Climate change

timhowardlaw

Hydraulic Fracturing News

Developments from several places, all relevant to the industry in general and the producers and transporters of reserves based on directional drilling and enhanced recovery.

EPA ACTION IN THE US:  The United States Environmental Protection Agency (“USEPA”) adopted final rules regarding methane and volatile organic compound (“VOC”) emissions from oil and natural gas production.  These rules have been pending but now that they are final, producers must prepare to adapt.  Notably, these rules cover only new or modified sources of production, not existing production.  The rules build on and modify rules previously in place.  See EPA, EPA’s Actions to Reduce Methane Emissions from the Oil and Natural Gas Industry: Final Rules and Draft Information Collection Request (“Overview Fact Sheet”) at 1, https://www3.epa.gov/airquality/oilandgas/may2016/nsps-overview-fs.pdf.  One of the rules alters USEPA’s basis for “single source determinations”.

But there was also a draft “Information Collection Request” for the oil and gas industry, requiring extensive reporting and data.  The purpose is to gather data from existing oil and natural gas production sources in order to prepare a methane rule applying to existing sources, and designed to reduce methane.

Proceeding with the proposed rules to final, and proposing new data gathering and initiative for existing wells, will introduce new costs onto an already stressed industry and overly high cost structure.  Producers have been more successful than expected in lowering production costs and drilling costs in the face of the price decline, but just when you thought progress was being made, an external factor intervenes.

TEXAS, NEW STUDY:  a new academic study regarding Texas seismicity (May 18, 2016) concludes that oil and gas activity has been causing earthquakes in Texas for many years, perhaps as early as 1925.  Six researchers from The University of Texas at Austin and Southern Methodist University prepared the study.  A geophysicist at Stanford University praised the study to InsideClimateNews but a spokesperson for the Texas Railroad Commission (the state body in Texas charged with regulating the oil and gas industry) called the basis of the study “subjective in nature”.  The Texas Railroad Commission has done several things suggesting that they are paying more attention to the issue, but have not found a causal link or promulgated any moratoria or regulations.  See insideclimatenews.org , “Oil and Gas Quakes Have Long Been Shaking Texas, New Research Finds”, by Zahra Hirji, May 17, 2016.  See “A Historical Review of Induced Earthquakes in Texas”, srl.geoscienceworld.org , for the Seismological Research Letter publication (abstract available online without charge).

ENGLAND TEST ALLOWED TO PROCEED:  observers and analysts will differ about the significance of this action, but it is worth noting.  The North Yorkshire County Council gave local approval for a test hydraulic fracturing procedure on a well in Kirby Misperton.  This is the first hydraulic fracturing in England in five years.  The permission granted by the Council also allows production (if the company finds paying quantities) for nine years. The site has produced gas for about 20 years; the well in question was drilled about three years ago.  National policy favors hydraulic fracturing and increased production; the company obtained necessary permits and reviews; but the council action stands as the only active approval in England at the moment.  Some expect many applications now to be filed and many to be pursued much as this one was asserted.  One wonders if the economics bear that much activity, but clearly this approval is a watershed of sorts.  The council vote was 7-4 (all 11 members voting); the council majority is Conservative.  Local protest and organized objection was vocal and constant and promises to continue.  The national government cites the need for energy security; job creation; and local development.  Opposition demands that the beauty of the region be preserved.  Third Energy, owner of the producing wells and applicant for the new, claims both can be done.

See dailymail.co.uk for Tuesday, May 24, 2016.

timhowardlaw

California: Future or Past?

California Governor Jerry Brown first served in that office from 1975 to 1983.  He implemented  many of the policies that form the foundation of the California of today.  He was considered too idealistic – or radical – depending on point of view.  In January 2015 he began his fourth and term-limited final service as Governor.  Spanning 1975 to 2015, what are his priorities?

Addressing global climate change:  California will use renewable resources for 50% of its electricity needs, and increase from the current 33% mandate.  Governor Brown will take the proceeds from auctioning carbon-dioxide emissions credits to construct a high-speed rail line.  In order to protect a river delta area considered ecologically sensitive he will build tunnels to carry water.

Governor Brown will release his draft state budget on Friday, January 9.  Will it include increased spending on schools, health care clinics for poor and underserved areas or unemployment?  Not known; stay tuned.

