Today we talk about five things in the news for the week of May 11, 2015:
- Senate Energy Looks at Infrastructure Legislation
- Cheap Gas Becomes Cheap Electricity in Pennsylvania
- House Critical of Greenhouse Gas Guidelines
- Natural Gas Catching Coal in Electricity
- All Hurdles Cleared for First LNG Export Project
Our interview is with Deanna Senior, who stars in the Smithsonian Channel’s new show “Boomtowners,” which follows the oil and gas boom in Williston, North Dakota.
1. Senate Energy Looks at Infrastructure Legislation
Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-AK) says she is putting together an energy bill with four titles: efficiency, infrastructure, supply, and accountability. On May 14, the Committee held a hearing on proposed infrastructure legislation. The hearing spent a lot of time on grid security and distributed generation. On the more relevant side, several Senators, including Sen. Rob Portman (R-OH), talked about regulatory problems.
On that note, Sen. John Borrasso (R-WY) has a bill that would speed up approvals for natural gas pipelines.
On the flip side of the coin, Sen. Angus King (I-ME) introduced a bill that would cap liquefied natural gas exports at 10% of domestic production.
Here is a complete list of the gas-related legislation under consideration.
- S. 411, the Natural Gas Gathering Enhancement Act
- S. 485, the APPROVAL Act
- S. 1196, to amend the Mineral Leasing Act to authorize the Secretary of the Interior to grant rights-of-ways on Federal land
- S. 1210, to provide for the timely consideration of all licenses, permits, and approvals required under Federal law with respect to oil and gas production and distribution
- S. 1228, to require approval for the construction, connection, operation, or maintenance of oil or natural gas pipelines or electric transmission facilities at the national boundary of the United States for the import or export of oil, natural gas, or electricity to or from Canada or Mexico, and for other purposes
- S. 1237, to amend the Natural Gas Act to limit the authority of the Secretary of Energy to approve certain proposals relating to export activities of liquefied natural gas terminals
- S. 1242, to amend the Natural Gas Act to require the Federal Energy Regulatory Commission to consider regional constraints in natural gas supply and whether a proposed LNG terminal would benefit regional consumers of natural gas before approving or disapproving an application for the LNG terminal, and for other purposes
2. Cheap Gas Becomes Cheap Electricity in Pennsylvania
Get ready for a smaller natural gas bill this summer, thanks to fracking.
That’s the message from UGI Utilities Gas Division, which plans to cut customers’ purchased gas rate by 7 percent, attributing the lower purchase price to abundant Marcellus Shale gas supplies
“Nearly 90 percent of UGI’s natural gas supplies now come from locally produced Marcellus Shale, and our customers are benefiting from this plentiful, reliable supply,” Paul Szykman, vice president of rates at UGI, said in a statement. “The seven-year trend of moderating gas prices continues despite a second consecutive winter of below-normal temperatures and related record, or near record, customer demand.”
3. House Critical of Greenhouse Gas Guidelines
On May 13, the House Natural Resources Committee held an Oversight Hearing entitled “The Obama Administration’s CEQ Recently Revised Draft Guidance for GHG Emissions and the Effects of Climate Change.” The Committee explained the issue this way in its background memo:
- The National Environmental Policy Act of 1969 (NEPA), mandates federal agencies to take a “hard look” at the “environmental consequences” of their actions. This includes a requirement that a detailed statement of environmental impacts be prepared for all major federal actions, called an “Environmental Impact Statement” (EIS).
- In December 2014, CEQ released a 31-page Revised Draft Guidance document to “provide Federal agencies direction on when and how to consider the effects of greenhouse gas (GHG) emissions and climate change in their evaluation of all proposed Federal actions…”
- The Draft Guidance: Establishes 25,000 metric tons of CO2 emissions as a reference point at which disclosure of future projected GHG emissions would be triggered.6 An agency may also be required to disclose even below 25,000 metric tons “if it is easily accomplished.”
- While CEQ states its Revised Draft Guidance “is not a rule or regulation… and is not legally enforceable,”12 nevertheless, federal agencies are “encouraged” to apply the guidance “to all new agency actions moving forward and, to the extent practicable, to build its concepts into currently on-going reviews.”
Christy Goldfuss, the Managing Director of the White House’s Council on Environmental Quality, explained the reasoning behind the guidance. She said:
We know that a changing climate is a reality, and carbon pollution is the biggest driver of climate change . We also know that emissions associated with Federal actions contribute to climate change and that climate change affects Federal agencies and their actions. Further, we know that consideration of climate change falls squarely within the scope of NEPA, and Federal courts across multiple circuits and districts have been considering various approaches to the analysis. Where courts differ and what agencies have been wrestling with for years, however, is how the effects of climate change and GHGs should be considered in NEPA review.
- Our guidance simplifies the consideration of climate change in NEPA reviews by offering a consistent approach to analysis, increasing certainty while preserving agency discretion. Added clarity will make it easier and faster to prepare analyses, and will also reduce the threat of litigation, which can be costly and cause further delay.
- Let’s spend a moment looking at what this means for an infrastructure project. The guidance in its draft form recommends an agency could consider the emissions from the reasonably foreseeable amounts of construction materials, construction equipment used in constructing the facility, and operations over the facility’s projected life. The disposition of the facility after that point would typically be speculative and therefore should not be included in the analysis. The agency would typically not analyze the emissions associated with the widgets produced (for example: vehicles, solar panels, tons of coal, gallons of gas, board feet of timber) unless there are reasonably foreseeable quantities – any attempt at speculation could be mistaken as valid and lead to misinformed decisions.
Wyoming Congresswoman Cynthia Lummis led the Republican criticism of the guidance. She argued that the guidance will require agencies to try and quantify unmeasurable impacts of unmeasurable amounts of gas, causing needless delays.
