saving money for Texans isn’t the same as saving money for the state government, but some of these savings translate directly into state budget savings, while others could be used to offset the need for budget cuts.

During the last budget cycle state leaders were able to patch the budget gap with federal stimulus money but this time around we won’t have that option. Tough decisions will need to be made and Texans have made it clear they’re not interested in new taxes. If you compare Texas’ deficit to other states with Texas sized economies like New York ($9 billion) and Florida ($3 billion) as economist Paul Krugman did in a column last week, you start to get an idea of the sort of trouble we’re in.  Even California’s deficit is about 20% of their general revenue, compared with about 31% for Texas and with an economy about two thirds the size of California’s.

State leaders have been vocal that this time around some difficult decisions will have to be made.  Texans will likely have to deal with longer Emergency Room visits (and more of them!), larger classroom sizes, fewer police officers and firefighters and less care for our grandparents.  State leaders are right to be worried about the looming budget shortfall and the need to tighten our belts, and the No Regrets Report lays out a good roadmap to begin to do that. In the mean time as has been mentioned by my colleagues Elena Craft and Jim Marston, the state could save money immediately by dropping their frivolous lawsuit aimed at circumventing a unanimous decision by the Supreme Court.

Also posted in Energy Efficiency, Renewable Energy / Read 1 Response

A Move In The Wrong Direction

By / Published: December 16, 2010

For the last century, Texas has been the energy capital of the United States and in order to maintain that position at the top we must attract new renewable energy companies to Texas.  Today the PUC convened in an open meeting to discuss the important question of whether Texas should be involved in the 21st century energy market, a market which is rapidly becoming dominated by China and India, among others.  Unfortunately it seems the conclusion they’ve already come to is “why do today what you can put off until eight years from tomorrow.”

 The PUC’s proposed rule pushes back the 2015 goal set by the legislature of having 500 MW of solar and other non-wind renewables to 2018, letting the solar and other renewable energy industries know that when it comes to planning for the future, we’d just as soon wait.  Not that anyone should be surprised, considering the legislature first passed this 500 MW goal in 2005 and it has taken five years for the PUC to respond with a proposal.

 A more aggressive Renewable Portfolio Standard for non-wind renewable energy, much like the one that fostered Texas’ wind dominance, is the type of policy that can help Texas be a leader in solar.  The PUC seemed to recognize this fact, and the clear intent of the Legislature in its first two drafts of this proposed rule.  A great deal of time and effort from staff and stakeholders went into discussing and analyzing the costs and benefits since the last draft was published in April.  However, for reasons the PUC has not disclosed, they have decided that instead of 500 MW by 2015 Texas needs 10 MW of solar and 20 MW of other renewables.  That is a dramatic drop from enough renewable energy to power 250,000 homes to only 15,000 homes.  The PUC’s change of heart on the non-wind RPS is economically irresponsible and sends the wrong message to renewable energy companies looking to do business in Texas.  This decision could drive solar companies to Arizona, New Mexico or Colorado, states with much more aggressive solar energy mandates.

 Meanwhile, Central Texas cities such as San Antonio and Austin, whose municipally owned utilities are not subject to the PUC, have established their own goals for solar power and have taken the initiative to invest now to offset the future risks of the rising cost of energy. Earlier this month SunPower announced plans to open a new corporate operations center in Austin, bringing around 450 jobs to the city.  Just this week RRE Solar broke ground on a mammoth solar project in Pflugerville that will be the flagship project of a multi-national renewable energy company that sees vast growth potential for utility-scale solar development in Texas.  San Antonio’s work with SunEdison on three 10 MW installations in the city is expected to lead to larger economic development opportunities with the solar giant. 

 Despite what some critics have said, it’s clear that cost is not really the issue when considering these types of long term goals.  Austin Energy and City Public Service represent some of the lowest electric rates in Texas over the last few years, and to keep those rates low and create new jobs their communities have set goals for solar power.  Even the PUC has been clear about the benefits of the RPS, saying in their 2009 report that wind energy “has had the impact of lowering wholesale and retail prices of electricity.”  However, the Austin and San Antonio utilities represent only about 10% of the market.  If Texas is going to fully take advantage of its solar resources, the PUC needs to have meaningful requirements for the rest of the market.

We can only hope that the 82nd Legislature passes more meaningful incentives for renewable energy to help generate clean Texas renewable energy generated power, economic development and the jobs that the PUC’s current plan fails to deliver.

Also posted in Renewable Energy / Read 3 Responses

Natural gas drilling: Problems and solutions

By Scott Anderson / Published: October 28, 2010

Yesterday I was interviewed on an energy-related television show about natural gas drilling in the U.S. and some viewers thought I was too pro-drilling, others thought I was too anti-drilling. My reaction to that is: PERFECT! That was precisely my intention – to be a balanced voice in the discussion of hydraulic fracturing (HF). HF may be an important process to extract what may be a cleaner-burning fuel source for our country; but if it is developed, adverse impacts for gas drilling must be reduced to assure public safety and to protect the environment.

Currently, the environmental impact of natural gas development is unacceptably high. From polluted water wells in Pennsylvania to an exploding home in Ohio, there are numerous recent examples of environmental disasters from natural gas production.

I said in the interview that HF can be used safely “IF” it is regulated more closely and companies are more transparent about the fluids they use. Regulation may be done state by state, but if states aren’t up to the task, it will need to be regulated at the federal level. So industry needs to step up to the plate and improve its practices. While there are issues with HF, many of the problems with gas are more widespread. A framework is needed that focuses on well construction and operation that goes beyond even HF to broader well construction issues and cementing. Additional issues that must be addressed include getting the cement and pipes right in the wells, and proper management of pressure. Additionally, for hydraulically fractured wells it is important to be sure wells are situated beneath a satisfactory cap rock — one or more layers of rock that’s sufficient to prevent toxic chemicals from migrating into drinking water. Some areas are so important, such as drinking supplies for cities, that they need to be off-limits for fracking.

If natural gas is to fulfill its potential, we need much cleaner drilling practices. Results will be gauged by the improved health and safety of citizens and the earth in the short and long term. Stay tuned for more discussion on this vital topic.

Also posted in Natural Gas / Read 3 Responses