Energy Exchange

University At Buffalo’s Shale Resources And Society Institute’s ‘Environmental Impacts During Shale Gas Drilling’ Report

By Scott Anderson / Published: May 16, 2012

The University at Buffalo’s Shale Resources and Society Institute issued a report yesterday, “Environmental Impacts During Shale Gas Drilling: Causes, Impacts and Remedies,” which offers a quantitative data review of Pennsylvania’s regulation of natural gas development in the Marcellus Shale. The press release notes that I was a reviewer for the report.

While I was a reviewer, this does not mean that all of my suggestions were taken or that I agree with all of the report’s opinions and conclusions.

Does the report have strengths? Absolutely. Unfortunately, it is hard to find understandable, comprehensive data describing natural gas industry environmental violations and the responses taken by enforcement agencies. The University at Buffalo has done a great service by bringing such information to light for the period studied (2008 through August 2011).

At the same time, several of the opinions and conclusions in the report are questionable. These include: 

  • The idea that a violation isn’t an “environmental” concern if it is a violation of “paperwork” or “preventative” regulations and didn’t result in immediate, actual harm to the environment.
     
  • Characterizing the rate of environmental violations (narrowly defined) as “low” in the first eight months of 2011 when, even using a narrow definition of environmental violation, violations were found at 26.5% of the wells drilled.
     
  • The suggestion that the present regulatory program is effective because the incidence of “environmental violations” (narrowly defined) declined from 58.2% of wells in 2008 to 26.5% of wells in 2011.

In sum, there’s a lot of good information to be gleaned from the study, but caution should be exercised with regards to some of the conclusions.

Posted in Natural Gas / Read 5 Responses

Ohio Senate Passes Major Energy Legislation: All Eyes On The Ohio House To Restore Provisions On Chemical Disclosure

By Matt Watson / Published: May 16, 2012

Yesterday the Ohio Senate passed Senate Bill 315, major energy legislation that addresses a wide range of issues – including provisions relating to transparency in oil and gas operations.  Unfortunately, the version that passed falls short of Governor Kasich’s ambitious call for broad chemical disclosure.

In the introduced version of the bill put forward by Governor Kasich and sponsored by Chairwoman Shannon Jones, companies would have been required to publicly disclose all chemicals used throughout the entire lifecycle of oil and gas wells – the so-called “spud to plug” approach to chemical reporting.

This comprehensive approach to chemical reporting stands in contrast to other state policies that merely require disclosure of those chemicals used in the hydraulic fracturing process.  It reflects an understanding that a wide range of dangerous chemicals are used in drilling, stimulating, operating and closing wells, and regulators and the public need to know what’s being used in order to evaluate risks and put strong standards in place that protect communities and the environment.  Governor Kasich deserves a lot of credit for advancing this idea in the original version of the bill.

Unfortunately, in the face of intense industry opposition the version of SB315 that passed yesterday eliminates much of the reporting that would have been required under the Governor’s original proposal. 

The version of the bill that passed yesterday still has requirements for reporting the chemicals used in stimulating a well (which includes hydraulic fracturing).  It also has requirements for reporting chemicals used for drilling the surface interval of a well.  And it’s worth noting that the bill language for these provisions – while still needing improvements – is stronger than what was in the introduced version of the bill.

But the requirements for disclosing chemicals used for drilling beyond the surface interval were dropped – as were most of the requirements for disclosing chemicals used to service and operate the well.  So, it’s now up to the Ohio House of Representatives to restore these important provisions.  There’s a lot of nasty stuff that goes down a well during drilling and production.  In fact, it tends to be the case that companies use increasingly dangerous chemicals the deeper they go in the drilling process.  So, limiting disclosure of drilling fluids to just what’s used in the surface interval doesn’t make sense.

In addition to restoring the full “spud to plug” approach to the chemical reporting, the House also needs to add bill language ensuring that Ohio citizens can challenge any trade secret claims that companies may make to conceal the identity of chemicals.  That’s just a basic necessity for policing the system and giving the public a reasonable level of confidence that companies are playing on the up and up.

Finally, the bill should be amended to begin the process of assessing and reporting the chemical composition of waste streams from oil and gas operations.  Without an adequate picture of the chemical makeup of wastewater and other wastes that come from oil and gas operations, it is difficult to impossible to determine whether various methods of waste handling and disposal are protective of human health and the environment.

EDF was pleased to offer our support for the “spud to plug” concept embodied in the introduced version of the bill, but SB315 needs to be strengthened to earn our support going forward.

Transparency is just one small part of all that must to be done to ensure oil and gas operations are safe for communities and the environment, but it’s a critical piece of the puzzle that lays a foundation for developing protective rules and rebuilding the public trust.  So EDF looks forward to working with our partners, leaders in the General Assembly and the Governor to make sure the final version of SB315 lives up to its full promise and sets Ohio on the right path for protecting communities and environment.