Governor Brown argues that he has a mandate to address future priorities because he transformed a projected budget deficit of $25 billion into a sound fiscal condition for the state.  In his inaugural address he stood firm about restraining spending overall and cutting some budget items.  His odd juxtaposition of fiscal restraint and very expensive new spending priorities stands out among governments today – municipal, state and federal.  He has no ambitions to hhigher office.  He is the poplular Democractic governor of the most populous state, with solid party majorities in the state legislature.  Is California the model for the future of the US, state and federal?  Or is the state just riding the peak of a roller coaster without provisioning for the inevitable steep ride?  Or is the California economy simply so big, so diverse, and so prosperous that any policy works?

timhowardlaw

Crowded North Pole

A Russian Mir submarine descended through the Arctic Ocean depths in 2007 and planted a titanium Russian flag on the sea bed, one of the polar commanders declaring “The Arctic has always been Russian.”  Denmark now officially disagrees.  Denmark did not plant a flag on the sea bed.  Instead they pinned a claim on the polar map by using the UN Convention on the Law of the Sea (“UNCLOS”).  On December 15, 2014 the nation made its claim to 900,000 square kilometers north of Greenland.  Greenland is a self-governing part of Denmark.  Denmark adopted UNCLOS on December 16, 2004.  UNCLOS claims to territory must be made within ten years of adoption.

No happenstance:  ten year claim period per UNCLOS; well-known mineral riches at stake; Russia (and others) already moving; and Arctic sea ice melting at an accelerated rate.  Arctic open water and year-round shipping may be immanent.  Denmark knows how to drill for oil and gas, and knows how to do it in deep water and cold water.

How much conflict will issue?  Nation states now contend for claims to the Arctic, specifically the sea bed.  A total of 71 ocean going vessels traversed polar open waters in the summer of 2014, up from only 46 in 2012.  sea passages require internationally recognized rules, effectively curbing conflict.  Despite the polar rush, all involved countries know that much of the energy and mineral resources in the area are within the recognized 200-nautical mile economic zone of individual countries.

Like any natural resource race, unknown reservoirs and caches tempt.  Denmark, Russia and many others savor the prospect of an open water Arctic prize.  Russia acted unilaterally.  Denmark acted under UNCLOS.  Now the task is to join action for mutual advantage.

timhowardlaw

Greenpeace Billboard in Peru

Peru hosted a summit meeting on climate change in early December, 2014 under the auspices of the United Nations.  Greenpeace made its point:  “Time For Change!  The Future is Renewable.  Greenpeace.”  For a billboard Greenpeace chose big and obvious:  huge yellow letters easily visible from the air positioned near Nazca, Peru – near the site of a geoglyph portion of the Nazca Lines.  The Nazca Lines were made between 500 B.C. and 500 A.D. by removing a layer of overburden to reveal lighter colored stratum below.  The Greenpeace letters were placed next to a glyph of a hummingbird.

Greenpeace achieved its intention.  Hundreds of thousands, perhaps millions, saw the message.  But the message delivered with the lettering was rather different:  disrespect for an archaeological site and perhaps irreparable damage from the letters and from the footprints of the activists on fragile terrain.  Professional archaeologists and the Peruvian Ministry of Culture voiced their fury.

A portion of the Nazca Lines, including the hummingbird, lie within an area declared a World Heritage Site.  The Greenpeace action created a real controversy.  But Greenpeace intends its actions to create controversy.  What difference if the actions affect a site internationally known and scientifically important or infringe my private property – or yours?  The number of people damaged or affected?

Greenpeace achieved notoriety but not the objective of focusing attention on climate change.  Perhaps a misfire of tactics, or perhaps a case of offending the scientific and intellectual community instead of the for-profit.

timhowardlaw

Geoengineering Closer to Reality?

Two methods of geoengineering – changing certain climate aspects by human intervention – moved closer to implementation recently.  However the biggest hurdle remains – lack of funding.  Lack of funding springs from the second significant hurdle – opposition to geoengineering.

The first method is cloud brightening.  Brighter clouds reflect more solar rays and energy back into space, and prevent the energy from reaching the earth’s surface and heating.  John Latham in 1990 published an article suggesting brightening low-lying maritime clouds by injecting tiny sea-salt particles into the clouds from below.  Dr. Latham’s ideas were ignored for over ten years.  During that time engineer Stephen Salter of the University of Edinburgh and colleagues worked on practical ways to do it.  Then recently Armand Neukermans, developer of inkjet printers, working in Silicon Valley with colleagues contrived a “spray atomizer” to spread the sea-salt particles.

The second Method belongs to Harvard professor David Keith.  Prof. Keith proposes an artificial layer of haze in the stratosphere to reflect sunlight.  To accomplish his layer he constructed a system which would hang beneath a large balloon, and spray a large plume of sulphate particles to create the same effect as the haze layer.  The apparatus would also measure the physical and chemical changes in the stratosphere.

Some environmental groups and certain academics oppose geoengineering and especially the planned experiments.  Perhaps as a result government money is simply not available for these endeavors.  Dr. Keith received funding for some research, but has none for experimental field testing.  No one has any near-term prospects.

Opposition from some quarters and the accompanying or loosely related refusal to fund stop progress for now.  The mechanisms seem viable.  Engineering still waits.