4. Natural Gas Catching Coal in Electricity
There were several signs last week of natural gas catching up to coal in electricity production. First, the U.S. Energy Information Administration predicted last week that gas would catch coal for a brief period of time this spring.
— Amy Harder (@AmyAHarder) May 14, 2015
The EIA says this is largely due to temporary factors, but also:
A contributing factor in the declining share of coal generation is the recent retirement of some coal-fired power plants. These plants are shutting down as power generators respond to the sustained competitiveness of natural gas prices and to the Mercury and Air Toxics Standards (MATS) regulations. In addition to 4.1 gigawatts (GW) of coal capacity that was retired last year, plant operators have retired or plan to retire 12.8 GW of coal capacity in 2015.
Meanwhile, SNL Energy reported that the five largest American utilities are taking a sharp turn towards natural gas:
- NRG Energy – Gas burn comprised 24% of NRG’s fossil fuel burn in 2014, an 11-percentage-point increase from its share in 2010, while coal burn comprised 75%, a 12-percentage-point decrease from its share in 2010.
- Duke Energy – Gas burn comprised 32% of Duke’s fossil fuel burn in 2014, up from 7% in 2010, while coal’s share of the company’s fossil fuel burn dropped to 67% in 2014 from 93% in 2010.
- Southern Company – Increasing 17 percentage points from 2010, gas burn comprised about 40% of the company’s 2014 fossil fuel burn, while coal burn decreased 17 percentage points over that same period to account for just under 60% in 2014.
These shifts are attributed to a lot of different things. Both NRG and Duke recently acquired more gas-heavy utilities. All three are retiring coal plants and converting some coal to gas. Duke, in particular, is also heavily investing in pipelines to improve gas supplies in its region.
5. All Hurdles Cleared for First LNG Export Project
A few years ago Cheniere Energy set out to be the leader in importing natural gas into America. As markets shifted, Cheniere turned their plans around 180 degrees and the company now leads the race to export liquefied natural gas. Dozens export terminals have been proposed, but Cheniere checked two important boxes last week on its path to making exports a reality. As FuelFix reports:
The Obama administration has delivered a critical natural gas export license to Cheniere Energy’s proposed liquefaction terminal in Corpus Christi, marking the first such approval for a greenfield project that would not be built on the footprint of an older LNG facility.
The company announced Wednesday that its board of directors had made a final investment decision in the project, authorizing Bechtel Oil, Gas and Chemicals to construct two liquefaction trains to covert natural gas so it can be carried by tankers to customers overseas. The overall project is designed to have up to three trains with the capacity to produce as much as 13.5 million tons per year of LNG.
Interview with Deanna Senior of Boomtowners
A few years ago, Deanna and her family were sitting at home in California and heard Brian Williams talking about the opportunities in North Dakota.
Deanna’s husband, Ray, had worked for some time as a commercial diver in the oil and gas industry in Louisiana, and he wanted to take another shot at the industry. On a whim, the two of them drove up to North Dakota for a weekend trip. They happened to find a job fair, and Ray was quickly hired. The economy in California was very up and down at the time, especially in Deanna’s real estate business. So the family decided to take the plunge and move to North Dakota.
Ray worked in North Dakota for a year while the family stayed behind in California. Housing was a challenge. The family bought a house, but had to wait for some time before it was completed. It was 45 below when the whole family got out there, but they kept a positive attitude about it. Deanna documented her experiences in a blog where she really tried to give fortune seekers a dose of reality about North Dakota. Her biggest warning – don’t come to North Dakota broke. She says you needed money to keep yourself afloat at first.
Williston has struggled to build a community to keep up with the boom. Deanna and her families’ struggle with housing is a major story line in the show. The town is also not the most kid friendly. When they first moved, a couple of the kids wanted to stay in California with their grandparents. They have adapted, however, and Deanna feels like they are succeeding in school and finding activities to keep them busy. The North Dakota location has even worked out to be a blessing in the worst of circumstances. Deanna’s daughter Sydney was recently diagnosed with cancer, but at least their are relatively close to world-class doctors in Minneapolis.
Deanna found a job with the county government, and she really likes being involved in the challenges of a developing community. She is a project manager, and is working to upgrade buildings to keep up with the population growth. For example, she recently oversaw a expansion of the court house so that it will be able to handle jury trials. She said the slowdown caused by oil prices might in a way be an opportunity for the government to catch up on the infrastructure it needs. She said it has struggled a bit because the small-town government is having to learn how to handle a boomtown.
Deanna says she has not had much environmental concerns. She said they live near the “oil belt” and that the family does struggle with noise and dust. It can be frustrating, but she accepts it because she made the choice to move to it. She said her attitude might be very different if she had lived there before the boom started. She has never heard of anyone having their water catch on fire, and the county provides regular reports on water quality that ensure her it is safe. She does worry about truck traffic, however, particularly with her newly-minted teen drivers.
Ray Senior is actually working in the natural gas business, trying to address one of the real environmental concerns. North Dakota has been maligned for the amount of natural gas that is wasted in the drive to drill for oil. The industry is working, under pressure from both the state and federal governments, to capture natural gas and make use of it. Ray’s company is focusing on capturing gas and then using it to power equipment at the well site.
In one episode of the Boomtowners, the narrator warns that low oil prices would hurt, “but for now, the party continues.” Deanna said that things have indeed changed from last summer when much of the show was filmed. She said the environment has changed, but she has not seen dramatic impacts of low oil prices. The real estate market has slowed, and some drilling companies have evaporated, but she does not personally know many people that have lost their jobs.
You can check out the Boomtowners on the Smithsonian Channel at a variety of times. You can also watch online on Google Play, Vudu, iTunes, and Amazon Video.