Posted in Natural Gas / Read 1 Response

Big Banks Increase Focus On Energy Efficiency Finance

By Brad Copithorne / Published: May 11, 2012

Report from the American Council for an Energy-Efficient Economy (ACEEE) Energy Efficiency Finance Forum

This week, I had the pleasure to attend and speak at ACEEE’s annual conference on energy efficiency finance.  Almost 250 executives were in attendance from banks, ESCOs, project developers, venture capitalists, asset managers, property owners/managers, utilities, government officials and nonprofits. 

Key takeaways included:

Commitment from Banks – Despite a lack of meaningful revenue to date, senior bankers from JP Morgan, Wells Fargo, US Bank, Deutsche Bank, Bank of America and Citi all reiterated their commitment to develop low-cost financing solutions for energy efficiency retrofits.  Marshal Salant of Citi did lament that, to date, the number of conferences far exceeds the number of deals, but he was hopeful that we could soon reverse the situation as he, and others, have an attractive pipeline of projects that they hope to close in coming months.

On-Bill Repayment will play a key role – EDF has been working to establish an On-Bill Repayment (OBR) program in California to finance retrofits through the utility bill.  Several speakers expressed hope that OBR may provide the credit enhancement and flexibility necessary to provide low cost financing for the residential and commercial sectors.  I had a chance to speak with representatives from each of the large California utilities at the conference.  While the utilities still have substantial concerns about the OBR proposal, I was pleased with the constructive nature of the dialogue.

EE Financing will be Available – Citi shared a chart indicating a wide range of financing vehicles that they believe are workable and either available today or in the near future.

Posted in Energy Efficiency, On-bill repayment / Read 3 Responses

ANGA’s New Texas Report Serves Up A Heaping Helping Of ‘Number Salad’

By / Published: April 26, 2012

The American Natural Gas Association (ANGA) released a paper in March titled “Texas Natural Gas: Fuel for Growth,” to a lot of press, and rightly so.  The paper correctly cites several benefits of using and producing natural gas in Texas: it is produced in-state, has water use and air-quality benefits when compared to coal and helps to fund state and local governments through taxes. 

Unfortunately, the paper also makes some claims that are difficult to take seriously; perhaps the first warning sign should be that while the paper was presented as an economic analysis, the authors have no economic credentials.  Dr. Michael J. Economides, a chemical and biomolecular professor at the University of Houston, and petroleum engineering consultant Philip E. Lewis spend little time worrying about the details in this report, serving up a heaping helping of “number salad.”

For instance, the $7.7 billion “loss” is calculated by projecting the potential use of gas in Texas, if it had followed the national trend, against the actual use.  But in looking at the data, it’s not clear that the Texas fuel mix ever tracked the national fuel mix.  Even more importantly, looking at the authors’ own slides, Texas uses 20% more natural gas in its fuel mix than the nation.  If anything, the national fuel mix is following the trend set long ago by Texas —adding more natural gas and wind, while decreasing coal output.

What might shock the authors is that natural gas consumption in the electric power sector has increased by around 5,000 one thousand cubic feet of gas (MCF) since 2006, 800 MCF in transportation and nearly 10,000 MCF in the industrial sector. 

There are so many misleading statistics and inaccuracies that we could practically write a report on the report, but instead I’ll just focus on one aspect that stands out in particular. 

When it comes to comparing natural gas to coal power, the authors are quick to cite the many local benefits of using natural gas energy produced in Texas: it’s cleaner than coal and creates local jobs and a local tax base.  Wind energy has largely produced the same benefits: local wind power has brought jobs and a growing tax base and population to rural Texas counties that “had seen consistent, significant population losses since 1950.”  On top of the economic development benefits, where natural gas beats coal in reducing pollution, wind energy beats both by reducing pollution basically to zero.  But when it comes to discussing any of these benefits from wind energy in the report, the silence is deafening. 

Natural gas is reshaping our energy landscape.  And, done right—with the proper, mandatory environmental safeguards in place and reduced methane leakage rates—compared to coal plants, natural gas power plants offer other distinct air quality benefits.  It emits less greenhouse gases than coal when combusted and avoids mercury and other dangerous air pollutants that come from coal.

However, the same – and more – can be said about wind energy and Texas’ potential clean energy resources, including solar and geothermal power, among others.  Rather than pitting our local clean energy resources against each other as this report does, we should seek to expand and diversify our clean energy mix, reaping health, environmental, economic and security benefits.

Posted in Natural Gas, Renewable Energy, Texas / Read 1 Response

On-Bill Repayment: Two Big Developments In California

By Brad Copithorne / Published: April 25, 2012

This commentary was originally posted on the EDF California Dream 2.0 Blog.

The California Public Utilities Commission (CPUC) recently released a Proposed Decision that included rulings on energy efficiency financing.  One ruling directs the state’s three largest utilities–PG&E, Southern California Edison and San Diego Gas & Electric–to develop an On-Bill Repayment (OBR) program for commercial properties that is based on a proposal developed by Environmental Defense Fund (EDF).