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timhowardlaw

Climate Change 20th Conference Morale

Morale and momentum increased at the 20th Conference of the Parties to the UN Framework on Climate Change in Lima Peru this December.  Whether that is only by comparison to the conference one year ago or an indication of expectations for the Paris meetings in one year’s time we will only know in one year.  In Paris the representatives and experts should compile a treaty to replace the Kyoto Protocol, as time is running thin.  The announcement in October by the European Union to cut emissions by 40% from 1990 levels no later than 2030 boosted progress for the 20th Conference.  Cities and multinational corporations alike have pledged to reduce emissions and adopt low carbon technologies, and various governments have committed $9.3 billion to the Green Climate Fund.  The President of the United States stepped out and upped the potential by his announcement in Beijing in November; the US will cut emissions from 2005 level benchmark by up to 28% by 2025.  China’s contribution in Lima amounted to a footnote, a representation that emissions would reach a peak in 2030.  Not to downplay, however, because China had historically refused to cut and pointed to the already-developed countries to bear the burden.  Will India and Brazil now move forward with China?  The US action isolated Australia, Canada and Russia as the developed and hesitant.

Twenty-first Conference, Paris, December 2015.  Treaty?

timhowardlaw

Arctic sailing, anyone?

The National Oceanic and Atmospheric Administration’s annual Arctic Report Card shows less sea ice, more open water and increasing algae blooms. The down side is the report’s conclusion that climate change impacts the Arctic another year, and the statement that a driver is human-generated carbon emissions. The up side – if you view it as such – is increased navigation possibilities. The darker, less reflective open water Arctic absorbs heat, reflects less and thus accelerates the warming process according to NASA satellite measurements. Based on these data, some number of scientists (from some to many, depending on news source) believe and predict that the Arctic will be ice free in the summer sometime between now and the end of the century. That’s quite a time spread, but the consensus trend is consistent.

While neither NOAA or the NASA initiatives focus on navigation the impact seems clear. Commercial enterprises of all types no doubt will focus on navigation. Nation states will also act to promote their own interests in the Arctic. Stay tuned.

timhowardlaw

Climate Change: The Coming of Funds

This time Congress must allocate the money for the proposed Climate Resilience Fund, announced by President Obama on Friday, February 14 in drought-stricken and federally-aided California.  The assistant to the President on science and technology, John Holdren, clarified that this was a scientific imperative as well as a political issue and would be a recurring theme.  The Fund is separate from the climate agenda set forth in June, 2013.  The purpose of the Fund would be more than academic research, in that it would include assistance to communities to prepare for climate change and would promote the search for new technological solutions for infrastructure and other improvements to deal with the changing climate.  The Fund would also engage in data gathering regarding the impact of climate change, although that seems redundant to current efforts unless the focus in somehow more unique than at first appears.

The Fund will be part of the Administration’s budget proposal for 2015, due to be unveiled soon.  This is part of the Administration’s “year of action”.  The President will – and has – used Executive Orders to implement other parts of his action agenda.  Whether progress toward the Fund could come from that mechanism is not yet clear.  Look for further Administrative directives to executive agencies, such as NASA and the EPA on his matter if Congress fails or refuses to implement the Fund.  Mr. Holdren made clear that the initiative would move forward.

Read more: http://thehill.com/blogs/e2-wire/e2-wire/198394-obama-to-announce-1b-climate-change-resilience-fund#ixzz2tVC54LBZ

timhowardlaw

Related developments? Latest IPCC report on global warming and the first navigation of the “northwest passage”.

2013

The International Panel on Climate Change, the UN body researching global climate issues, issued an updated report on Friday, Sept. 27, 2013.  The report confirmed the previous conclusion that global warming was occurring and continuing, and that the cause was anthropogenic (human agency).  The anthropogenic likelihood was raised to 95%.  The degree range of climate warming during two projected time periods was narrowed to a more precise band.  in oral remarks, one of the lead authors observed that 90% of the carbon dioxide released during the previous decade came from burning fossil fuels.

The effect on commerce?  A Canadian bulk carrier vessel and its Coast Guard escort left Vancouver on Sept. 17 and is now off the coast of Greenland, having essentially navigated cross-polar through what has become known as the Northern Sea Route – the Northwest Passage for which so many explorers searched in the 19th century.  The vessel, the Nordic Orion, plans to dock in Pori, Finland next week.  The Canadian Arctic sea waters through which it journeyed were until recent years blocked by year-round sea ice too thick for any ice breaker or tanker.  The irony?  The Nordic Orion carries 15,000 metric tons of coal.  A further irony?  Russia has a series of Arctic ports and a fleet of ice breakers to keep open a competing Northern Sea Route; planned cargoes undisclosed.

An alarm or a green light?  Does it depend on whether you are focused on the environment or on the trade route race?  Where is the United States?