The Proposed Decision notes that the agency lacks the full necessary legal authority to implement an OBR program for residential customers. To address that, EDF is sponsoring legislation introduced by California Senator Kevin de Leon that would provide the CPUC with the necessary authority.

Senator de Leon and EDF have been working together to assemble a broad coalition of supporters including labor, contractors, building owners, banks and other investors, solar installers, energy efficiency project developers, environmental advocacy and environmental justice groups. 

We are excited to report that yesterday the bill passed the California Senate’s Energy, Utilities and Communications Committee. While we have a long way to go, this is another key step toward establishing a program that can invest billions of dollars of private capital in energy efficiency and renewable energy projects in California at no cost to taxpayers or ratepayers.

EDF will continue working with a broad range of stakeholders to successfully create the nation’s first statewide OBR program that is entirely financed by third parties. This landmark approach will enable project developers and building owners to use both conventional and innovative financing options to invest in energy efficiency and renewable energy projects.   

The CPUC is expected to vote on its proposed decision on May 10, 2012. The bill will continue being heard and voted on over the coming months. Once the final votes are in, California aims to have the commercial OBR program up and running by January 2013.

Posted in Energy Efficiency, On-bill repayment / Tagged | Comments are closed

California Low Carbon Fuels Appellate Court Ruling is a Win on Many Levels

By Tim O'Connor / Published: April 24, 2012

Late yesterday, a three-judge panel in the 9th Circuit Court of Appeals granted an important stay motion in favor of California and its Low Carbon Fuel Standard (LCFS). The court’s decision allows the state to move forward with vital protections for human health and the environment that will strengthen California’s clean energy economy and improve our energy security.

The LCFS is one of California’s most ambitious and innovative climate change regulations to date. It is among 70 measures adopted under AB 32 (the Global Warming Solutions Act of 2006) that will be used to reduce emissions to 1990 levels by 2020. The standard calls for reducing the carbon content of fuels by 10 percent by 2020, which is expected to reduce 15 million metric tons of greenhouse gas pollution per year by 2020. Some of the cuts will come from improvements in the way traditional oil and ethanol feedstocks are produced, processed and delivered to consumers. Other cuts will come from advancements in breakthrough technologies such as electric cars and renewable fuels that dramatically cut toxic air contaminants and further diversify our fuel supply with locally generated energy sources.

How LCFS Works

The standard creates a flexible system that allows fuel suppliers to comply by either documenting reduced emissions in their fuel production pathways (using a science-based lifecycle emissions model) or by purchasing credits from suppliers that have reduced emissions below a predetermined threshold. This approach rewards innovative solutions that cut emissions as quickly, cheaply and extensively as possible, using a scientifically credible emissions reporting and trading platform.

How LCFS Provides Energy Security and Protection from Fuel Price Surges

California drivers burn about 16 billion gallons of gasoline and 4 billion gallons of diesel fuel every year and emit, in aggregate, approximately 170 million tons of greenhouse gas emissions. Much of this fuel is sourced from California oil fields (approximately 200 million barrels per year), though more than 50 percent is imported from the Middle East, South America and Alaska. These imports make our economy vulnerable to price swings and shortages driven by production changes and politics.

There is perhaps no greater embodiment of our state’s vulnerability to imported fossil fuel than dramatic and sustained “price shocks.” These periods of elevated prices impact drivers’ pocket books and transfer huge amounts of money from California’s economy to foreign countries, many of which are hostile to our country.

Since 1995, California has experienced 15 such fuel price shocks, including the current one that has increased fuel prices by about 40 percent above the 24-month moving average. California’s LCFS, an important clean energy policy, is going to break this trend.

The LCFS Incentive to Diversify the Transportation Fuel Mix

California’s LCFS is a scientifically-based standard that provides incentives for fuels that cause less climate change pollution throughout their entire lifecycle. At the same time, the LCFS allows for traditional fuel producers to continue operating as long as they turn in sufficient compliance credits. Fuel sources producing credits include electricity (powering electric vehicles), natural gas, advanced biofuels and some traditional biofuels that emit less carbon than gasoline and diesel. These fuels are typically produced or grown in the Western United States rather than imported from abroad. This results in a more diversified fuel mix that is less vulnerable to fuel price shocks.

Positive Signal for States Looking to Follow California’s Lead

Though the Court of Appeals has yet to hear the case on the merits, yesterday’s ruling is a positive signal that this standard has a strong legal foundation that will likely be upheld on appeal and can be adopted by other states. We trust this is music to the ears of Oregon, which just last week announced a Clean Fuels Program similar to California’s.

Without a federal policy in place to regulate the carbon pollution in fuels, it is critically important that California and other states have the ability to carry out smart, science-based policies such as this standard to cut pollution, reward innovation, and build a stronger, more efficient economy.

EDF will continue pursuing the matter on appeal until a final resolution, an outcome that looks suddenly brighter for California consumers, innovative fuel producers and the environment.

 

 

 

 

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